We’ve had a few “red” days lately. Makes sense. Oil is higher following more nastiness in Iran, trade tensions are rising between the US and Canada, and worries are growing that the Fed will raise rates to cope with inflation. But the market has been telling you something for 329 days that you should listen to, advises Keith Fitz-Gerald, editor of 5 With Fitz.
The real question – and what people want to know, myself included – is whether or not rising yields worldwide reflect better-than-expected economic growth, higher-than-expected inflation, or a looming debt crisis. There are really only three choices.
My money is on number one…better-than-expected economic growth. Remember what’s what. Companies in the S&P 500 Index (^SPX) have reported the strongest earnings growth since 2021. Profits were up an average of 40% year-over-year in the second quarter on double-digit revenue gains.
S&P 500 Index (^SPX)
Source: TradingView
So – my advice – forget about the economists, pundits, and pontificators who fear what “might” happen and, instead, concentrate on what’s likely to happen.
As for the market’s message? The S&P 500’s 200-day moving average – basically a smoothed-out line tracking the market's underlying trend – has now risen for 329 straight trading sessions. That’s the fourth-strongest such streak in the last decade.
Since 1999, when this line is rising, the S&P has returned about 8.5% a year on average. That compares to 0.1% when it’s declining, according to the Kobeissi Letter.
