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S&P 500 Weekly Update: Someone Forgot To Tell The Market It Was Suppose To Plunge

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by: Fear & Greed Trader
Fear & Greed Trader
Investment advisor, portfolio strategy, dividend growth investing, long/short equity
Summary

Put in the earplugs. Noise is here in the form of geopolitical armageddon on our doorstep.

J.P. Morgan Global Composite PMI index is at an eight-month high, the global economy is on the mend.

Just when it appeared a pullback was on tap, the Dow 30, S&P and Nasdaq Composite forge new all-time highs.

Earnings season is about to begin and will offer clues on the expected rebound in profits.

"If you walk peacefully on the beach; our feet sink a bit before we can take the next step forward, rinse and repeat. So goes the market at times." - Rose Nose

While the market does indeed march on, some have spent a lifetime trying to come up with a concrete definition of risk and they don't mind spending money searching for it. The thought process is that if all risks can be measured accurately, then they can be hedged away. This leads investors to hedge out their hedges to the point where there's now no risk being taken which subsequently leads to no returns either. Can you say, Hedge Fund? Whether you measure risk or not, you still have to bear it at some point to make money in the markets. There are no shortcuts.

In my view, the best a risk model can do for the investor is to point out where potential areas of risk exist, not how that risk will manifest and play out. This is where investors get caught up in the negativism by concluding the worst possible outcome just has to be the result.

When I look at this topic, I come to the conclusion that "risk" is personal. You cannot define risk or risk tolerance without first assessing the unique characteristics of the investor in question.

I'm a big believer in focusing on what YOU can control as a form of risk management. While we're never going to be able to perfectly measure risk, one of the best ways to manage risk is to have a comprehensive plan in place.

Having a plan doesn't mean you can eliminate all of the perils investing presents. That's impossible. Part of that plan is realizing that an investor's appetite for risk will likely ebb and flow with the markets even if your ability to take a risk based on your financial situation hasn't changed much. Therefore, you want to make sure you are not always acting on these impulses.

Intelligent investors understand the importance of planning for a wide range of outcomes by thinking in terms of probabilities, understanding that they will be wrong from time to time. It then becomes important to have the willingness to admit they can't or don't need to know everything.

Taking risks makes sense. You just don't want to get into the habit of taking unnecessary or unacceptable risks, based on your personal makeup. Now all we have to do as investors are to figure out what those "unacceptable" risks are.

Investment firms and market participants returned from their holiday festivities with geopolitical concerns weighing on their minds. To judge by the tone of the media coverage and much of the analysis over the past weekend, the world is teetering on the brink of an apocalyptic war in the Middle East between the U.S. and Iran.

At the start of the trading week, the expected knee-jerk reaction was to sell, but the selling didn't have much conviction behind it. After the S&P dipped 20 points at the outset, the index finished the day up 11 points, posting a 31 point intraday swing. The Dow and Nasdaq reversed course as well.

Overnight fireworks in the futures market (S&P down 40+) put traders on edge when Iran fired missiles into Iraq on Tuesday evening. However, with no damage and no American casualties reported, the major indices all rallied sharply off those evening lows.

The S&P put in an intraday high on Wednesday, while the Nasdaq Composite closed at an all-time high. The rally was once again broad-based as the cumulative NYSE advance-decline index posted yet another all-time high as of the close. My condolences to those that were "net short".

More new highs on Thursday before a reversal from rally mode on Friday. Strength begets strength. Trying to call the start of any pullback has been a losing strategy.

Economy

Scott Grannis assembled his views on why "Federal Debt Is Not A Threat To The Economy". As he eloquently points out, there are many factors that need to be considered before we jump to any conclusions on the debt issue.

The consensus is that the U.S. economy will grow only 1.8% in 2020, which would be the weakest growth since 2012. One of the persistent flaws in the economic thinking of many analysts and investors is that economic expansion has to come to an end because of old age alone. History contradicts this widespread claim. Research from the San Francisco Federal Reserve Bank back in 2016 shows that old economic expansions are no more likely than young expansions to die in the following year.

