LIVE MARKETS-Smidge of bad, sprinkle of good, can still cook up gains into year-end

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SMIDGE OF BAD, SPRINKLE OF GOOD, CAN STILL COOK UP GAINS INTO YEAR-END

In the wake of the S&P 500 index's .SPX more than 30% surge off its early April intraday low into its late-July intraday high, Ryan Detrick, chief market strategist at Carson Group, is taking a look at a smattering of what looks bad and what looks good, and what that recipe could mean for stocks through year-end.

Detrick still sees more good news than bad news and expects this bull market to continue into year-end. However, he notes that August tends to be volatile, especially in post-election years.

Taking this a step further, he says that the next two months could be a headwind for the bulls, given that the average post-election year peaks in early August and tends to bottom in late October.

Detrick adds the economy is slowing down, yet the Federal Reserve is standing pat and refusing to cut interest rates. He also sees some signs of technical deterioration.

That said, Detrick views himself as "a glass half full type of person," so he's also noticed some good signs as well.

Last "Friday’s big drop brought with it the first close for the S&P 500 beneath the 20-day moving average after an incredible 68 trading days above it, the longest streak since 1998. We found eight other times the index was above the 20-day moving average at least 60 days and the good news is after these long streaks ended it didn’t mean the bulls stopped having fun," writes Detrick in a note.

According to him, a year later, stocks were higher seven out of eight times and the past four times (going back 50 years) stocks were up each time, with a 14% gain being the worst year while two years produced gains of more than 20%.

Remember "Sell in May?" Well, stocks were up in May, June, and July this year. Detrick notes that after these three months are higher, the rest of the year (final five months) has been higher 15 out of 17 times and up nearly 6% on average with more than an 8% median return.

"So there you have it, some bad news and some good news. Overall, worries are increasing, but we remain in the camp stocks will be higher (maybe by a decent amount) by year-end."

(Terence Gabriel)

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