Our Stock Market Shows Fatigue after Great Bull Run
By Saghir Aslam
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live with dignity and fulfill their moral obligations towards charitable activities)
(Continued from last week)
While nothing says the pattern must be replicated, there are other clues to those seeking a direction in a market plagued with complacency.
“A few recent developments suggest August is likely to be a down month. Equities could be suffering from some complacency (VIX is awfully low at 12) and after five consecutive months of gains, we should not be surprised to see a pause.”
Still, with the earnings season almost half way through, more than 80 percent of S&P 500 companies have posted profit that beat projections, while almost 60 percent topped sales estimates. Analysts have eased their expectations for a drop in second-quarter net income to 3.2 %.
Technology has been one of the brighter spots in second quarter earnings. From Google parent Alphabet to Apple Inc., quarterly results boosted companies in the S&P 500 to their best earnings period performance in 16 years. They capped the month with the biggest rally out of the S&P 500’s 10 sector groups.
Seven of the industries rose in July, with raw-material and health-care companies advancing at least 4.7 percent. Freeport-McMoRan Inc. added 16 percent amid signs the company was making progress to get its balance sheet in order. Drugmaker Biogen Inc. surged 19 percent after beating earnings estimates and announcing the departure of it’s chief executive.
Energy had the worst performance, falling 2 percent as crude fell to the precipice of a bear market from its June high.
“It’s been a tale of two halves this month, with the first half being influenced by Brexit and international events, while the second half has been running on earnings. The earnings haven’t been too impressive, but it has helped to reassure investors that the economy is for the most part OK.”
All of us know very well that nothing goes up all the time. To the best of my knowledge, this has been the best and the longest bull market ever since I can remember and as most of you know, I have been investing in the stock market for decades, in the 60’s to be exact when I bought my first five shares in International Business Machine (IBM).
I have gone through many bull markets and bear markets including dot com when certain companies’ stocks were making new highs daily. And all of us remember how high NASDEC went up. Only a few people who were not extremely greedy started to slowly get out of the market. Majority of them thought the bull market of the dot com days will never end and the next thing they knew, the market fell flat on its face and much of the gains got wiped out and many people lost fortunes.
At this point, from my experience and being careful, take a little bit of uncertain days and I have set my goals to continue to get more cash. Use your judgment, think about it and do whatever your heart tells you to do but be careful.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)