SPX Had a Record Week
Ryan Detrick, a Chief market strategist and a senior vice president of FINRA, believes that the past week has been incredibly good for the stock market. The S&P 500 index, one of the indicators of the US economy, which includes the 500 largest companies in terms of capitalization from different sectors, grew for the period of all five days.
The index rose from 3418 pt. on Monday to 3508 pt. on Friday. According to Mr. Detrick, last time such trend was observed were in 2017 and 1998.
5 Months of Consecutive Growth
He also believes that the August results can already be calculated. If there are no significant changes on Monday, then this month will bring about 7% growth. This, in turn, will mean that the index has been growing for five months in a row. The analyst thinks further growth could be anticipated: the historical data shows that the "green" spring and summer months lead to further strong market growth in the fall and winter.
"The S&P 500 will likely be up in August (up 7% with a day to go). This means it will be green in April, May, June, July, and August. What has happened next? Other than the Fed policy mistake of December '18, significant strength is the answer." Ryan Detrick via Twitter
Mr. Detrick notes that 2018 was out of statistics, which, in his opinion, is due to the erroneous policy of the Federal Reserve. In the winter of 2018, the Fed lifted the key interest rate by 0.25%, to a target range of 2.25% -2.5%. This caused a decline in the S&P 500 Index, which had previously shown growth.
Volatility Is Growing With the Market
Despite the positive forecasts, a disturbing fact should be noted. Earlier it was reported that the VIX, the volatility index, has been growing along with the market in the past few days. This behavior is abnormal and it usually precedes abrupt and dramatic trend changes. In this case, a trend change may result in the end of the bullish rally.
The same is observed in the relationship between the Nasdaq 100 Index and VXN, the volatility index for it, both have recently been growing, according to The Market Ear: