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Weekly Economic and Stock Market Commentary – June 1, 2021


Weekly Economic and Stock Market Commentary – June 1, 2021

As for the stock market specifically:

The major market averages ended May and the week with strong gains. Each of the market numbers listed in the table rose by at least a percentage point, and the Nasdaq Composite went up more than 2 points for the week.

Last week really was led the small company stocks.

As you know, I don’t comment on individual holdings here, so you will either have to call me or simply take my word that small company holdings, small company growth, in particular, had a strong week.

We will start the week near record levels for the S & P 500, and Dow Jones Industrial Average. The Nasdaq composite starts within 4% of its all-time high.

Given the bullish percent, indicators made multiple direction changes in the past 3 months, the better strategy is to make decisions based upon what is happening with the particular holding. There will be a time when a general “sell across the board” strategy may be in order, but that is not now.

There was one change last week that is notable. The OTC Bullish Percent Index went to offense. The NYSE and Optionable market areas remain in Os but are close to changing direction in a good way, too.  I will keep with the recommendation of WEALTH PRESERVATION at this point.

Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of May 28, 2021 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Commerce reported April Consumer Spending numbers. Consumer spending rose by 0.5% during April despite a decline of 13.1% of household income during the month. The income decline number is the largest on record. There wasn’t much detail in the story that came to me, but services spending rose 1.1%, while spending on “things” fell 0.6%.

The S & P CoreLogic Case-Schiller National Home Price Index came out last week. At the end of March, home prices rose 13.8% on a year-over-year basis. That is the highest price increase rate since December 2005. The report that I have did not mention an average sales price. However, in a couple of related reports, The Commerce Department stated the average price of new homes sold in April was $372,400. A separate report by the National Association of Realtors told us existing home prices in April rose an astounding 19.1% in April. The median sales price was 341,600.

Finally, the President released the federal budget for fiscal 2022. The plan is to spend two tons of money more than previously and raise taxes by a ton-and-a-half. The budget also calls for ending the existing tax code at the end of 2024 and revert to the tax code that existed at the end of 2016. That will increase taxes on those earning less than $400,000 (sorry about that).

Questions about this Weekly Economic and Stock Market Commentary – June 1, 2021? Call (973) 538-7030 or email philip.rongo@ibexwealth.com.