December 31, 2015
A Word About the Market
The last few day’s market action is pretty typical of what we have seen all year. A few big-cap names drive the indices up when they can, while the great bulk of stocks drive the market back down on days when the big-cap names don’t do much. Much of the positive action in individual names have not been keeping pace with the indices. This action is a good demonstration of why 2015 has been a very frustrating year for many investors.
If you aren’t in a narrow group of key stocks, it has been extremely hard to find returns. The indices simply don’t reflect the action in the average stock. The median stock in the more comprehensive universe measured by the Russell 2000 is down 9% ytd and 1/3 of the index is down around 20% or more. Commodities are still down significantly for the year, European markets are flat, Emerging Markets are down significantly on the year, even the US Aggregate Bond Index, AGG, is struggling. Just goes to show how difficult a year 2015 has been, especially for small/mid-caps and emerging economies.
All-in-all, the major indexes are still trading within a directionless wide range but are closer to our traditional “risk on” levels. Maybe we will see a break-out of this range to the upside? We will be monitoring things closely to see if there is enough evidence to warrant putting risk back on in this environment, but for now our decision is to stay conservative.
Recent positive trends we are monitoring:
• Pessimistic sentiment despite recent rallies (bullish).
• Seasonality favors a bullish bias.
• Technically some key indices have recaptured our “risk on” levels AND new highs are expanding. While this development is limited to a handful of stocks, with so many stocks down in correction mode right now we are watching to see if this starts to spread further into the broader based market. If it does, we may have the opportunity to see some positive movement in 2016.
As always, we will remain disciplined with our risk management approach and look for confirmation of improving market data points.
This commentary on this website reflects the personal opinions, viewpoints and analyses of the Gainplan LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Gainplan LLC or performance returns of any Gainplan LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Gainplan LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.