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Market Update: 8-7-17

Jerris Wealth Management Group LPL Research Weekly Market Update

BUY THE DIP? WHAT DIP?

Burt White Chief Investment Officer, LPL Financial | Jeffrey Buchbinder, CFA Market Strategist, LPL Financial

Buy the dip? What dip? Beyond the double-digit gains in stocks this year1 and all of the all-time highs (29 for the S&P 500 Index already this year), perhaps the biggest story for the S&P 500 in 2017 is the absence of pullbacks. Here we discuss the lack of pullbacks, what could cause the next one, and how technical analysis could help us decide whether to buy the dip.

Whether you look at the number of trading days since the S&P 500 has pulled back 5% (279 days), or just 3% (187 days), it has been an unusually calm and steady advance. The streak without a 3% pullback, pictured in Figure 1, is particularly noteworthy as it has only been matched once since 1950. From January 1995 through January 1996, the S&P 500 went 241 trading days (about two weeks short of a full calendar year) without a 3% pullback. The early stages of the technology boom, Federal Reserve (Fed) rate cuts, falling market interest rates, and low (at least for that period) and stable inflation all played a role in the stock market’s steady move higher during that period.

Market Update: 7-31-17

Jerris Wealth Management Group LPL Research Weekly Market Update

IS POLICY SKEPTICISM CREATING A SMALL CAP OPPORTUNITY?

Burt White Chief Investment Officer, LPL Financial | Jeffrey Buchbinder, CFA Market Strategist, LPL Financial

We believe small caps are becoming an increasingly attractive tactical opportunity. The primary reason for our optimism is the amount of skepticism toward the Trump administration’s ability to move its policy agenda forward, particularly with regard to tax reform. Small cap stocks bene t disproportionately from a lower corporate tax rate because of their more domestic focus. We still think tax reform will be passed in early 2018 despite widespread skepticism, though likely a slimmer version than the Trump administration and congressional leaders have proposed. Here we discuss the opportunity in small cap stocks that may be developing as skepticism builds.

Market Update: 7-24-17

Jerris Wealth Management Group LPL Research Weekly Market Update

TAX REFORM PIVOT?

Burt White Chief Investment Officer, LPL Financial | Jeffrey Buchbinder, CFA Market Strategist, LPL Financial

Is it time for the tax reform pivot? Earnings season will get a lot of attention this week (July 24–28) with 190 S&P 500 Index companies slated to report, as will the Federal Reserve with its two-day policy meeting concluding on Wednesday, July 26 (though we do not expect any big news). Just as important for markets is the Republicans’ latest unsuccessful attempt to reform healthcare, which means that we are closer to the pivot toward tax reform.

This week, given the latest healthcare developments in Washington, D.C., we share our updated thoughts on tax reform’s prospects and some implications for the healthcare sector.

Market Update: 7-17-17

Jerris Wealth Management Group LPL Research Weekly Market Update

GLOBAL SUMMER EARNINGS
SIZZLE OR FIZZLE?

Burt White Chief Investment Officer, LPL Financial | Matthew E. Peterson Chief Wealth Strategist, LPL Financial

Can overseas earnings continue to grow and extend the first-half rally in many international markets? That is the question investors are asking as second quarter 2017 earnings season begins. Since the financial crisis of 2008, U.S. companies and equity markets have generally outperformed their overseas peers. Greater U.S. profitability and corporate efficiency have resulted in stronger earnings growth, and domestic equity markets outperforming overseas ones. That may be starting to change, as earnings growth is improving overseas and international markets are outperforming domestic market indexes.

Now that Europe is past the potentially upsetting elections in the Netherlands and France with little volatility, the market will be focusing on earnings. European corporate earnings had been weak until the fourth quarter of 2016, which continued the trend of strong fourth quarters, even in weak years [Figure 1]Despite a strong finish in 2016, for the year European corporate earnings had declined -5.4% in U.S. dollar terms. Unlike in other years, earnings started strong in 2017, with annual earnings growth of 15% through the rst quarter of 2017. Expectations were high, and 62% of companies outperformed expectations, far better than recent performance. The single largest contributor to growth came from energy companies, which bene ted from the rebound in oil prices over the past year. Other sectors also showed strength, with earnings improvements in basic materials, consumer companies, as well as financials.

Market Update: 7-10-17

Jerris Wealth Management Group LPL Research Weekly Market Update

SECOND QUARTER 2017 EARNINGS PREVIEW Q1 A TOUGH ACT TO FOLLOW

Burt White Chief Investment Officer, LPL Financial | Jeffrey Buchbinder, CFA Market Strategist, LPL Financial

Earnings season is underway this week (July 10–14) and may be another good one, with double-digit S&P 500 Index earnings growth possible. But getting to double digits will be tougher than it was in the first quarter when S&P 500 earnings increased more than 15% year over year.

First quarter earnings season will be a tough act to follow as the year-over-year comparison gets more challenging. The first quarter of 2016 was the trough of the earnings recession, so the first quarter of 2017 had the easiest annual comparison. Growth improved (fell less) in the second quarter of 2016 as corporate America began to emerge from the earnings recession, lifting the base for comparison for the just-completed second quarter. This trend will continue over the rest of 2017 given the earnings growth acceleration achieved during the third and fourth quarters of 2016 [Figure 1].

Market Update: 6-26-17

Jerris Wealth Management Group LPL Research Weekly Market Update

A TECHNICAL CHECK-IN
THE GLOBAL BULL LOOKS STRONG

Burt White Chief Investment Officer, LPL Financial | Ryan Detrick, CMT Senior Market Strategist, LPL Financial | Dave Tonaszuck, CMT Technical Strategist, LPL Financial

The global equity bull market is alive and well, with very broad participation. Longer-term technicals continue to look very healthy and strong, even as the bull market and economic recovery in the U.S. turns eight years old. A closer look at key indexes suggests the path of least resistance remains higher for stocks, although it likely won’t be an easy ride, as volatility could creep higher during the second half of 2017.

Our Team

Susan Jerris

Susan
Jerris

LPL Registered Principal 
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Anthony Roble

Anthony
Roble

LPL Registered Administrative Assistant
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CA Insurance License #0K61923
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Diana Esperon

Diana
Esperon

Administrative Assistant
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