{"id":2825,"date":"2022-01-06T21:23:33","date_gmt":"2022-01-06T21:23:33","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=2825"},"modified":"2022-01-06T21:24:23","modified_gmt":"2022-01-06T21:24:23","slug":"2022-market-forecasts-sell-in-may-and-go-away","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/2022-market-forecasts-sell-in-may-and-go-away\/","title":{"rendered":"2022 Market Forecasts: Sell in May and Go Away?"},"content":{"rendered":"

A common toast has been: \u201cMay 2022 be better than 2021!\u201d\u00a0 However, where the US Stock Market is concerned, most of us would gratefully accept a repeat of 2021\u2019s returns.\u00a0\u00a0<\/span><\/p>\n

The ETF reports on ValuEngine.com<\/a> for funds that follow market benchmarks provide a side benefit in writing market analyses.\u00a0 They are a window to implicit forecasts for 1-, 3-, 6- and 12-month forecasts VE models are making for each benchmark\u2019s ETF portfolio.\u00a0 This is because the ratings and projections combine bottom-up constituent analysis with analyses of the historical price movements of the ETF in different market environments.\u00a0 We can use all of this to try to look forward into 2022.<\/span><\/p>\n

All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 500 ETFs have been updated on\u00a0www.ValuEngine.com<\/a><\/strong><\/h5>\n
Free Two Week Trial to all 5,000 plus equities and ETFs covered by ValuEngine\u00a0HERE<\/a><\/strong><\/h5>\n

The benchmark indexes and ETFs chosen for this feature are:<\/span><\/p>\n

    \n
  1. The S&P 500 Index representing US Large Cap, the ETF is iShares\u2019 IVV;<\/span><\/li>\n
  2. The S&P 400 MidCap Index representing US MidCap; the ETF is SPDR\u2019s MDY;<\/span><\/li>\n
  3. The Russell 2000 Index representing US Small Cap; the ETF is iShares\u2019 IWM<\/span><\/li>\n
  4. The Russell 1000 Large Cap Growth Index; the ETF is iShares\u2019 IWF;<\/span><\/li>\n
  5. The Russell 1000 Large Cap Value Index; the ETF is iShares\u2019 IWD;<\/span><\/li>\n
  6. The Nasdaq-100, constructed as an index using the top 100 non-financial stocks with primary listing on the Nasdaq, but now regarded as the premier US Big Tech Index; the ETF is Invesco QQQ.\u00a0<\/span><\/li>\n<\/ol>\n
    Current ValuEngine reports on these ETF\u2019s can be viewed\u00a0HERE<\/a><\/strong><\/h5>\n