Instead, a common-sense view states that entrepreneurship and public policy matter the most. For whatever reason, those issues have been ignored and dismissed. Common sense also tells us in such a weak recovery as we have seen since 2009, the "textbook" definition and the "models" used to forecast cycles can be tossed out the window. Unfortunately many held on to those doctrines far too long.

My theme for the economy and the market revolves around a boost in "confidence". As shown in the chart below, confidence about the outlook for the economy reported by CFOs in the quarterly Duke CFO survey has started to improve after a big decline earlier in the year.

Source: Bespoke

While this may be a start, there is plenty of room for more improvement. More than half of CFOs still expect a recession to start in the next 12 months, down only very slightly from Q3's level.

Bloomberg reported that its weekly indicator of consumer comfort hit a new high for the cycle. At 65.1, the index is 3.9 points below the all-time record highs logged in January of 2000.

Source: Bespoke

The seasonally adjusted final IHS Markit US Services Business Activity Index registered 52.8 in December, up from 51.6 in November, signaling a further rebound in output growth following a slump in activity during the summer. The moderate upturn accelerated to the fastest since July and was linked to more favorable demand conditions.

Chris Williamson, Chief Business Economist at IHS Markit:

"Business activity in the vast service sector picked up the pace at the end of last year as rising domestic demand and signs of reviving exports led to higher workloads. Combined with indications of manufacturing lifting out of its recent lull, the survey data suggest the overall pace of economic growth accelerated to its fastest since last April."

"However, while moving in the right direction, service sector growth remains well below that seen in the early months of 2019, and the overall survey results are indicative of GDP rising at a relatively modest annual rate of 1.8% in December."

"The missing ingredient compared to this time last year is optimism about the future, with business sentiment regarding prospects for the next twelve months running well below levels seen this time last year, and close to the lowest for at least seven years. Indeed, much of the recent improvement in demand has come from stronger sales to consumers, with business spending and investment remaining under pressure amid this anxiety about the economic and political outlook."

ISM-NMI services index rose 1.1 points to 55.0 from a lean 53.9 in November and 54.7 in October, as the measure climbed further above the three-year low of 52.6 in September. The ISM-NMI is still well below the 60.4 figure in November of 2018, which was the second-highest reading going back to August 2005.

November U.S. factory report slightly beat estimates with a 0.6% rise for non-durable shipments and orders, and a 0.1% non-durable inventory increase, after upward revisions for both in October. The mix left November factory orders swings of -0.7% for the headline and +0.3% for the ex-transportation measure, alongside a firm 0.3% November factory inventory rise.

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Nonfarm payrolls increased 145k in December after gains of 256k in November and 152k in October. That leaves the three-month average at 184k. The unemployment rate was steady at 3.5%. The labor force rose 209k after a revised -54k gain. Household employment was up 267k following an -8k decline previously. Average hourly earnings edged up 0.1%, after a 0.3% gain previously (revised up from 0.2%).

Global Economy

World Bank: Global Growth Expected To Recover To 2.5% In 2020. The multilateral development bank said 2019 marked the weakest economic expansion since the global financial crisis a decade ago, and 2020, while a slight improvement, remained vulnerable to uncertainties over trade and geopolitical tensions.

The J.P. Morgan Global Composite Output Index, which is produced by J.P. Morgan and IHS Markit in association with ISM and IFPSM, rose to an eight-month high of 51.7 in December, up from 51.4 in November. The headline index has posted above the neutral 50.0 mark that separates expansion from contraction in each of the past 87 months.

