Friday, August 27, 2010

Market Comment 08 27 10

After three consecutive weeks of stock market declines, the bulls finally surfaced today and, supported by Fed chief Bernanke's encouraging words, pulled the markets off their lows. Despite Friday’s strong up move, the effort was not enough to propel the major indexes into positive territory for the week.

The Dow lost 0.6%, while the S&P 500 and Nasdaq gave back 0.7% and 1.2% respectively.

The economy is clearing slowing down and the markets have been adjusting to this reality. Individual investors are very bearish at the moment. Bearish extremes often times however lead to a short term turn in the markets. We may see the market go into rally mode for a few days.

Tuesday, August 24, 2010

Market in Oversold Territory

The market has closed lower 10 of the last 12 days.

As shown below, today's declines have put the S&P 500 back into oversold territory. The index is back down more than 5% year-to-date, down 6.66% since August 9th, and up just 2.9% off the July 2nd lows.

The market should bounce soon, but I remain skeptical of a rebound that has any legs. The technical condition of the market has deteriorated a great deal and risk remains high.

For now we will remain safely in our low volatility income / bond funds.

Chart source: Bespoke Financial

Thursday, August 19, 2010

Lipstick on the Dow

I borrowed this chart and comment from Chris Kimble. It gave me a chuckle, so I thought I would share it. Since we are out of the stock market at the moment we have the luxury of poking fun at it.

(Click on chart to enlarge it for easier viewing)

Chris comments: Does lipstick change the looks of this pattern? It could take just one day to make the potential Head & Shoulders pattern one for the record books! "Catch up" isn't something that you dip your French fries in. It's, among other things, the fact that equities can "catch up" with the fundamentals in a blink of an eye!


Head and Shoulders Pattern
This pattern suggests that lower prices may be ahead. This chart pattern does not guarantee a decline, but none-the-less it is worth paying attention to.

Wednesday, August 18, 2010

Market Comment 08 18 10

Even with the strong advance in the stock market the last few days the technical picture that has developed over the past couple of months has not changed. The tone of the market changes from positive to negative on a dime with no clear trends developing. The market remains in a trading range.

Our model portfolios currently have no exposure to the stock market. Since our low volatility bond/income fund portfolios continue perform well we can ignore the day-to-day volatility in the stocks.

Thursday, August 12, 2010

Brace for Impact

Three words you never want to hear your pilot say - "Brace for Impact."

The Feds decision to give a slight nod of acknowledgement to the idea that the economic recovery is faltering took its toll on the stock market Wednesday. The market took a pretty good nose-dive. Near term, the environment for stocks has taken a turn for the worse. Expect more turbulence ahead.

Our model portfolios currently have no exposure to stocks. Furthermore, our low volatility bond / income funds holdings continue to perform well.

For now we can ignore the volatility of the stock market while protecting our current holdings with our stop loss strategy.

Saturday, August 7, 2010

GWM Client Attributes

Most of our clients have completed or nearly completed the accumulation stage of their financial lives. For most of them management of risk is as important as pursuit of gain because they could not replace the capital they have accumulated with future earnings.

GWM Client Attributes:

Wednesday, August 4, 2010

Market Comment 08 04 10

The stock market is moving to the upside and our income / bond funds remain in a low-volatility, low-risk uptrend. Yesterday's modest pullback in stock prices was not significant. We continue to use stops to limit risk and will enjoy this uptrend as long as it lasts.