Average Annualized Return Per Closed Trade: 17.9%
Average Return Per Closed Trade: 15.5%
Average Holding Period: 320 days

Since reaching a peak last Thursday after President Trump’s first Congressional address, the S&P 500 has largely trod water—closing yesterday roughly 1 percent from its March 1 record closing high as market participants are finding it difficult to find new catalysts to push the market higher. This week marked the end of a six-week winning streak for the blue chip index.

While the economic data continues to look good—for example, today’s government job report for January showed a 235,000 increase in non-farm payrolls—much of the improvements has already been expected and baked into the market.

The Fed will meet next week to determine the next leg of monetary policy. Over the last few weeks, market expectation for a rate hike has greatly increased. The Fed Futures futures market now implies a 93 percent probability of a quarter-percentage increase in the benchmark federal funds rate. If the Fed stood pat next week, it would be quite a shocker in the market’s eyes, especially with various top Fed officials recently making statements that strongly suggest a March rate increase is very much in play.

Besides action on the federal funds rate, market participants also eagerly await the Fed’s quarterly economic projections, to be released next Wednesday at the conclusion of the FOMC meeting. The last quarterly projections, released in December, implied that Fed officials saw three quarter-point rate hikes this year. The upcoming March projections will reveal whether they still maintain the same outlook and help shape the markets’ rate expectations. A surprise here would move markets.

Speaking of movers, the big movers this week was the price of oil. For the first time in 2017, West Texas Intermediate, also known as Texas light sweet, the benchmark for U.S. oil pricing, sank below $50 a barrel. The culprit is the continued rise in U.S. crude inventory, which has increased in 9 consecutive weeks.

This week’s Department of Energy report showed that commercial crude oil inventory had risen to 528.4 million barrels at the end of last week. It had jumped by 8.2 million barrels from the total in the previous week. The greater-than-expected increase spooked traders, leading to a sharp decline in the price of oil due to renewed oversupply concerns. Since bottoming in October, the inventory has risen by 12.9 percent. On the other hand, the drawback of refined petroleum products, such as gasoline, indicated good demand.

As long as OPEC and the non-OPEC signees of the output curb agreement (the U.S. isn’t one of them) stick to their pledge to limit output, another collapse into the $30s seems unlikely—and so far it appears the oil exporters have abode by the agreement. Additionally, we are in a seasonal period when oil refiners conduct maintenance and reconfiguration of their plants, so that reduces the demand for crude.

Demand is expected to increase at a strong rate and the increase in U.S. shale production likely won’t satisfy global needs. Another sharp fall in oil prices won’t help the stock market, but again, that is unlikely.

We post a snapshot of our Brain Trust Profits Portfolio and the record of our closed trades below. For a more detailed table of current recommendations as well as information on closed trades, log into our website and click on the ‘Portfolio’ link.



Closed Trades: