Tuesday, July 16, 2019

Finance Trends 2019 Mid-Year Markets Review

Email subscribers of the Finance Trends Newsletter receive the first look at new articles and market updates, such as the following piece, sent out to our email list on Sunday (6/14).
 
Hello and welcome, everyone!

If you received our last email notice over the July 4th holiday, you'll know that this weekend's newsletter will serve as a mid-year market update and a follow-up to issue #29, "How to Reinvest in a Rising Market".

 

Ladies and gentlemen, without further ado, let's start the show... 

Finance Trends Newsletter: Our Mid-Year Market Review

When we last spoke, back in February, the U.S. stock market was rallying off its December-January lows.

As the S&P 500 and Nasdaq reclaimed their 200 day moving averages in February and March, it became increasingly apparent that a lot of retail investors (and perhaps some institutional investors) were left under-invested while watching this recovery move from the sidelines. 

The U.S. stock market has moved steadily higher throughout the first half of 2019. However, this steady advance has not come without its share of volatility, "chop", and a backdrop of unwelcome news and political developments.  


Now if you know me pretty well in person, you'll know that I tend to steer well clear of most so-called "news" and politics (in fact, I had to remind an old buddy of that stance earlier this morning over a text message re: Trump).

So I won't take this space up rehashing and analyzing all the stuff you might have heard regarding trade wars, China, the latest political scandals in the U.S., and who or what Kylie Jenner may, or may not, have done yesterday.


Instead, let's move straight to the charts and the data to find out what's really going on inside the capital markets. 

Chart Review: US and Global Indices and ETFs

We'll start with SPY, the SPDRs S&P 500 ETF.

After 2018's year-end decline, this dominant index ETF has climbed well off its January lows (a 50+ point move) and closed this week at a new all-time high just over 300. The S&P 500 index (underlying) now sits at 3,013.

SPY S&P 500 ETF ETFs chart stock charts

Not to be outdone, Nasdaq ETF, QQQ has climbed 25% year-to-date (finviz data).

Strong showing from the tech-heavy ETF whose major holdings include Microsoft (MSFT), Apple (AAPL), Cisco (CSCO), Intel (INTC), and Adobe (ADBE).

QQQ Nasdaq 100 ETF chart stock charts 


Lagging behind, the Russell 2000 ETF IWM has turned in a positive first half of the year (up 16% YTD), but has struggled to keep up with the relentless strength of the S&P and Nasdaq.

IWM Russell 2000 small cap ETF chart stocks ETFs
 

Moving to the international side, China's A-share ETF ASHR has performed quite well this year.

ASHR is up over 26% YTD, easily outpacing the China Large Cap ETF, FXI, which is up 8% YTD.

ASHR China A-Shares ETF chart stocks ETFs

While the giant iShares Emerging Markets ETF, EEM is up almost 10% YTD, it has been similarly outpaced by the recovering Frontier Markets ETF, FM, up 16% YTD (chart below).

FM Frontier Markets ETF chart stocks funds charts invest

Finally, the iShares ACWI ETF, which tracks shares in the world's developed and emerging markets, is up nearly 17% year-to-date. This ETF has yet to reach its former highs above $77.50.

ACWI ishares MSCI ACWI ETF world global stock index chart


Chart Review: Stocks in Focus

Here is a quick review of 10 stocks highlighted in our last newsletter (issue #29).

You can view the updated charts of these 10 stocks: ACIA, APPF, CHGG, CRON, FTNT, HMI, LSCC, TTD, XLNX, and YETI, below.








To scroll through a view of their individual larger charts on finviz just click this link.

I personally traded several of these names (as well as major index ETFs like QQQ) in the first half of the year. Some proved profitable, some left me in the dust with losses or evaporated gains.

While most of these stock charts have gone on to show gains for the year-to-date, it hasn't always been a day at the beach trading them. I suspect that those who purchased shares early in 2019 and held through earnings, volatility, and noise (aka "news") were among the patient few who fared best.

Many of the stocks in that short list have gone on to gain 40%-70% YTD. A few stocks, like LSCC, have even doubled (100%).

Still, if your initial entries were rather late, or you were shaken out (stopped out) of some of these winning stocks and failed to re-enter them quickly (as was my experience with one eventual big winner, APPF) you failed to see real results on your bottom line.

Trading and real-world investing can be very tough. It's not all Lambos and pool-side trading from Italian villas and profit screenshots ("is that your real brokerage account or a demo account?") like you see everyday on social media. That is pure marketing and hype.

Yes, I have enjoyed profitable trades in stocks like YETI and FTNT (and some others I won't bother to name here) over the last year. But there have also been some frustrating periods of losses and times where it was imperative to switch to cash and "play defense".

I have talked with (and read the updates of) several other experienced traders, and the general consensus is that this has not really been an "easy dollar" market. Despite the upward climb in the major averages this year, it has often been a grind for many market participants.

Let's not forget how many people were continually doubting the U.S. market rally as it climbed (and chopped) its way back to new highs. Disbelief led many to stay under-invested as stocks moved higher in 2019.

How to improve our results in the back half of 2019 and beyond? That will be a subject of personal reflection and study... and probably a subject for future letters. Stay tuned.

The Shape of Markets / Finance to Come

One final note before I hit "send". There has been a rush of developments in the cryptocurrency space in recent weeks. We've all heard about the booms and busts in the prices of Bitcoin (BTC) and "altcoins" like Ether (ETH) and Ripple (XRP).

But what about the blockchains and distributed ledger innovations underlying these digital tokens? Is there a real use for these crypto assets or is it all just "solutions in search of problems" and empty hype, as some would have it?

What about Facebook and their recently announced digital currency, Libra? Will it displace leading cryptocurrencies like Bitcoin or overturn fiat currency standards across the globe?

It's a huge subject, and one that will require further research (not to mention added space for discussion). While it's too much to address in this week's letter, I will be providing further news and insights into this giant and important topic in our future issues. Look for more updates starting in August.  Thanks for reading, and enjoy your Sunday evening!

I'll be taking some time off and traveling over the next few weeks. Have a great July and take advantage of the summer weather as much as you can. It always goes by so quickly (unlike our Northern winters).

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