Last 3 months

I Apologize for the long absence, as a result i would like to recap the last three months in the S&P 500. I have also decided that this blog needs structure, I will post a weekly recap and outlook moving forward.


Recent Three Month History

October 2011 was a very bullish month for the Index. The index began the month at 1131.21 points and finished the month at 1253.30 points, with a high of 1292.66 and a low of 1074.77 for a month over month return of just over 10%. This marked the largest percentage gain on the index for the year 2011 after being at its yearly low (1074.77) at the start of the month. Part of the catalyst for the October rally was an agreement to boost the European region’s rescue fund to one trillion Euros. The rally was also partially spurred by an agreement to write down 50 percent on Greek debt. Finally, U.S economic indicators showed that the economy expanded in the third quarter at the fastest pace in a year, this eased concerns about a potential double dip recession, the growth trickled down into individual equities: as three-quarters of companies that reported third quarter results beat analyst estimates and on aggregate increased sales by 11 percent.

November 2011 was a month that began with some volatility; it was followed by a bearish decline in the index during the middle of the month. The index rebounded nicely into the end of November effectively recovering all the losses incurred in the month. In November 2011 the S&P 500 opened at 1251.00 and closed at 1246.96, with a high at 1277.55 and a low of 1158.66 for a month over month return of (-0.32%). To start off the month Investors were skeptical about Greeks ability to meet austerity measures necessary for a recovery, this skepticism was brought on by a call for a referendum on the debt crisis. The market rallied on positive economic data from the U.S soon after, but quickly pulled back due to more uncertainty in Greece. These uncertainties about Greece lead investors to fear about contagion in the European region, however, fears were mitigated by positive earnings reports as well as positive news from Greece and Italy; this fueled the volatility moving into the month of November. In the Middle of the month the fear of contagion resurfaced coupled with weaker readings on economic growth a bearish drop in the Index begun. On November 28th U.S retailers announces record breaking sales over the thanks giving weekend which sparked the rally going into the end of the month. Major central banks announced coordinated actions to provide liquidity to the global financial system, they also agreed to reduce interest rates for struggling European banks to put investors at ease.

December 2011 did not bring much change. The index started the month at 1246.91 and ended the month at 1257.60, the high was 1269.37 and a low of 1202.37. The last month of the year garnered a 0.85% return. In December Standard and Poor’s warned investors about an impending downgrade for the Euro-zone credit rating, this bad news was mitigated by news that the EU would discuss increasing the region’s debt rescue fund. Although the U.S Federal reserve assured Investors that the United States economy has been growing modestly, investors feared that there was no stimulus measures to offset a worsening European debt crisis. Signs of improving economic conditions in Germany and the United States in the form of increasing GDP and reducing jobless claims coupled with reducing yields on Spanish bonds sparked a late December rally. Investors felt optimistic about 2012 which caused a “Santa Claus” rally into the end of the year.

Thus far January has been a bullish month for the S&P 500. The index opened at 1258.86 and has rallied to 1315.38 for a 4% gain. Indicators point to a growing economy in the United States. This year there has been a reduced amount of jobless claims, which signifies an expanding economy. The rally was reinforced with positive news in Europe with regards to their bond auctions. January also marked the beginning of Q4 earning season. Other major events in the month include a downgrade of French credit rating, this downgrade instilled fear in investors as France is believed to be one of the strongest economies in the EU. The most recent news out of Europe has brought hope to investors; the IMF will raise additional funds to help combat Europe’s debt crisis. This bit of great news assisted a continued bullish rally in January.