Olya Borichevska from Global Economic Research at J.P. Morgan:

"The December global all-industry PMI came in positively at the end of the year reinforcing a view that activity will improve in the coming quarters. The all-industry activity PMI increased for the second month to an eight-month high. Improving trends in new order inflows, employment, and business sentiment also suggest that further headway should be made at the start of the new year. International trade remains the main drag on efforts to lift growth further, so any moves that reduce tensions and barriers on this front will be especially beneficial."

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The IHS Markit Eurozone PMI Composite Output Index improved slightly during December, but still signaled weak economic growth. After accounting for seasonal factors, the index recorded 50.9, up from 50.6 in November and slightly better than the earlier flash reading. Despite the improvement to a four-month high, the index nonetheless continued to post at a level amongst the lowest seen since the first half of 2013.

Chris Williamson, Chief Business Economist at IHS Markit:

"Another month of subdued business activity in December rounded off the Eurozone's worst quarter since 2013. The PMI data suggest the euro area will struggle to have grown by more than 0.1% in the closing three months of 2019."

"At face value, the weak performance is disappointing given additional stimulus from the ECB, with the drag from the ongoing plight of the manufacturing sector a major concern. However, policymakers will be encouraged by the resilient performance of the more domestically-focused service sector, where growth accelerated in December to its highest since August. Business optimism about the year ahead has also improved to its best since last May, suggesting the mood among businesses has steadily improved in recent months."

"While the tide may be turning, downside risks to growth in the year ahead nevertheless remain notable. While US-China trade wars have eased, any escalation of trade tensions between the US and Europe will likely hit exports further. Brexit also remains a major uncertainty and is likely to continue to dampen growth in Europe. Nonetheless, in the absence of any major adverse developments, we expect to see growth starting to improve as 2020 proceeds, with low inflation and easing financial conditions supporting consumer spending in particular."

Registering 50.1 in December, the seasonally adjusted Eurozone Productivity PMI, derived from IHS Markit's national manufacturing and services PMI survey data, was in expansion territory for the first time in 20 months. The latest figure was up from 49.7 in November but indicated only a fractional improvement in workforce efficiency.

Up from 50.6 in November, at 51.3 in December, the IHS Markit Eurozone Construction PMI pointed to a faster expansion in construction activity across the currency area. In fact, the latest rise was the quickest for eight months amid accelerated growth in both Germany and France. Across the euro area's three largest economies, only Italy registered a reduction in construction activity.

Eliot Kerr, Economist at IHS Markit:

"The final month of 2019 brought the quickest rise in eurozone construction activity for eight months. The positive result was primarily driven by faster growth in both Germany and France, while a contraction in Italy weighed on the overall expansion."

"At the sub-sector level, the rise in total activity was supported by both home building and commercial construction. The former saw the fastest increase since last May, while the latter posted a fractional expansion. On the other hand, civil engineering activity continued to fall, with the pace of decline accelerating to the fastest for seven months."

German factory orders unexpectedly fell 1.3% in November versus estimates for a 0.2% gain.

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The seasonally adjusted IHS Markit/CIPS UK Services PMI Business Activity Index registered 50.0 in December, up from 49.3 during November, to signal stabilization of overall service sector activity. Moreover, the latest reading was higher than the earlier "flash" estimate for December (49.0).

Tim Moore, Economics Associate Director at IHS Markit:

"Service companies widely commented on delayed spending decisions and a headwind to sales from domestic political uncertainty in the run-up to the general election. With manufacturing and construction output also subdued in December, the latest PMI surveys collectively signal an overall stagnation of the UK economy at the end of 2019."

"However, the latest UK service sector figures are an improvement on those seen in November and strike a slightly more positive tone than the earlier 'flash' PMI for December. The final IHS Markit/CIPS UK Services data includes survey responses from after the election, unlike the earlier flash estimate."

"It is notable that the forward-looking business expectations index is now the highest since September 2018 and comfortably above its 'flash' reading for December. The modest rebound in new work provides another signal that business conditions should begin to improve in the coming months, helped by a boost to business sentiment from greater Brexit clarity and a more predictable political landscape."

