Institutional Investor

Portfolio Perspective: U.S. Equities Are Positive for Now

John Kosar, Asbury Research

This week our table shifts to a more equally balanced, neutral distribution of key near-term U.S. stock market factors from a positive one for the previous two weeks. The market started off the week in a bullish near-term environment stemming from the positive one-month rate of change in the S&P 500 amid strong, positive exchange-traded fund asset flows, low volatility and the recent 2 percent rise in the Nasdaq 100 above its 4,147 benchmark high hit in September 2000. Moreover, the latest investor sentiment data suggest that the mid-October advance is not yet over.

There are some headwinds to be aware of, however, such as widening corporate bond spreads and continued weakness in a positively correlated German DAX. Our research suggests that it would currently take a decline below 2,000 in the S&P 500 — a 2 percent drop from Friday’s close — to put enough long positions into the red to trigger a correction.

John Kosar is the director of research at Schaumburg, Illinois-based financial information services provider Asbury Research.

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