Party On, Wayne - Market's Joyride To The Upside

Party On, Wayne! image

The joyride to the upside continued in the stock market last week as the S&P 500 surged another 2.5%. If my calculator is correct, that means the venerable blue-chip index is now up 10.7% so far in 2019 and has put in a nifty gain of 18% since the December 24th panic attack. Impressive.

What is perhaps even more impressive from my seat is the reversal in Ms. Market's mood. Recall that back in December, traders assumed the worst. Everything was bad. There was nothing positive to be found anywhere. All news was bad news. Even the good news (record holiday shopping for example) was ignored because the markets were doomed. The Fed had lost its way. The administration was planning to flush the hundreds of billions it spent on tax cuts down the drain with the trade war. And the "R-Word" (recession) dominated the global view. Insert sad emoji here.

Now fast forward eight weeks. The S&P has soared. The index is back above its 200-day moving average. There is talk of a new bull market. I'm getting calls about keeping up with the stock market again. Everything is good. Nothing is bad. And any news that happens to fall in the disappointing category can simply be ignored. Amazing what an 18% gain in a couple months can do, right?

The Game Changers

Why the sudden mood swing, you ask? Easy. Because the Fed changed its tune and leaders in both China and the U.S. want a deal. As such, it is now assumed that the economies of the world will resume their long-lost upward mojo. So, the real question becomes, how long until we start hearing the words "synchronized global growth" again?

It appears that traders are now assuming the Fed will thread the needle and remain friendly to the stock market. That the trade deal will get done; completely and on time. Oh, and the aforementioned trade deal with China is going to fix everything.

No need to worry about all that negative economic data you've been seeing, folks. We can just blame it all on the trade war. And since the trade war will soon be over, everything is going to be hunky dory going forward.

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Disclosure: At the time of publication, Mr. Moenning held long positions in the following securities mentioned: none - Note that positions may change at any time.

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