July Market Update: Climbing a Wall of Worry

The S&P 500 gained 6.89% in June. YTD for the first half of 2019 the S&P 500 is up 17.35% (Note: YTD increase was 17.51% at the end of April). June market returns played out like the opposite of the December 2018 market. In the last week of November 2018, the S&P 500 had an incredible rally pushing the Ivy Portfolio signal to "invested" as we started December. I suggested investors not take the bait and stay in "cash." December returns declined until our current rally started after Christmas Eve market lows. Contrast that time period with the May to June period. At the end of May stocks declined on news of new tariffs potentially being placed on Mexican imports. This drove the Ivy Portfolio signal to "cash" on the last trading day of May, setting investors up for the opposite of the scenario that happened in the November-December timeframe of 2018. As soon as Trump indicated that Mexico had complied with his administrations' requests for help monitoring the flow of migrants the tariff threat stopped. This news sent stocks higher, helping investors ride the bullish stock wave a bit longer. Let's examine price, sentiment and valuation as we start July.