The Caixin China Composite PMI data (which covers both manufacturing and services) pointed to another strong rise in total Chinese business activity in December. However, the rate of growth eased since November, with the Composite Output Index falling from a 21-month high of 53.2 to 52.6 at the end of the year.

Commenting on the China General Services PMI data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group:

"The expansion in the services sector remained at a relatively fast pace."

1) Domestic demand expanded at a faster pace than overseas demand. While the gauge for total new business rose for the second month in a row, the one for new export business fell from the previous month, reflecting the slowing expansion of foreign demand.

2) Services supply expanded at a relatively slow clip. The measure for outstanding business returned to the expansionary territory, indicating that supply growth lagged behind demand expansion. The employment gauge fell marginally to the lowest level since July despite remaining in positive territory.

3) Business confidence was subdued. The gauge for prices charged by service providers fell into contraction territory, hitting the lowest point since August 2017. The drop was larger than the decline in the gauge for input costs, suggesting the rise in services demand was possibly due to greater sales promotions. That had an adverse impact on business confidence, with the measure for business expectations dropping to the lowest level since late 2015.

Mexico reported the strongest industrial production numbers in 9 months this past week.

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The headline Jibun Bank Japan Manufacturing Purchasing Managers' Index, a composite single-figure indicator of manufacturing performance, fell to 48.4 in December from 48.9 in November, indicating an eighth consecutive deterioration in business conditions across the Japanese manufacturing sector. Furthermore, the rate of decline was the joint-sharpest for three-and-a-half years, on a par with that seen in October.

Commenting on the latest survey results, Joe Hayes, Economist at IHS Markit:

"Japan's manufacturing sector has ended in 2019 where it started, stuck in contraction with little hope of an imminent turnaround. Taking all fourth-quarter survey data as one, the manufacturing economy has endured its worst performance in over three years, with momentum clearly to the downside heading into 2020."

"Looking at the sub-sector data, the capital goods market appears to be suffering the most and has subsequently contributed to the stronger decline in the goods-producing economy. That said, survey data highlighted that weak demand remains an industry-wide problem, impacting output volumes and causing firms to cut their prices in hopes of turning the tide."

"Overall, the manufacturing sector appears set to negatively contribute to GDP in the fourth quarter and, if considered in tandem with the December flash services PMI figures, the chance of an economic contraction in the fourth quarter looks strong."

The seasonally adjusted Japan Business Activity Index fell to 49.4 during December, down from 50.3 in November, signaling the second contraction in service sector output over the past three months. Furthermore, the decline was the strongest in over three years, subsequently rounding off the worst quarterly economic performance since the third quarter of 2016.

Joe Hayes, Economist at IHS Markit:

"Japan's service sector has ended in 2019 in a precarious position. At the start of the year, robust domestic demand was sufficient to offset globally-driven weakness in the industrial sector. Now, underlying conditions in the service sector have deteriorated and are no longer strong enough to support the Japanese economy."

"Overall, survey data for the three months to December imply that fourth-quarter GDP is likely to contract. While the sales tax and typhoon hampered October's performance, we saw a very limited recovery in November and the service sector has registered its strongest downturn in over three years in December."

"Latest data highlight that the impetus is back on Abe and the Bank of Japan to look at ways to stimulate the domestic economy. Survey data for the second half of 2019 suggest that the Japanese economy has most likely entered a cyclical lull, although continued job creation and upbeat expectations provide a glimmer of hope."

The IHS Markit India Services Business Activity Index improved from 52.7 in November to 53.3 in December, highlighting the second-strongest rate of increase in output in over a year (behind July). Survey members linked the rise to better market conditions and new business growth.

Commenting on the latest survey results, Pollyanna de Lima, Principal Economist at IHS Markit:

"It's encouraging to see the Indian service sector continuing to recover from the subdued performances noted in September and October. More importantly, the news of sustained job creation, robust new order growth, and a pick-up in business confidence suggest that expansion can be maintained in the early part of 2020."

