Greetings Friends,

The US stock market got off to a bumpy start in 2018.

In early February US stocks fell 10%. That drop made investors nervous – ‘is this the beginning of a huge meltdown or a normal correction?’

Today – it looks like a correction.

US stocks were quick to rebound from the weakness.

With just two weeks left in the first half of 2018 the tech heavy NASDAQ 100 (QQQ) is up 14% on the year.

The S&P 500 is up 4.73% on the year. When you add in dividends, that return jumps to almost 6%.

Global stocks have been a bit mixed.

The Vanguard Total Stock Market ETF (VT) is up 2.25%.

Emerging Markets (EEM) have lagged, down 4% on the year.

Take a look at the returns below.

As you can see the US stock market is quietly having another solid year – and looking forward into the second half of the year I am expecting more gains.

In the short run – I am expecting to see some volatility. US stocks are moving into a seasonally volatility time of the year. You can see that in this cool historical volatility chart below from Equity Clock.

However, beyond seasonal volatility – I am expecting more gains for US and global stocks.

If you listen to the lame and ill informed mainstream financial media you would think the world is collapsing.

No doubt there are problems – but the reality is the US and global economies are the strongest they have been in over a decade and US corporate earnings are on fire.

S&P 500 earnings growth accelerating in 2018: Anyone confused about why stocks are up so much should look at this S&P 500 corporate earnings chart. Earnings growth is the #1 driver of stocks. And S&P 500 earnings growth has accelerated big time in 2018.

First-quarter earnings growth came in at an eye-popping 24% in the first quarter. That is insane.

Take a look at the chart below from Zacks Investment Research

Earnings growth will slow a bit moving forward – but earnings are still expected to grow nicely well into 2019 and that should create strong tail winds for stocks.

The US and Global Economies are Hot: You would never know it by listening to the mainstream media but the US and global economies are growing at their fastest rate in ten years.

Two days ago the Atlanta Fed raised second-quarter GDP forecast to 4.8%. Anything above 3% is considered great. So this is a huge number.

Atlanta Fed raises U.S. second quarter GDP view to 4.8 percent

Goldman Sachs just reiterated that it expects the global economy to grow 4.1% in 2018 – its fastest pace of growth in more than ten years.

These are my leading indicators. And right now the are telling me stocks are headed higher and more gains ahead.

Cannabis Stocks Heating up and Moving into the Strongest Part of the Year

Similar to the US stock market, cannabis stocks were also weak early in the year.

But just like the S&P 500 that weakness was short lived.

Cannabis stocks have been heating up.

The US cannabis index just hit a new all-time high.

Canopy Growth Corp (NYSE: CGC) just hit a new 4-month high, is up 26% on the year and is back within 10% of the all-time high. Take a look.

Looking forward I am expecting big things from cannabis stocks in the second half of the year because of two huge catalysts.

• Canada set to legalize recreational cannabis in late summer.
• 16 US states set to vote on cannabis programs in November.

The Big Picture: this is the time to be aggressive in the cannabis sector.

If you already own cannabis stocks, not is a good time to add more shares.

If you have been waiting to buy, this is a good time to start.

Anyone with questions say hello: mike@vodickagroup.com

I’ll be back in two weeks with a mid-year update.

Your Investment Partner,