Market Condition = Oversold

Daily Market Snapshot

S&P 1500

Market is now Oversold

 

S&P 1500 Index

Chart View





 

After yesterday's big sell-off the broad market, as represented by the S&P 1500, is now down over 8% from it's recent highs. The S&P 1500 Index is now within a few points of wiping out all of it's 2012 returns.

 

Based the current market snapshot the market is oversold and due for a bounce. Today, Facebook is having it's initial public offering, the most anticipated IPO in history. Futures are indicating that we will indeed get a market bouncer this morning. The nature of this bounce will be very telling. If the bounce is strong and holds thoughout the day there may be some hope that the correction has run it's course.

 

Ian Woodward, market analyst and HGS Investors forum mentor, in his usual colorful language, says we are at Custer's Last Stand. We either get a meaningful bounce that represents institutional sponsorship across many sectors or the floodgates open up and the market sinks further.

 

All GWM Model Portfolios currently have little if any exposure to  the equity market. In other words, we are safe.

The Woody Indicator

 (Volatility Indicator $VIX)

Volatility has increased as the market has corrected.

I want to remind you that this is not the end of the world or the stock market. It is a market correction. We will  want to re-engage when volatility subsides and our indicators give us the all clear signal.  In the mean time we keep our powder dry.


Addendum: Flexible Income Folio

Our investment management methodology and investment selection process is all about comparing the relative strength of the universe of investment  alternatives. Simply put, we want to be invested in those assets that are showing strength while avoiding those assets that are showing weakness.

Below is a chart that depicts the performance of various investments that I take positions in from time to time in our Flex Income folio. BOND (blue line) and IEF (baby blue line) have clearly outperformed the rest.

We avoid the rest and invest in the best.

Trendline Analysis

Flex Income Folio candidates

(Click on the charts for easier viewing)

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.