Market Summary
The Nasdaq composite index achieved a notable achievement on
Thursday when it reached a new closing high for the first time since March 10,
2000. Back then, the Nasdaq swelled as investors were euphoric about the
possibilities of many new tech companies that debuted on the public markets.
The Nasdaq of today is very different animal compared to 2000. The tech firms
are more established and better financed in 2015, and are some of the world's
largest firms. “This chapter that the Nasdaq is writing is more suggestive that
it's a market that, while still technology-weighted, is much more mature,"
said Steven Baffico, chief executive officer at Four Wood Capital Partners in
New York. "The companies in it reflect that, companies like Cisco and
Microsoft.”
For the week, the S&P gained 1.8 percent, the Nasdaq
gained 3.3 percent and the Dow added 1.4 percent.The Nasdaq Composite and
S&P 500 both chalked up record high closes on Friday, propelled by strong
results from tech behemoths Google, Amazon and Microsoft. The Nasdaq Composite
added 0.71 percent to end at 5,092.09, its second straight record high close.
The S&P 500 rose 0.23 percent to a record high close of 2,117.69 points,
barely above its previous high of 2,117.39 set on March 2.
Investment Analysis
While markets are at record highs, March-quarter earnings of
S&P 500 companies are expected to dip 1.3 percent, with revenues dropping
3.5 percent as the dollar hurts U.S. multinationals and low oil prices affect
energy companies, according to Thomson Reuters data. For the start of the
second quarter the graph below shows Energy stocks continuing to lead the other
major asset classes. After a sell-off between June and January driven by
oversupply, oil prices seem to have found their footing in the last three
months, gaining about 20 percent in April. Explosive
stock price moves from technology stocks like Amazon and Netflix has the Nasdaq
sector soaring recently. Wall Street may get new clues on the timing of an
interest rate hike when the Federal Reserve issues a statement following its
two-day meeting on Wednesday.
Last week’s analysis is still in play “… In the updated graph below energy stocks are blowing away the other
main S&P sectors over the past month. Essentially, all the other sectors
are basically breakeven the past 30 days with some groups moderately lower and
others slightly higher. With the major S&P sectors struggling to gain
traction and economic indicators sending mixed signals smart investors should
continue maintaining both bullish and bearish positions. With this strategy you
need a reasonable stop-loss plan to bail out of underperformers and ride
winning trades…”The November to April best 6 months for stocks is coming to
a close and that the old axiom about “Sell in May and Walk Away” is not far off.
By Gregory Clay
Investment Strategist
Click here to Connect on LinkedIn
gregoryclay@theoptionplayer.com
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