January, Fundamentals and the Fed: What Early Volatility Means for 2016

Tuesday, January 12th, 2016
Written by Manifold Fund Advisors

With U.S. stocks kicking off the year with the worst four-day start ever, investors are wondering if the current volatility is setting the mood for the rest of 2016. “January typically has increased trading volume, and that means the direction of the market can get amplified,” said Manifold Fund Advisors CIO Steve Wruble in Jeff Benjamin’s Investment News article, “What Early Stock Market Volatility Means for the Year Ahead.”1 With technical momentum fizzling out at the end of the year, currency issues tied to commodity issues, a strong dollar, and half of S&P 500 sales from overseas affecting that Index, markets begin to make decisions on how much of 2015’s performance was fundamentals, and how much was the Fed’s monetary policy. As Steve notes, there is not a lot of optimism in sight, especially from energy and oil prices, and he isn’t ready to proclaim a full-blown buying opportunity. Though certain fundamentals are at play when prices are down, “it’s tough to say if this is a great entry point [into equity markets], because we still have some things to clear out, and some rough waters to get through,” Steve concludes. Without the Fed driving markets, investors will be looking for evidence that revenues are growing, and the first test is earnings seasons.

1 For full article, please visit InvestmentNews.com.

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