"Worryingly, however, were the survey's results for price indicators. While inflation was subdued in the earlier part of 2019, there were three consecutive accelerations in the rate of input cost inflation this quarter. Services firms saw the fastest rise in their expenses in almost seven years in December."

"With manufacturing sector weakness also fading in December, what was anticipated to be a disappointing private sector performance for the third quarter of fiscal year 2019/20 is now looking brighter. Growth looks set to be sustained, but at an unspectacular rate, with the latest quarterly PMI Composite Output Index reading broadly in line with that recorded in the three months to September."

The seasonally adjusted headline IHS Markit Hong Kong SAR Purchasing Managers' Index rose from 38.5 in November to 42.1 in December, signaling the slowest deterioration in the health of the private sector since July. However, the rate of deterioration remained sharp. With December data, the average PMI reading (40.0) for the fourth quarter is the lowest since the survey started 21 and a half years ago.

Commenting on the latest survey results, Bernard Aw, Principal Economist at IHS Markit:

"December PMI data showed Hong Kong's private sector economy finished off 2019 stuck in a severe downturn as businesses continued to struggle against the headwinds of a political crisis."

"The average PMI for the fourth quarter signaled that GDP had fallen by around 5%, indicating that the economic downturn had deepened during the closing quarter of the year."

"There are scant hopes of any imminent improvement as local political tensions failed to show any signs of easing into the new year. Business confidence continued to run at one of the lowest levels in the series history while new orders continued to fall sharply in December. Facing gloomy prospects, companies again made deep cuts to purchasing activity and inventories."

Earnings Observations

The official start to the 2019 Q4 earnings season begins next week when the major financial institutions report. Analysts are calling for flat to slightly lower numbers for the quarter.

FactSet research estimates an earnings decline for the S&P 500 at -1.5%.

Refinitiv research expects a decrease of -0.3%. Excluding the energy sector, the earnings growth estimate is 2.0%.

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The Political Scene

The dynamics of the US-Iran confrontation following the killing in Baghdad of Iranian Quds Force commander Qassem Soleimani in a U.S. drone strike indicates that the probability of an all-out shooting war between the two sides remains small. Due to economic sanctions, Iran is in shambles, and what is left of their country will be destroyed if the conflict escalates.

Many of the worst-case scenarios being discussed are premised on the assumption that the killing of Soleimani is evidence either that the U.S. administration has changed its policy and is now actively seeking an escalation of its confrontation with Tehran or that led by a capricious Donald Trump, the U.S. has no coherent policy towards Iran at all.

Perhaps the simple explanation offered is the correct one. Washington ordered the strike as a preemptive measure to avert planned attacks against U.S. personnel around the world.

The rhetoric will be ramped up adding uncertainty, creating fear, and doubt in the minds of investors. Here we are again. All last year we learned when it comes to the media and their interpretations containing opinions, proceed with caution.

I remain positioned in stocks with the notion that while there will be knee-jerk reaction over the Iranian difficulties. At the end of the day, it is not an issue that threatens the bull market trend. Iran may attempt to disrupt the global scene either militarily or in the cyber world. It has already done so, and there has been little impact. It simply has no leverage over the U.S. The economic sanctions that have been imposed have effectively neutered the country. That was the case before its general was killed and it remains the case today. In essence, nothing has changed.

U.S. House Speaker Nancy Pelosi said that the House will prepare to issue articles of impeachment against President Trump to the Senate next week after not securing any concessions on the Senate trial from the GOP. In a letter to House Democrats Speaker Pelosi wrote:

"I have asked Judiciary Committee Chairman Jerry Nadler to be prepared to bring to the floor next week a resolution to appoint managers and transmit articles of impeachment to the Senate, I will be consulting with you at our Tuesday House Democratic Caucus meeting on how we proceed further."

