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Technology stocks were among the biggest winners last week and the S&P 500 rallied to set a new high. The broad-based rally is expected to continue as more Americans are vaccinated and the nation looks forward to some form or normalcy. The yield on the benchmark 10-year treasury dipped slightly as inflation concerns were more muted.

On the technical front, we continue to see more evidence mounting for a continued bull market. Last week, one indicator we follow called the Percent Positive Trend for the S&P 500 reached its highest point ever going back to 1997 posting a reading of 91.09%. Basically, this indicator measures the number of stocks in the S&P 500 that are in a positive trend and trading above their bullish support line. This reading has only been above 90% four times since 1997 and is associated with strong bull markets. The chart below provides some insight into what we might expect going forward from this point.

While the results can vary in the short-term, the average return after one year appear to be strong in most cases. While no one can predict where the market will go from here, we will keep a close eye on developments and update you.

If you have any questions, please contact me.

The Markets and Economy

A very solid jobs report release on Good Friday signals a strong rebound for the U.S. economy. American employers added a seasonally adjusted 916,000 jobs in March, the strongest gain since August. The unemployment rate fell to 6%
The Fed is buying $120 billion of bonds each month – $80 billion of Treasury debt and $40 billion of mortgage-backed securities. The Fed confirmed on March 17, 2021 that the purchases will continue “until substantial further progress has been made toward the committee’s maximum employment and price stability goals”. Those goals are; 3.5% unemployment and annual inflation of at least 2%.
Treasury Secretary, Janet Yellen is lobbying major global allies for a minimum corporate tax rate. President Biden is pushing for the U.S. corporate tax rate to be increased from 21% to 28% to partially fund his $2.3 trillion infrastructure plan.
On average, households have set aside 42% of the latest round of federal relief checks for savings, a survey by the Federal Reserve Bank of New York has found. The reported savings are slightly higher than those from previous relief payments, but the survey notes lower-income households are likely to use more of the funds for consumer spending.
In the latest sign of growing optimism for the economy, United Airlines Holdings plans to hire and train 5,000 pilots through 2030. That’s about half the number of pilots the airline says it will need. United bought a training academy shortly before the pandemic took hold and devastated the travel industry.
The International Monetary Fund raised its growth forecast for the global economy in 2021. The IMF now expects a growth rate of 6%, up from its previous forecast of 5.5%. The U.S. and Chinese economies were cited as the biggest drivers of growth as vaccinations and aggressive measures to combat Covid-19 are beginning to bear fruit.
General Motors Co. will halt production at several North American factories and extend shutdowns at others due to a chip shortage that has been worsening. Other car manufacturers are facing the same problem as demand has exceeded production at chipmaker’s facilities.

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The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Consult your financial professional before making any investment decision. You cannot invest directly in an index. Past performance does not guarantee future results.

Note: All figures exclude reinvested dividends (if any). Sources: Bloomberg, Dorsey Wright & Associates, Inc. and The Wall Street Journal. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

Securities offered through Triad Advisors, member FINRA/SIPC. Imvestment advice offered through Resources Investment Advisors, LLC, an SEC-registered investment adviser. Resources Investment Advisors. LLC and Vertical Financial Group are not affiliated with Triad Advisors.

David Kover on April 13th, 2021

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S&P 500 Posts New High. Tech Stocks Rebound