Missing Out from the recent RALLY on EQUITIES?

What Investors Need to Watch for:

US STOCK OUTFLOWS into US Bonds worth USD1.1T in the last 6 months a +9.2% increase as demand rises from the Fed unwinds its massive bond portfolio while investors seeking refuge from the trade war jitters that would cause a major selloff in stock market prices. The shift can only be watched with some probable regrets as markets stock prices continue its northward direction.

On the other hand, the market can see a wide disparity between the SP500 dividend yield at 1.9% compared with US 10-year and 2-year US Treasury yields at 2.97% & 2.65% respectively, thus seeing a justfied move for such decisions made mid-year as described on the chart and data source until June 2018 from Morning star. The recent rise on the major indices would at least narrow the wide percentage differential which may well continue into the coming weeks moving forward.

Robust earnings beating market expectations have lifted US Equities to record levels from the recent rally. And to top it all, the recently concluded US-EU trade talks where both parties have found some common ground that could even leave room for selective-free tariff goods; have provided a stronger catalyst that lifted stock prices. This clearly shows how well the US & EU team up can draw the ire of China more than ever.

Of course with the exception on Facebook untimely disclosure of its revenue deceleration could not averted its stock price to drop more than 20%. Although, Facebook issues can still be considered an isolated case from the overall market sentiments. But have left the market quite mix in today's US session. With both NASDAQ & SP500 on the defensive of a corrective move. Currently NASDAQ at 7859.49 -74.69, SP500 at 2839.54 -7.04 compared with the DOW30 at 25559.77 up by 145.87 and the RUSSELL 2000 at 1685.29 as of this writing.

The market's behavior is closely being monitored with the above issues being well considered as the overall direction to the upside can still be sidelined with some misdirections that can lead toward market uncertainty. This is what we term as hiccup, as major hedge funds have already felt investors outflow from stocks to more passive bonds market. For now, the focus is on the ECB maintaining its stance towards its monetary flexibility with President Mario Draghi's Q&A on his press conference would be closely watched.