This week the markets shrugged off last week’s fears and went back to the slow and steady melt up, despite economic news that looked likely to once again rock the boat. By Thursday’s close, the S&P 500 had gained 5.8% from the prior Friday’s open, putting it and the rest of the major market indices back in the green for 2018. While next week will be a lite one on the economic data side, it will contain a few data pieces that we’ll be watching to gauge the vector and velocity of the global economy and inflation. Those results will tell us if we’re in for more weeks like this one or the prior one when it comes to the stock market.

Now let’s recap this week’s happenings and share my observations on it all…

Monday the S&P 500 soared 1.4% in the first half hour of trading only to then drop 1.3% from that high, then back up again to close up 1.4%. Tuesday and Wednesday were both basically days of further upward movement for the market. Thursday there was a slight wobble at the open — falling -0.3% in the second hour of trading — but then moved back up again to close up 1.2%. Having briefly dipped below its 200-day moving average last week, the S&P 500 closed Thursday all the way back up above its 50-day moving average and down just 4.9% from the January 26 all-time high, retracing roughly half of the decline from the January 26th peak.

Investors appear to still be rather skeptical when we look at fund flows. For the 8 days through Tuesday, equity ETFs saw the largest outflows of the past 5 years when converted to a monthly rate. Then again… Monday inflows were the largest year-to-date so perhaps after the Xanax and Zantac kicked in over the weekend, folks were feeling better. Perhaps some of the concerns are coming from the record high 24% of investors surveyed in the BofA Merrill Lunch Global Fund Manager Survey who think corporate balance sheets are overleveraged – problematic with rates rising as bonds need to be rolled over at a higher rate, leading to higher interest costs that weigh on earnings. That brings us to fixed income ETFs, which are still not feeling the love, having seen positive inflow days only 8 times this year as of Tuesday and have hit new cumulative outflow lows.

Looking at sector performance, since the opening on Friday 9th, the technology sector has gained an incredible 8.5% and financials rose 6.9% and we’ve seen a sharp rebound in the Connected Society and Disruptive Technologies positions on the Tematica Investing Select List. The weakest performing sector has been energy, which gained a comparatively weak 2.4%, and isn’t surprising given the continued fall-off in oil prices as more US capacity comes on stream.