    Today\u2019s focus is primarily on the 12-month period that will end on December 31, 2022.\u00a0 On the chart below that is listed as the ValuEngine forecast for 1-year, indicating the next 12 months.\u00a0 The data in the summary table are all from December 30, 2021, the last trading date of the year that just finished.<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
    <\/td>\nMDY<\/b><\/td>\nIWM<\/b><\/td>\nIWF<\/b><\/td>\nIWD<\/b><\/td>\nQQQ<\/b><\/td>\nIVV<\/b><\/td>\n<\/tr>\n
    Market Index Being Tracked<\/span><\/td>\nS&P Midcap<\/b><\/td>\nRussell 2000 Small Cap<\/b><\/td>\nRussell Large Cap Growth<\/b><\/td>\nRussell Large Cap Value<\/b><\/td>\nNasdaq 100\u00a0<\/b><\/td>\nS&P 500<\/b><\/td>\n<\/tr>\n
    ValuEngine Rating<\/span><\/td>\n3<\/b><\/td>\n4<\/b><\/td>\n4<\/b><\/td>\n2<\/b><\/td>\n4<\/b><\/td>\n3<\/b><\/td>\n<\/tr>\n
    VE Forecast 3-mo. Price Return<\/b><\/td>\n0.1%<\/span><\/td>\n0.4%<\/span><\/td>\n1.5%<\/b><\/td>\n0.4%<\/span><\/td>\n1.5%<\/b><\/td>\n1.0%<\/span><\/td>\n<\/tr>\n
    VE Forecast 6-Mo. Price Return<\/span><\/td>\n0.6%<\/span><\/td>\n1.1%<\/span><\/td>\n3.6%<\/b><\/td>\n1.4%<\/span><\/td>\n3.5%<\/span><\/td>\n2.6%<\/span><\/td>\n<\/tr>\n
    VE Forecast 1-yr. Price Return<\/b><\/td>\n-5.2%<\/span><\/td>\n-2.9%<\/span><\/td>\n-2.2%<\/span><\/td>\n-6.2%<\/span><\/td>\n-2.0%<\/b><\/td>\n-4.3%<\/span><\/td>\n<\/tr>\n
    Historic 3 mo. Price Return<\/span><\/td>\n7.7%<\/span><\/td>\n1.7%<\/span><\/td>\n11.5%<\/b><\/td>\n7.3%<\/span><\/td>\n11.1%<\/span><\/td>\n10.7%<\/span><\/td>\n<\/tr>\n
    Historic 6 mo. Price Return<\/span><\/td>\n5.4%<\/span><\/td>\n-3.0%<\/span><\/td>\n12.6%<\/b><\/td>\n5.9%<\/span><\/td>\n12.3%<\/span><\/td>\n11.0%<\/span><\/td>\n<\/tr>\n
    Historic 1-Yr. Price Return\u00a0<\/span><\/td>\n23.3%<\/span><\/td>\n13.5%<\/span><\/td>\n26.7%<\/span><\/td>\n22.8%<\/span><\/td>\n26.8%<\/b><\/td>\n27.1%<\/span><\/td>\n<\/tr>\n
    Historic 5-Yr Ann. Price Return<\/span><\/td>\n10.2%<\/span><\/td>\n10.1%<\/span><\/td>\n21.2%<\/span><\/td>\n7.3%<\/span><\/td>\n24.2%<\/b><\/td>\n14.5%<\/span><\/td>\n<\/tr>\n
    Volatility<\/span><\/td>\n19.6%<\/span><\/td>\n21.1%<\/span><\/td>\n16.4%<\/span><\/td>\n16.9%<\/span><\/td>\n17.0%<\/span><\/td>\n15.5%<\/b><\/td>\n<\/tr>\n
    Sharpe Ratio (3-Year)<\/span><\/td>\n0.52<\/span><\/td>\n0.48<\/span><\/td>\n1.29<\/span><\/td>\n0.44<\/span><\/td>\n1.42<\/b><\/td>\n0.94<\/span><\/td>\n<\/tr>\n
    Beta<\/span><\/td>\n1.19<\/span><\/td>\n1.22<\/span><\/td>\n1.02<\/span><\/td>\n1.04<\/span><\/td>\n1.02<\/span><\/td>\n1.00<\/b><\/td>\n<\/tr>\n
    # of Stocks<\/span><\/td>\n400<\/span><\/td>\n2038<\/span><\/td>\n503<\/span><\/td>\n854<\/span><\/td>\n100<\/span><\/td>\n500<\/span><\/td>\n<\/tr>\n
    Undervalued by VE %*<\/b><\/td>\n50%<\/span><\/td>\n66%<\/b><\/td>\n45%<\/span><\/td>\n45%<\/span><\/td>\n35%<\/span><\/td>\n35%<\/span><\/td>\n<\/tr>\n
    P\/B Ratio<\/span><\/td>\n2.8x<\/span><\/td>\n2.8x<\/span><\/td>\n14.4x<\/span><\/td>\n2.7x<\/b><\/td>\n9.3x<\/span><\/td>\n4.8x<\/span><\/td>\n<\/tr>\n
    P\/E Ratio<\/span><\/td>\n24.4x<\/span><\/td>\n183.2x<\/span><\/td>\n39.8x<\/span><\/td>\n21.5x<\/b><\/td>\n34.1x<\/span><\/td>\n27.0<\/span><\/td>\n<\/tr>\n
    Div. Yield<\/span><\/td>\n1.0%<\/span><\/td>\n0.9%<\/span><\/td>\n0.5%<\/span><\/td>\n1.6%<\/b><\/td>\n0.4%<\/span><\/td>\n1.2%<\/span><\/td>\n<\/tr>\n
    Expense Ratio<\/span><\/td>\n0.23%<\/span><\/td>\n0.19%<\/span><\/td>\n0.19%<\/span><\/td>\n0.19%<\/span><\/td>\n0.20%<\/span><\/td>\n0.03%<\/span><\/td>\n<\/tr>\n
    Index Provider<\/span><\/td>\nS&P Dow Jones<\/span><\/td>\nFTSE Russell Indices<\/span><\/td>\nFTSE Russell Indices<\/span><\/td>\nFTSE Russell Indices<\/span><\/td>\nNasdaq<\/span><\/td>\nS&P Dow Jones<\/span><\/td>\n<\/tr>\n
    Index<\/span><\/p>\n

    Scheme<\/span><\/td>\n

    		Mkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting<\/span><\/td>\nMkt. Cap Weighting\u00a0<\/span><\/td>\n<\/tr>\n
    ETF Sponsor<\/span><\/td>\nSPDRs by SSgA<\/span><\/td>\n iShares by Blackrock<\/span><\/td>\n iShares by Blackrock<\/span><\/td>\niShares by Blackrock<\/span><\/td>\nInvesco<\/span><\/td>\niShares by Blackrock<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    In order to frame our forecasts, let\u2019s look at the ValuEngine rankings that summarize our models\u2019 views on the expected price appreciation of IVV. This is an ETF built to replicate performance of the S&P 500 Index which is the most common benchmark for active management and the focus of most market forecasts.\u00a0 IVV has a rating of 3 thus predicting average performance among the ETFs in our universe during the next six months.\u00a0 Given its bellwether status as the market\u2019s proxy, a rating of 3 is the norm for IVV.\u00a0 The ValuEngine market forecasts for IVV \u2013 and thus the S&P 500 – will vary from negative to positive depending on our models\u2019 assessments of the current environment.<\/span><\/p>\n

