Top Advisors Corner

Years Ending In 7

 Everyone knows about annual seasonality, and has heard of “Sell in May and go away”.  That slogan persists even though actual seasonal strength typically peaks in August, but nothing good rhymes with August.  There is also a strong tendency of the market to show regular patterns on a 10-year basis, now known as the Decennial Pattern.  And years ending in the number 7 have an ugly surprise for the bulls. 

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Mary Ellen McGonagle: EMERGING MARKETS CONTINUE TO SHINE WHILE THE U.S. STALLS ; Opportunities Outside U.S. Can Bolster Your Returns

While the U.S. markets have seen reduced breadth and increased volatility over the last month, there are pockets of strength overseas that are worth investigating.

But first, let’s recap the recent action in the U.S. to highlight why it makes sense to broaden your exposure to other markets.  

My work shows that strong earnings are the primary driver of a stocks upward move so we’ll begin with a review of 2nd quarter earnings for this year where strong earnings reports were met with selling.

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David Keller: Comparing Corrections

When the market enters a corrective pattern, I like to compare the current move to previous corrections.  I’ve written before about how corrections can make you feel, but in this case let’s remove the emotion and simply review the facts.  Here we’ll consider cap tier performance as well as breadth analysis to put this correction into proper context.

Back on May 10th, I wrote about the divergence between large cap stocks and mid and small cap indexes, and included this chart to illustrate the point.

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