After a tumultuous first quarter, one would have expected a somewhat subdued second quarter. As we learned just after a week of trading in April, you can throw that expectation out the window. We must get accustomed to a higher level of realized market volatility. One word of advice – don’t take your investment cues from Twitter (TWTR). If you do, you are on your own.
The equity markets are beginning to form what technicians refer to as a “W” pattern. By that; following the chart below; the markets after topping at the end of January, headed lower into early February, bounced back in early March, and then declined once again into early April. Next, we should expect the right side of a W whereby markets move back higher toward the January highs.
From a fundamental basis, with earnings continuing to rise, as the economy has strengthened, the most recent market decline has left the major averages undervalued. The Standard & Poor’s 500 (SPX) index is selling at less than 17 times current year’s earnings. You must go back to the beginning of the bull market, in 2013, to experience a market as fundamentally cheap as it is now.
Last Friday’s jobs report for March was good, but when compared to that of February, may have disappointed a few on Wall Street. One possible explanation was some late winter / early spring snow storms hitting many major metropolitan areas.
Earnings season will begin this week and pick up a full head of steam the following two weeks. From those reports, we will get a better picture of the equity markets and receive quantitative justification to complete the right side of the W.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long SSO & SPXL — although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
– Read Scott’s intra-day thoughts and comments on Scutify for which he is a co-founder of its parent company Wall Street All-Stars, LLC
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