At the close of trading on Friday, 06/23/2017, the S&P500 ($SPX), which at this point in time actually represents 505 of the largest companies in the US, settled at a value of 2,438 or at roughly the same value that it was in the beginning of June (2,415).  This means that during the course of the 17 trading days that we’ve had so far in the month of June the index has averaged a gain of only 1.35/day.  Despite this relatively sideways movement there has been seeing some very interesting rotation amongst the sector and sub-sector constituents of the S&P500.  For instance the iShares Nasdaq Biotech ETF ($IBB), one of MSCM’s Sector Rotation current holdings, rose nearly 9% last week thanks in part to the Senate unveiling a healthcare plan that is expected to reduce regulation in both the healthcare and pharmaceutical arena.  This was in addition to a handful of companies receiving key FDA approvals amongst the ETF’s top 10 holdings.  

Technology on the rise

a small number of companies, including these giants, make up 1/3 of the funds overall holding

We also saw a modest rebound in the technology sector as it continued to retrace its losses from earlier in the month.  Year-to-date (YTD) the Powershares NASDAQ ETF ($QQQ), one of the current holdings in our Core ETF model, is up 19.8% thru Friday’s close.  This rally in tech has been led by a very small number of constituents that make up roughly one-third of the funds overall holdings.  These companies are Facebook ($FB), Amazon ($AMZN), Netflix ($NFLX), Alphabet ($GOOGL), and Microsoft ($MSFT) all of which are up between 15%-35% YTD.

One might think that this would be enough to continue to propel the market to higher highs.  However, the S&P500 isn’t without its headwinds.  For instance we are continuing to see the yield curve flatten, something economists use to try and predict recessions.  The 10yr US treasury yields finished Friday at 2.14% while the 30yr treasury is less than 60 basis points higher at 2.71%.  These lower yields, combined with a lack of sustained volatility and the potential that the Fed might not be able to raise rates as quickly as they would hope, have caused the financial sector to significantly under-perform the broader markets, finishing up only 3.5% as of Friday’s close.  Couple this with a year-to-date decrease of 20% in the price of light sweet crude oil causing the energy composite to lose more than 13% and one quickly realizes that we need to see some firming up of some key sectors for the S&P500 to continue to march higher. 

While we don’t currently see a significant market drop or economic recession on the horizon, as tactical asset managers we have a well-developed plan in place, should a market drop catch us by surprise.  

If you would like to learn more about how we can help you participate in the markets while striving to protect your assets in the event of a downturn please attend one of our upcoming seminars or reach out to us directly

Major Earnings for the Upcoming Week (tickers are listed with a “$” preceding them)


Pre-Market:  Darden Restaurants Inc ($DRI)

After Close:  KB Homes ($KBH)


Pre–Market:  General Mills ($GIS), Monsanto ($MON), Paychex Inc. ($PAYX)

After Close:  Pier 1 Imports ($PIR)


Pre-Market:  ConAgra Holdings ($CAG), Constellation Brands ($STZ), McCormick and Co. ($MKC), Walgreens ($WBA)

After Close:  Micron ($MU), Nike ($NKE)

Economic Releases (6/26– 6/30):


7:30 am CT – Durable Goods orders

7:30 am CT – Chicago Fed National Activity index

9:30 am CT – Dallas Fed Mfg. survey                              


7:15 am CT – S&P Case-Shiller Home Price Index

9:00 am CT – Consumer Confidence

9:00 am CT – Richmond Fed Mfg. index

10:15 am CT – Fed’s Harker Speaks


6:00 am CT – MBA Mortgage Applications

7:30 am CT – International Trade in Goods

9:00 am CT – Pending Home Sales

9:30 am CT – Oil Inventories


7:30 am CT – Weekly Jobless Claims

7:30 am CT – GDP

9:30 am CT – Natural Gas Inventories

12:00 pm CT – Fed’s Bullard Speaks


7:30 am CT – Personal Income and Outlays

8:45 am CT – Chicago PMI

9:00 am CT – Consumer Sentiment

12:00 pm CT – Baker Hughes Rig Count

Disclaimers and Disclosures

Investing Risks:  The risk of loss from investing in securities (stocks, ETFs, mutual funds, etc.), bonds, options, futures, and forex or related products, can be substantial.  Investors must consider all relevant risk factors, including their own personal financial situation, before investing.  

Investments in bonds and fixed income products are subject to various risks (including liquidity, interest rate, financial, and inflation risks) and special tax liabilities.  

Options Risks:  Options involve risk and are not suitable for everyone.  Options Trading privileges are granted at the account level by your custodial broker and are subject to review and approval.  Not all accountholders will qualify.  Before trading options, a person must receive a copy of Characteristics and Risks of Standardized Options. Individuals should not enter into options transactions until they have read and understood the risk disclosure document, Characteristics and Risks of Standardized Options, which can be found on our website  Copies may be obtained by contacting your broker or the Options Clearing Corporation.

Spreads, Straddles, Strangles, and other multi-leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return.  These are advance option strategies and often involve greater risk, and more complex risk than basic options trades.  

Portfolio Margin:  A portfolio margin account generally permits greater leverage in an account, and greater leverage has the potential to create greater losses in the event of adverse market movements.  Portfolio Margin, or Risk-Based Margin, is a margin methodology that sets margin requirements for an account based on the greatest projected net loss of all positions in a “security class” or “product group” as determined by the custodial brokers theoretical pricing model using multiple pricing scenarios.  These pricing scenarios are designed to measure the theoretical loss of the positions given changes in both the underlying price and implied volatility inputs to the model.  Clients participating in portfolio margin will be required to sign an agreement acknowledging that their security positions and property in the portfolio margin account will be subject to the client protection provisions of Rule 15c-3 under the Securities Exchange Act of 1934 and the Securities Investor Protection Act.  Clients will be subject to minimum equity requirements by not only the custodial broker but also the managing firm.

General Disclosures:  Any strategies discussed in this presentation, including examples using actual securities and price data, are strictly for illustrative and educational purposes only and are not to be construed as an endorsement, recommendation, or solicitation to buy or sell specific securities or strategies.

Investors should carefully consider the investment objectives, risks, charges, and expenses before investing in any investment product.  To obtain a prospectus containing this type of information as well as other important information, contact your custodial broker.  Please read the prospectus carefully before investing.  

You should discuss any/all implications of investing in such products with your custodial broker, financial adviser/advisor, and/or tax advisor.  Past performance is not indicative of future results.  

Third Party Information:  This presentation may utilize or refer to third party data.  In such a case, let it be known that MSCM, LLC. does not control, nor has it developed the content being referred to, and does not make any warranty, express or implied, as to the accuracy, usefulness, timeliness or even the continued availability or existence of said information/content created or maintained by others.  Opinions expressed by others are not necessarily those of MSCM, LLC., nor does MSCM, LLC. endorse, warrant, or guarantee products, services or information described or offered by such firms.