The S&P 500 started the year on a positive note, and then it pulled back in February and early March. Now, a positive tone is returning to the market, and stocks are ticking higher in a stealthy fashion.
All this is happening in the face of a supposedly slowing economy, weaker real estate prices, and high oil prices. I can only read into this situation that institutional investors still want to buy stocks in this market. Even though the environment is fairly lackluster and no one expects big returns from the main market indices, there really isn’t anywhere else for investors to put their money.
Perhaps people are afraid of spending a lot in the real estate market. People with money to invest may be returning to the stock market because there isn’t anything else to consider. In any case, the stock market is improving right now.
Contributing to the current environment for stocks is stability in Asian stock markets. Of course, anything can happen to China stocks, but the recent volatility seems to have abated for now. As things can change in lightning speed, owners of China stocks have to be careful with their holdings. Maintaining moving stop limits is crucial to managing risk with these securities.
Here we are in between earnings seasons, and the stock market is ticking higher. I didn’t think this would be the case. We’ll see if it lasts over the next few weeks. If it does, I think this would represent a really strong signal about the health of the equity market. We may just be surprised yet at how well stocks can perform this year.