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GregCorneille
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Gregory is the President and Investment Advisor of Axcel Capital Management, LLC. He directs all research, analysis, and corporate strategy for the ACM Managed Account Programs. He is a former U.S. Army officer and a graduate of Hampton University. He began his career in investments in 2006 and... More
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Axcel Capital Management, LLC
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Axcel Capital Management Market Commentary
  • March 2014 Market Commentary: Warmer Weather Good For Stocks?  0 comments
    Mar 10, 2014 6:42 PM

    After a slow start to the year, the month of February saw the U.S. equity markets recover losses and new highs of on the S&P 500 yet again, providing further fuel to the argument that the bull market which began in 2009 is still intact and strong. For the month of February, the S&P 500 was up 4.3% and the Dow Jones Industrial Average (DJIA) up 4%. For the year, S&P ended the month up 1.5% and the Dow down -0.7%. Interest rates remained down from the start of the year, with the 10-year Treasury note rate finishing the month at 2.66%.

    Stocks have risen over the past month mostly due to more solid corporate earnings reports and the Federal Reserve's reassurance to maintain an interest rate environment conducive to growth, despite maintaining its commitment to wind down quantitative easing. Disruptions due to weather - many retailers lost money because of store closings across the country due to the flurry of winter storms and freezing temperatures - and disappointing economic reports did not stand in the way of stocks regaining their January losses. Leading the way were traditionally defensive oriented sectors such as healthcare and utilities; up 6.6 and 5.7% so far for the year, respectively. Over a longer term, defensive oriented sectors leading the markets higher is usually an indication of a slowing market run.

    Economic reports generally were less than positive and showed indications of marginally slowing economic growth. Monthly updates on employment, consumer confidence, manufacturing and housing were all down significantly from previous months; with weather again strongly speculated to play a factor. However, the Federal Reserve - with new Fed chair Janet Yellen sworn in last month - once again calmed the markets in comments made after its monthly meeting; but many leading economists remain concerned that the Fed's commitment to withdraw quantitative easing - even while keeping interest rates steady - might eventually decrease market confidence and negatively impact the stock market.

    The month of March marks the 5 year anniversary of the bull market which began in 2009. From a technical perspective, the market climb in February did much to assuage fears that the rally is still intact. In reaching new all-time highs, the S&P 500 climbed back above its 100 and 50 day moving averages. The relative strength of the S&P likewise climbed back into positive territory. Noting the renewed strength in the S&P 500 which significantly exceeded that of a bullish position in fixed income, we have eliminated our position in long-term treasury bonds and taken a position in large cap stocks. Along with our previously current position in small cap stocks, we are fully invested in domestic equities.

    Disclosure: I am long IWM, IVV.

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