The S&P500 is upward trending
The S&P500 is upward trending. The character of the price trend has changed to a cyclical motion since the S&P500 peaked early in 2018. We think some of this cyclical nature is due to robot buying and selling programs initiated by large hedge funds and bank proprietary trading strategies. Higher volatility is an obvious result, as is increased difficulty in staying invested for some investors.
We have a new buy signal on High Yield Bonds and a new sell on Precious Metals. We remain long on S&P500, NDX, and government bonds. Government bond yields have moved up with the Federal Reserve increasing short term interest rates and reduction in their balance sheets. The Fed is reducing their balance sheet liquidity since the banking crisis of 2008. The Fed is no longer buying and keeping government bonds to provide money to banks. With the 2008 overleverage of 1.6-1.8 of the large banks, compared to vs. 1.3 now, the financial markets are different.
We like: retail, biotech, small cap value, internet, consumer products, and telecommunications.
Our monthly newsletter (price $279/year 440-871-7278) lists Harloff Value Index (HVI) values and rank for: the Style Box, US Sector indexes, and World Indexes. The Style Box indexes have positive HVI except for large cap value. In the Sector category only utilities have positive HVI. In the World Indexes only the US dollar and S&P500 are positive.
There are pressures on the equity markets.
Because the markets can turn quickly, be ready. May the market be with you (June 22, 2018)!
Contact Harloff Capital Management at 440-871-7278 to discuss how our active management may help you!