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Markets Facing Resistance Near All-Time Highs: Market Commentary from Cabana’s CFO – June 10, 2021

4 years ago

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I hope everyone’s week is off to a great start. With our CEO Chadd Mason on vacation this week, we wanted to provide a brief mid-week update on the markets and economy.

The first three trading days of this week show the S&P 500 once again facing strong resistance at its all-time high. Additionally, the yield on the 10-year Treasury Note, which sets rates on everything from mortgages to corporate debt, has continued to decline and is trading intra-day below 1.50% for the first time in over a month. There are a myriad of issues that could lead to this decline – from inflation concerns and jobs numbers (most recent numbers were not quite as good as anticipated) to a weaker dollar. With that said, it will be important to see if rates continue to be pushed lower. As mentioned previously, the bond market and yields are often a leading indicator of what lies ahead for the overall stock market. If yields continue to come down, or simply maintain these levels, that is likely a good sign for the market.

One of the key indicators that forecasters will look to is the ISM Manufacturing Index, also known as the Purchasing Managers Index (PMI). This index is an important measure of overall U.S. activity. The PMI for May 2021 came in at 62.1, which is the highest level that the index has touched in 14 years and up over 40% from this same time last year. This number signals a strong expansion of the manufacturing economy and high demand. The only negative we see at the moment related to this high level of demand would be supply issues that currently exist. The supply simply cannot keep up with the demand at this point. With that said, overall, this is a strong number and shows that the economy has certainly heated up.

So, million-dollar question – where does all this data/information leave us? Well, one can make a compelling argument that equities are well positioned, the economy is strong and that we are well on our way to recovering from the pandemic.

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January 17, 2024

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of Cabana. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

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All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

Morningstar’s Moderate Target Risk index  follows a moderate equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company.  

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The S&P 500 Index is a market-capitalization weighted stock market index of 500 widely held large-cap stocks often used as a proxy for the U.S. stock market.  

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The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq