S&P 500 & US Indexes Monthly Fundamental Forecast – May 2016

The S&P 500 actually edged up 0.27% for the month with a YTD gain of 1.05% at 2065.30 as earning season wasn’t as bad as expected and the weak US dollar is helping overseas earnings. Apple was the big disappointment this month.

In the last year S&P sales have declined 1.6%, which includes a 29% hit from the energy sector. Ex-energy, sales were up 2.1%. The result, margins shrank almost exclusively because of energy, which suggests if the recent rally in WTI stays firm and holds, margins and earnings can improve.

According to the latest weekly sentiment survey from the American Association of Individual Investors, bullish sentiment dropped down to 27.37% this week from last week’s reading of 33.41%. This now makes it 26 straight weeks where bullish sentiment has been below 40%, and 60 out of the last 61 weeks. Once again a clear sign that investors still want nothing to do with the most recent equity market rally.

The bull market may not be over, but the current stock market rally off of the February correction lows is built on a shaky foundation.

The Fed is really in a bind as we near full employment. They know that as soon as they lean toward a clear idea that two or more rate hikes are truly in the cards this year that the US dollar will move strongly higher. This will move the US away from the extremely easy policies of the European Central Bank (ECB) and the Bank of Japan (BOJ).

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

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