    Focusing on the S&P 500 column in the four rows containing our forecasts, our models expect the market to navigate the next three-to-six months in modestly positive territory.\u00a0 However, with a 12-month forecast of -4%, even a six-month 3% gain, our models forecast a mild correction during the second half of 2022.\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n

    Are there segments of the market for which the ValuEngine models have a more positive outlook?\u00a0 There are differences but not very sizable ones.\u00a0 QQQ, still rated 4 (Buy), gets out least negative price forecast; we predict a dip of just 2%.\u00a0 IWD, rated 2 (sell), has the lowest prediction for calendar year 2022 of -6%.\u00a0 For those wondering how an ETF with a projected decline for 2022 can have a \u201cbuy\u201d rating, it\u2019s important to understand that ValuEngine ratings are assigned relatively.\u00a0 Therefore, in this environment, \u201cbuy\u201d should be thought of as \u201cabove average.\u201d\u00a0\u00a0<\/span><\/p>\n

    The ValuEngine models currently favor growth over value with IWF, the ETF based on the Russell 1000 Growth Index rated 4 and expected to endure less than half the decline of IWD based upon the Russell 1000 Value Index.\u00a0 The models predict one reversal of historic trends.\u00a0 Although IVV (large cap S&P 500 ETF) has outperformed IWM, (small cap Russell 2000 ETF) consistently and decisively during the past 5 years, IWM now receives an above average rating of 4.\u00a0 IWM\u2019s largest position is AMC Entertainment, which is also rated 4 (buy).\u00a0 Additionally, we rate 66% of IWM\u2019s holdings as undervalued, the only one of the six benchmark index ETFs that doesn\u2019t have 50% or more of its holdings rated as overvalued.\u00a0\u00a0<\/span><\/p>\n

    Thus, the answer to the perennial question appears to be yes.\u00a0 No matter which of the major six benchmark categories you choose, our models say you are likely to enjoy positive returns during the first half of the year but if you continue to hold a benchmark index-based ETF for the rest of 2022, you will give back all the gains and lose a bit more. \u00a0 ValuEngine\u2019s model predictions are fallible as most predictions tend to be.\u00a0 The models\u2019 projections have tended to predict the direction of the trends more than they\u2019ve been incorrect.\u00a0 Magnitudes can be more difficult.\u00a0 In this blog entry that was posted at the end of September, we projected a week positive return for most of the benchmark indexes averaging about +1.5%.\u00a0 The were indeed positive but the magnitude was correct only for small cap IWM.\u00a0 The other five benchmark index ETFs fourth quarter price returns ranged from 7.3% for Large Cap Value IWD to 11.5% for Large Cap Growth IWF with the S&P 500 ETF, IVV, between the two with 10.7%.\u00a0\u00a0<\/span><\/p>\n

    Financial Advisory Services based on ValuEngine research available: \u00a0\u00a0<\/strong>www.ValuEngineCapital.com<\/a><\/strong><\/h5>\n

    I\u2019ve seen several well-known strategists, including the venerable Byron Wein, also project a decline or correction of the S&P 500 between -2% and -15%.\u00a0 That may portend that our forecast will turn out to be accurate, but it could just turn out that misery loves company.\u00a0 The next question is to determine where investors who lower their exposures to one or more of these six benchmark index categories should re-allocate their dollars.\u00a0 That will be the subject of our next blog.\u00a0<\/span><\/p>\n

    Herb Blank<\/p>\n

    Senior Quantitative Analyst<\/p>\n

    ValuEngine, Inc<\/p>\n

    www.ValuEngine.com<\/a><\/p>\n

    _______________________________________________<\/p>\n

    All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 600 ETFs have been updated on\u00a0www.ValuEngine.com<\/a><\/h5>\n
    Financial Advisory Services based on ValuEngine research available through\u00a0ValuEngine Capital Management, LLC<\/a><\/h5>\n
    Free Two Week Trial to all 5,000 plus equities covered by ValuEngine\u00a0HERE<\/a><\/h5>\n
    Subscribers log in\u00a0HERE<\/a><\/h5>\n","protected":false},"excerpt":{"rendered":"

    A common toast has been: \u201cMay 2022 be better than 2021!\u201d\u00a0 However, where the US Stock Market is concerned, most of us would gratefully accept a repeat of 2021\u2019s returns.\u00a0\u00a0 The ETF reports on ValuEngine.com for funds that follow market benchmarks provide a side benefit in writing market analyses.\u00a0 They are a window to implicit … Read more<\/a><\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[130,1,39],"tags":[1931,1929,1704,1760,1761,1733,1705,1731,1930,1770,1845,1928,1834,1833,1617,1510,1932,1712,28,1656],"_links":{"self":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2825"}],"collection":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/comments?post=2825"}],"version-history":[{"count":2,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2825\/revisions"}],"predecessor-version":[{"id":2827,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2825\/revisions\/2827"}],"wp:attachment":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/media?parent=2825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/categories?post=2825"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/tags?post=2825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}