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Q2 Observations From Baseball to the Markets, Here’s Our Take .

DWA quarterly observations about the market through a technical lens

Q2 Observations From Baseball to the Markets, Here’s Our Take

By Nasdaq Dorsey Wright /

Spring is in full swing and with it so is the great American pastime of baseball! We are only a few weeks into the 2017 season, and yet already predictions have been made on which teams will head to the World Series in October.

Professional baseball is nothing short of a marathon, with each team playing 162 games during the regular season. That comes out to more than 2,000 match ups! With so many variables in play, there is absolutely no way that even the “experts” can determine with any degree of certainty which team will be crowned the World Series champion this early in the game. It may makes for good TV, and some entertaining reads; but our guess is most people would not attempt to pick the winner at the beginning of the season. Introduce any significant financial bets into the picture, and willing participants would further dwindle. After all, what if the star player gets hurt? What if the brilliant rookie prospect turns out to be a bust? You’d be stuck riding that selection into the sunset.

Why then, would it make sense to invest your money that way? Market predictions are always abundant, no matter how good or bad things look. Yet we know how quickly and how much things can change from one year to the next. We need not look further than just one year ago. 2016 began with a sharp sell-off (to the tune of 13%) in the S&P 500 Index, and the bears cautioned that the structural bull market had come to an end. Five months later, the market was at new all-time highs and 2016 ultimately went down in the history books as a double-digit year for many major market benchmarks. This is just one of many historical examples proving the importance of having a logical, organized game plan for navigating the markets that allows us to adapt to changing environments.

As we move ahead in Q2 of 2017, below are some important observations about the current market landscape:

US Equities remain the strongest of the asset classes we monitor, and continue to present attractive opportunities. Leadership is particularly strong within the Technology, Financial, and Healthcare sectors. Meanwhile, the Energy sector continues to face selling pressure at this time.

International stocks have been the most improved asset class so far in 2017, and continue to support additional upside potential from here. Emerging Markets remains favored or Developed Markets with most demand found in Latin America and the Asia-Pacific region.

And there’s the Fixed Income market. After witnessing a spike in interest rates at the end of last year, Q1 provided a mostly stable environment. Due to the inverse relationship between bond prices and rates, if we see rates move lower, bond prices would benefit. Meanwhile a continued increase in rates would adversely affect bond prices.


Disclosures:

The information contained herein has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any recommendation (express or implied) or information in this material without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources believed to be reliable (“information providers”). However, such information has not been verified by Dorsey, Wright & Associates, LLC (DWA) or the information provider and DWA and the information providers make no representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein. DWA and the information provider accept no liability to the recipient whatsoever whether in contract, in tort, for negligence, or otherwise for any direct, indirect, consequential, or special loss of any kind arising out of the use of this document or its contents or of the recipient relying on any such recommendation or information (except insofar as any statutory liability cannot be excluded). Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice. Neither the information nor any opinion expressed shall constitute an offer to sell or a solicitation or an offer to buy any securities, commodities or exchange traded products. This document does not purport to be complete description of the securities or commodities, markets or developments to which reference is made.

Potential for profits is accompanied by possibility of loss.

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