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Market Letters

Market Letter - October 2016

We are only twelve days away from a most contentious presidential election, and since mid-July, the market has gone “nowhere” trading in about a 600 point range (18600/18000). We believe the market will make a dramatic move based are who “takes the throne” on November 8th. If we have a Clinton win, the market will likely favor large, multi-national companies and financial companies like JP Morgan, Goldman Sachs and Bank of America. It has been evident over the past several months the Healthcare and Biotech sectors do not support a Clinton win. If we have a Trump win, the popular belief is the market will prefer the materials sector such as steel, sand, cement, all related to infrastructure and the Healthcare sector could rebound.How does this affect you, the investor/plan participant? Remember: the market WILL always adjust to whatever political environment it needs to exist in and 401(k) participants are investing for the long term.The major support in the market now is the 17960/17700 levels. If the 17700’ish number is violated, we could see much more downside. If you are risk adverse or have short timeframe to retirement, we suggest moving out of equities and into bond funds or cash if this happens. More importantly, contact our office for an individual review. We here are busy analyzing many mutual funds; their core stock holdings and how they will react to whichever candidate wins. As soon as the election is over, we strongly urge you to contact our office for a complete review of the investments available to you.Our viewpoint is that large cap value type mutual funds typically perform well...

 

Market Letter- August 2016

The market has been hovering around all times highs for six weeks creating what we market technicians refer to as an “overbought” situation and may be ready for some downside activity. If this proves to be the case, here are some support levels you need to know: 18250-18000-17800-17500’ish. If these levels do not hold, we could see a return to the 17000 low made in late June due to the “Brexit” issue.What to do now? Should the market not “hold” at the 17500’ish level, and if you are nearing retirement or have a low-risk tolerance, you may wish to move some allocations into cash or bond funds (bonds) which are relatively less risky than equities. If you expect a longer timeframe to retirement and your risk tolerance is on the high side, just ride this out.MARKET SECTORSENERGY (Oil) SECTOROil dipped to low about 3/4 weeks ago and has been moving up since, currently at $47’ish and may drop once again but most analysts (and us) believe it will be higher by year’s end. If you can handle the risk, this sector could end up being most profitable for you. HEALTHCARE SECTORThis sector continues to underperform. Both candidates have opposing viewpoints on the direction of health care. Until the outcome of the election, we may continue to see a decline in this sector. INTERNATIONAL SECTORWe do not suggest any allocations here, at this time.REAL ESTATE SECTORThis sector is performing very well and should be part of your allocations.TECH SECTORAfter performing well since late June, this sector appears to be running out of steam for now. You may wish to reduce exposure here.UTILITY INDEX...

 

Market Letter- June 2016

Given the extreme volatility since late last summer and the market nearing its May 2015 all-time high of 18,351, caution would be the “key” word here.Some may think, “Why caution?” if we are nearing the all-time highs of the market. Caution is advised when this happens because the market could possibly reverse direction violently as we near the general election. This could be the cause and effect since the market never likes uncertainty. Also, the recent upward trends in the market have done so on anemic volume. As we have previously shared, “volume is the fuel” that propels the market in either direction and without it, the moves are somewhat dubious.The current support numbers are as follows: 17850, 17700, 17600, 17500 (most important) and finally, the recent low made in May, 17200. Contact us if the market falls below 17200, it could possibly fall much more severely.What should you do if you are nearing retirement or risk adverse?We suggest a “dual strategy” if you are nearing retirement or risk adverse. Take a major portion of your current balances and allocate them into bond funds and cash. Become aggressive with future contributions only. This allows “dollar cost averaging” to actually work for you if the market were to have a severe sell-off between now and the elections.Retirement investing is for the “long-term”; however, our goal is to help you miss those large losses when the market has a major shift to the downside and preserve much of your current balances.Now we wait and see. Does the market continue “falling upwards” eventually making new highs or does it...

 

Market Letter- April 2016

There are still no clear signs of a strong reversal to the downside. The market is struggling to extend the rally that began in mid-February. We describe this type of market action as “melting-up.” Our thinking is that the markets will need to go much lower before it can justify any higher levels ahead this year. Remember, we have been in an “up market” for the past (7) years and we just don't see where the economic catalyst can come from at this point. The increasing concern on the geopolitical front is definitely enough to spook many investors. Another big problem we see for the market going higher is volume (or lack thereof). Ever since these markets bottomed out in early February, volume has steadily declined. Not a good sign for the higher market argument when you consider how strong the moves have been over the last few months now. Something has got to give. This anemic volume cannot, and likely will not continue. Remember, it is volume that “fuels” the market in either direction. Company earnings season begins next week and if they look good, this could move the market higher, however, if the earnings reports are poor, this could lead to the down move we mentioned above. Now we “wait and see.” What to do now? Based on this current market view, we're going to stick with our previous fairly defensive posture for the time being. See our previous market letters for reference. MARKET SECTORS ENERGY (OIL) SECTOR Oil continues to be “range bound” trading between $36 to $42 and change. It also appears...