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Still Waiting…

Weekly Commentary, 05/08/17 to 05/12/17 

On March 1st, the S&P 500 made a new all-time high at 2400.98 following President Trump’s first speech to congress the previous night. The 2400 level, which marked roughly a 12% gain from Trump’s victory, has since become a tough hurdle for the market to climb over as this week ended with still no forward progress on crossing above it! Both the Dow Industrials and Russell 2000 (a small cap index) are in similar situations, lacking positive returns from early March.

On the index front, there is one major market standout. Since the same March 1st S&P 500 all-time high, the NASDAQ Composite also nailed that same all-time high feat on the same day, but has since charged ahead by almost 4%. Much of this has been a popular media story as big-cap tech, which includes names like Google, Apple, Microsoft, Facebook, and Amazon, has accounted for a healthy percentage of the NASDAQ’s gains this year.

Outside of simple index analysis, we have seen a strong earnings season so far. S&P 500 Earnings Per Share had a great rebound, jumping by 13% in the first quarter which is the fastest growth rate since 2011. Not surprisingly, they are led by Technology up 17% and Financials are also a leader with earnings up 21%.

We wrote last week about the lack of volatility, as measured by the VIX. That trend continued and is gaining more and more press as to why this might be happening. Volatility is often misunderstood and is a very tough measure to use solely to gauge equity markets. That said, generally, bull markets thrive on slow and steady moves higher while bear markets see higher volatility readings. It’s safe to say that today’s low volatility is reflecting the current bull market state.

As the markets wrapped up the week, we are still waiting for the next psychologically impactful S&P 500 level to be emphatically crossed. The S&P 500 keeps toying with crossing 2400 while the NASDAQ Composite charges higher. If a low volatility bull market with solid fundamentals (e.g., increasing EPS) can’t power it through, we wonder what can? We look forward to seeing what narrative that may be while staying true to our investment frameworks letting their processes tell us how to position our various strategies. 


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 NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies. The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. 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. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. It is the most widely quoted measure of the overall performance of the small-cap to mid-cap company shares. The VIX is the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market's expectation of stock market volatility over the next 30 day period. 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 U.S. 10-Year Treasury Note is a debt obligation issued by the United States government that matures in 10 years. The Sharpe ratio measures the excess return per unit of deviation, or risk. The core personal consumption expenditures index measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices. 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.
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Past Performance is no guarantee of future results. Investments are subject to risk, and any of Stadion's investment strategies may lose money.