This situation continues to be a non-event for the markets.

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The Fed

In the last four months, the 10-year Treasury rate rallied off the low of 1.47%, reaching an interim high of 1.94%. The 10-year Treasury has now settled into a trading range, perhaps building a base for a run higher. On the flip side, traders that live in fear of a global recession suggest this is a pause before the bottom (1.47%) is tested again. The 10-year closed the week at 1.83%.

The three day 2/10 Treasury Yield Curve inversion that occurred last August is now in the rearview mirror.

Source: U.S. Dept. Of The Treasury

The 2-10 spread was 16 basis points at the start of 2019; it stands at 17 basis points today.

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Sentiment

Irrationally Exuberant? Bullish sentiment is below the historical weekly average.

The American Association of Individual Investors (AAII) reported bullish sentiment declined for the third week to 33.07% from 37.22%. Bearish sentiment jumped to the highest level in six weeks, rising to 29.89% from 21.88%. Those who are neutral on the future direction of the market saw a decline to 37% from 40.9%.

Crude Oil

After trading above the $60 level since mid-December, the price of WTI has retraced most of the recent gains and now trades under $60.

The Weekly inventory report revealed U.S. commercial crude oil inventories increased by 1.2 million barrels from the previous week. At 431.1 million barrels, U.S. crude oil inventories are at the five-year average for this time of year.

The big surprise, total motor gasoline inventories increased by 9.1 million barrels last week and are about 5% above the five-year average for this time of year.

WTI ran up on geopolitical fears, and when those fears didn't materialize, the price dropped. The price of WTI fell sharply, closing the trading week at $59.00, down $3.99. That completely wipes out the $2.65 gain from the previous week. Predicting the price of crude oil continues to be a wild guessing game.

The Technical Picture

During the S&P 500's entire consolidation phase from early 2018 right up until the breakout in Q4, one constant in the market was positive breadth. Coming out of every sell-off, the S&P 500's cumulative A/D line led prices higher. This positive trend continues as the NYSE advance-decline index posted yet another all-time high this past week.

While the primary focus for breadth is on the S&P 500, we also saw similar trends in both the Nasdaq and even the Russell 2000, where the cumulative A/D line hit new highs for the year in the waning days of 2019.

The DAILY chart of the S&P shows the index remains in a strong uptrend. I never like to entertain the idea of a pullback until we see the index break initial support at the very short-term moving average (green line).

Chart courtesy of FreeStockCharts.com

Once an index/stock breaks out of a trading range and multiple new highs are set, it becomes difficult to extrapolate how far the rally can go. The notion that an individual can select the exact time to pull in the reins and change positioning with hedging strategies is sheer noise. The daily chart clearly shows how many times that could have been (and probably was) done during the last 200 S&P point rally. Each and every time it was a losing proposition.

No need to guess what may occur; instead it will be important to concentrate on the short-term pivots that are meaningful. However, the Long Term view, the view from 30,000 feet, is the only way to make successful decisions. These details are available in my daily updates to subscribers.

Short-term views are presented to give market participants a feel for the current situation. It should be noted that strategic investment decisions should NOT be based on any short term view. These views contain a lot of noise and will lead an investor into whipsaw action that tends to detract from the overall performance.

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Market Skeptics

There are plenty of pundits that like to make a "splash" by creating a big headline when it comes to the markets. There are none bigger than bond guru Jeff Gundlach. However, when it comes to actually following his advice, one may find themselves left out in the cold.

Beware of geniuses selling agendas.

Looking at the investment landscape, plenty of analysts and investors are cautious after 2019 posted a 29+% gain. More new highs are forged in the first few days of 2020, and now comes the typical nervous reaction. Human nature takes over and says the market run is way overdue for a pullback. The problem is trying to make a 'call' on the timing of that event is not only frustrating, but it is also costly. A case could have been made for a pause in the rally back in early December and every day thereafter.

