Weekly Commentary, 11/16/15 – 11/20/15
Stocks climbed higher as investors shook off concerns stemming from recent terror attacks. In the U.S., the S&P 500 Index put in one of its best weeks of the year, gaining 3.3% following one of the worst weeks for the benchmark, shedding 3.6%. Global markets were able post gains as if nothing had happened. Asian countries gained approximately 1.5%. Nearer to the attacks, Germany soared over 4%, London by 3.5% and even France was up over 3%.
The market gained steam on Wednesday after the release of the minutes from the Federal Open Market Committee meeting last month which helped clear the path for higher rates at the December meeting. A rate hike would indicate the Federal Reserve believes the U.S. economy is strong enough to justify higher rates. After flip-flopping whether a rate hike would be bullish or bearish for stocks, the bulls seemingly won out. The minutes suggest the Fed will “pause and reassess” after the first move. The yield on U.S. Treasury notes, most sensitive to a Fed rate hike, settled at 0.93%, the highest in more than five years.
Market technicals are improving. It is encouraging to see the technology and cyclical sectors outperforming other sectors. However, we would like to see breadth widen out. Over the last 50 days, the largest stocks continue to outperform their smaller cap colleagues. Small and mid-cap stocks have yet to clear their 200-day moving averages. For a sustainable rally, it’s important to see smaller cap names catch up to the larger cap names.
The Stadion Managed Account Risk objectives are managed using a “core/satellite” approach. The core positions will comprise 40-60% of the portfolio and are invested in equity, fixed income and money market instruments with the strategic allocation becoming more risk averse as the risk tolerance of each fund changes. In allocating the objective’s satellite assets the remaining 40-60% of each portfolio, Stadion uses a proprietary, rules based weight of the evidence model. Stadion’s Dynamic Trend model’s weight of the evidence improved this week. ETF positions were added that included broad market exposure and selective sector exposure.
Past performance is no guarantee of future results. Investments are subject to risk, and any of Stadion’s investment strategies may lose money. The investment strategies presented are not appropriate for every investor and financial advisors should review the terms and conditions and risks involved. Stadion’s actively managed portfolios may underperform during bull markets. Some information contained herein was prepared by or obtained from sources that Stadion believes to be reliable. There is no assurance that any of the target prices or other forward-looking statements mentioned will be attained. Any market prices are only indications of market values and are subject to change. The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock price. It is not possible to invest directly in indexes (like the S&P 500) which are unmanaged and do not incur fees and charges. The Sharpe ratio measures the excess return per unit of deviation, or risk. Any references to specific securities or market indexes are for informational purposes only. They are not intended as specific investment advice and should not be relied on for making investment decisions.
Past Performance is no guarantee of future results. Investments are subject to risk, and any of Stadion's investment strategies may lose money.