Is This The Start Of The Sell-Off?
Stocks have had a record run, but recently they’re showing signs of potential weakness. Is this the start of a pullback? Meanwhile, jobs reports have been good, and the economy continues to show signs of improvement.
Stocks have had a record run, but may be showing signs of weakness. Stocks pulled back September 3–4, but after a 60% rally in less than six months, some type of weakness—and a pullback—would be perfectly normal. Sentiment is also quite optimistic, which can be a worrisome signal from a contrarian point of view. The good news is the weakness may be an opportunity.
Jobs remain strong
The August jobs report came in at 1.4 million, in line with expectations. There were worries about a weak number, but again the economy is quite healthy. Additionally, strong global manufacturing is a nice sign for this recovery. The stock market might be due for weakness, but the continuing economic recovery is comforting.
The monthly win streak
The S&P 500 Index is up five straight months, which is actually quite bullish. Since 1950, there have been 26 other five-month win streaks, and stocks were higher 25 times a year later. The stock market is telling us something, and it likely wants to go higher longer-term.
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All index data is from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This Research material was prepared by LPL Financial, LLC.
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