| The market went from trading purely on sentiment, to trading based on the strong underlying fundamentals in just two weeks. Once the Iran conflict uncertainty began to fade, focus returned to strong corporate earnings growth. The retreat in oil prices lessened concern about oil shock inflation, and interest rates have come off their higher recent levels. |
| We remain bullish the balance of the year, but in the short term, the market always overdoes in both times of market stress, and when suddenly the bulls take over again. As the chart indicates below, the Nasdaq100 went from relative strength indicators showing an oversold condition, to showing overbought conditions in just two weeks. Though an overbought situation can persist for awhile, and the current uptrend may continue, we would not be surprised to see some “backing and filling” as we consolidate recent gains. That said, we expect any weakness will be bought. |
| The average bull market that last over three years, sees it life extended to about eight years. We believe the resilient economy, rising earnings estimates, and lower interest rates in time, will propel the market for some time, and we continue to be optimistic intermediate to longer term. When the market breaks down, but then regains the 200-day moving average within 30-days, it is up 100% of the time averaging high double digit returns a year later. |