However as time marches on and new highs are made, it leaves some to now suggest that the real drama for equity markets is likely to come sooner than many currently expect. The "market is too complacent" is the highlight of the Bear dreams. Sometimes I sit and wonder how they come up with these wild observations. The problem with that theory is according to them and the cult that follows the VIX index, the S&P has been "complacent" since the rally started last October. The VIX was 13 on October 15th, it's 12.5 today. Selling because of "complacency" back then would have been a poor strategy. Another example of trying to be a genius and outsmart the stock market.

There is an old market saying, "Buy the rumor. Sell the fact." The recent gains in the stock market, the spikes in both consumer and business confidence reflect the "rumor" part of this old adage. So the general observation as we started to close out last year saw the first phase of the trade negotiations over, and the positive confidence data in the rearview mirror.

The skeptics concluded it must be time to sell and look for where we can park all of the cash we just raised. So far that hasn't worked. Unless that investor can tell me when it's time to roll that money back into equities, there is a high probability that turns out to be losing strategy. Remember with all the "noise" last year, the largest drawdown was 7%.

For those that may want to then make a case that a large pullback is "overdue" consider 2017 when the best the bears got was a 3% drawdown. Trying to pick a time to put money back to work didn't materialize. No one knows for sure whether that can happen again, but the angst associated with trying to make those decisions usually leads to more mistakes.

Last week's geopolitical issue will prompt cries that the Iranian overhang remains in place, and we could all wake up to a 50 point drop in the S&P because of an "incident". Of course, that is a possibility. There is also a possibility an overnight drop of 40 S&P points in the futures market turns out to be a 16 point gain with a new intraday high posted in the process. Get the point? No one can prepare for either. If one believes they have to be ultra-cautious because Iran exists, they should not be invested in stocks.

The folks that continue to pound the message there is a wild unacceptable risk to owning equities now need to move on and sell their snake oil somewhere else.

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Whether an investor wants to believe it or not, this is a Secular Bull market. However, not even the staunchest of bulls are looking for an easy path to more new highs. At some point, we will be standing at the first waypoint of undoubtedly many bumps in the road to further improvements in the global economy and higher stock prices.

But do not get discouraged when those bumps materialize. There are abundant signs that economic activity is picking up, inflation is tame, the Fed is out of the picture.

An investor can focus on the risks, play around with the many theories, strategies, and ideas that are enticing, and sound like they will work. Most of the time they don't, and in fact fail miserably because they have an investor chasing their tail. Keeping it simple, following the obvious, and listening to the message of the market will outshine most strategies.

The S&P closed the week at 3,265. To those that chastised my bullish outlook back in 2019, please remember you were warned this was going to occur.

For those that remained bullish, you are in the pilot's seat.

I plan to stay the course.

I would also like to take a moment and remind all of the readers of an important issue. In these types of forums, readers bring a host of situations and variables to the table when visiting these articles. Therefore it is impossible to pinpoint what may be right for each situation. Please keep that in mind when forming your investment strategy.

Thank you #2.jpg to all of the readers that contribute to this forum to make these articles a better experience for everyone.

Best of Luck to Everyone!

Disclosure: I am/we are long EVERY STOCK/ETF IN THE SAVVY PLAYBOOK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: My portfolios are ALL positioned to take advantage of the bull market with NO hedges in place.

This article contains my views of the equity market, it reflects the strategy and positioning that is comfortable for me. Of course, it is not suited for everyone, as there are far too many variables. Hopefully it sparks ideas, adds some common sense to the intricate investing process, and makes investors feel more calm, putting them in control.

The opinions rendered here, are just that – opinions – and along with positions can change at any time.

As always I encourage readers to use common sense when it comes to managing any ideas that I decide to share with the community. Nowhere is it implied that any stock should be bought and put away until you die. Periodic reviews are mandatory to adjust to changes in the macro backdrop that will take place over time.