Some kudos, thoughts and
observations as we begin the fourth quarter of 2015:
A New Artist Arrives
Doug’s wife, Marina, began
oil painting 3 years ago. She sold her first painting last month, which had
been on display in Webster. Please join us in congratulating her! If you’d like
to see her other works, they can be viewed at http://www.elegantfineart.com/marinaconoway.htm
S&P 500 Weakness Obscured by Megacaps
Investors fearing that
U.S. stock indexes will soon test their August lows should be aware that more
than a third of equities are already there. (Bloomberg News)
While the Standard &
Poor’s 500 Index is only slightly above its low for 2015, almost 35 percent of
the index’s members have slipped back below this year’s bottom. The market
heavyweights are doing all the heavy lifting: Apple Inc., Microsoft Corp.,
Amazon and Exxon Mobil Corp., all among the largest companies by market size.
These and other megacaps
are obscuring weakening breadth in U.S. equities. To some, that’s an ominous
sign amid market volatility that has seen the S&P 500 slide significantly
within recent weeks. The index is a
stone’s throw from its 10-month low reached Aug. 25.
Weighted for size, only
two of the 10 major groups in the S&P 500, materials and health-care, are
trading below the August low. That changes when stocks are weighted
equally. Then six industries, including
consumer and energy stocks, have fallen below the level.
Amid a broader flight to
safety, what remains to be seen is how this plays out as the market finds its
footing. As always, the question is are
we rolling toward a major bear market or is this simply a corrective action? Thankfully, all of this is a natural part of
the rebuilding process necessary to make future moves up.
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