The Word from Main Street

Market Update for the Week of September 20, 2021

Like many who may have looked at financial media outlets over the past week, you may have seen articles referring to the S&P 500 Index ‘fighting’ to stay above a short-term line in the sand for bullish momentum – the 50-day moving average. Most of these articles touched on the fact that following recent market action, the S&P 500 Index was struggling to stay above the 50-day moving average as trading action saw the index move as low as $4435 before closing at $4443, roughly 14 points above the 50-day moving average of $4429. While initially this may seem like doom and gloom, it's worth taking that info and pondering when the last time the index fell below its 50-day moving average. Well, it wasn’t that long ago – June 18th of this year in fact. We also witnessed the index get close to its 50-day moving average on July 19th as well as May 12th and the index has closed below the 50-day moving average on three other occasions this year prior to the June 18th close – March 8th, March 3rd thru 5th, and January 29th (source: Nasdaq Dorsey Wright). Additionally, with last Wednesday’s action, the chart of the S&P 500 reversed back into X’s to $4470, further distancing itself from the 50-day moving average. In other words, the index closing below the 50-day moving average is noteworthy, but it's not quite the “run for the hills” connotation that articles out on the internet may make it out to be.

For most technical analysts, the 150-day and 200-day moving averages are going to be the go-to for understanding whether we are seeing weakness out of a particular stock, fund, or index. As of market close on September 16th, 2021, the S&P 500 closed roughly 271 points above its 150-day moving average and 383 points above its 200-day moving average (source: Nasdaq Dorsey Wright). So, while the index went through a rough period over the past couple of weeks, it has still held above its short-term moving average and well above its longer-term moving averages. We believe this recent action is likely more of an exhale after a strong few weeks during which the index seemed to have a couple of trading days a week marking new all-time highs.

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Source: Nasdaq Dorsey Wright

Shifting to the economy, below is the most rcent Recovery Tracker from First Trust Advisors that shows the 2019 level, month-over-month (MOM), and week-over-week (WOW) comparisons of high frequency economic data.

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Source: First Trust Advisors

Below are the graphs and information from the most recent COVID-19 tracker. With the Delta variant on everyone's mind as cases rise again, we are hearing more about school closings, mask mandates, potential shutdowns, vaccine mandates, vaccine effectiveness, and the list goes on and on. The vaccines have clearly led to a lower overall level of deaths during this recent wave of Delta variant cases and that represents considerable progress. There are still many questions out there, and it's important to follow the data closely.

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Source: First Trust Advisors

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Source: First Trust Advisors

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Source: First Trust Advisors

 9-20 Epi_s.jpg

Source: First Trust Advisors

 


Source: First Trust Advisors

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Source: First Trust Advisors

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Source: First Trust Advisors

Looking back over the past year, an August 20th – 22nd, 2021 Scott Rasmussen national survey found that 57% of voters believe that shutting down businesses and locking down society did more harm than good. 75% of Republicans believed it did more harm than good while only 43% of Democrats felt that way (source: scottrasmussen.com). A cross-sectional study that included 1,443,519 blood donation specimens from a catchment area representing 74% of the U.S. population estimated SARS-CoV-2 seroprevalence (weighted for differences between the study sample and general population) increased from 3.5% in July 2020 to 20.2% for infection-induced antibodies and 83.3% for combined infection- and vaccine-induced antibodies in May 2021 (source: jamanetwork.com September 2nd, 2021).

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