Quote of the Week

“Moral courage is a rarer commodity than bravery in battle.”  – Robert Kennedy

Technical Corner

The markets have sold off the last two weeks being led by the high-flying tech stocks that have driven the market to new highs this year. I am going to be lazy this week and use the research of two market strategists I have followed.

Keith McCullough, the head of Hedgeye, which is the company we use for our investment analysis, just stated that “the bubble” has already popped. He uses the analogy of an avalanche. Everything looks good on the surface, but underneath the snow is collapsing, then all of a sudden, the snow comes down the mountain. He has been through the 2000-2002 and the 2008-2009 crashes.

The other annalist that I have great respect for is Ned Davis Research. I will quote what he just said today.

“The S&P 500 could fall by another 15-20% in the coming weeks, and although it will recover, it is unlikely to rise much beyond current levels, suggesting that a top may be in place.

The index has hit record highs this month, in a year of volatile trading, driven by technology stocks, and it is this sector that is likely to fuel any steep declines.

The average change in the S&P 500 over the last 100 days is +1%, and that tends to be consistent with sharper moods in the market. The S&P 500 is down almost 4% over the prior two weeks.

The VIX volatility index which tracks the volatility of options on the S&P 500, hit a three month high on September 3rd at 33.60. While it is down 16% in the last week, the VIX has risen almost 27% in the previous month, indicating heightened investor nervousness.

Tech stocks, as reflected by the Nasdaq, have fallen by 10% since hitting a record earlier this month. Some of these stocks have had pretty significant declines, so they may continue to weigh the market down. You may start to see the broader indexes decline as well”.

The S&P 500 index has risen around 50% since touching coronavirus lows in March, helped by a boom in tech stocks and rock bottom interest rates. Ned Davis feels many stocks are still priced far more optimistically than they should be, given the backdrop of an economy still technically in recession and millions out of work.


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These are the opinions of Larry Lof and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 is an index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the US economy. Indices mentioned are unmanaged and cannot be invested into directly.

Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.

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