Good Jobs Report Helps Market Regain its Footing

A good jobs report helped the market regain its footing today. 

You can see from the S&P 500 chart below, that recent market pull-backs have been limited to draw-downs in the 4 or 5% range.  I also want to point out that the 120 Day Moving Average line has acted as support in each decline. Will this time be the same?

Many sectors of the market have been hit very hard. The market indexes have masked much of the carnage going in various market sectors, i.e., the small cap stocks.  The Russell 2000 (small cap index) has declined about 11% from its recent highs, but more that 50% of the index stocks have declined more that 20%..

The US is clearly the best performing economy in the world. While Europe is close to another recession, the US continues to grow, all though at a slow rate.

Today's reversal has given me the confidence to begin increasing our equity and bond exposure.

(Click on Chart for Easier Viewing)  

S&P 500

If history repeats itself, the rally will now resume. 

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.

Is a short term bottom in the Market at Hand?

The market behaved rather well today. All the recent rally attempts had  failed until today. The market went up and held its gains into the close. This is an encouraging sign. Below is a chart showing Dow Jones Industrial Average and its 200 Day Moving Average.  Notice how the 200 DMA acted as support during the last two declines.Will that be the case once again?

Dow Jones Industrial Average Index

Orange Line = 200 Day Moving Average

The DJIA is now close to break even on the year.

Dow Jones Industrial Average Index

If the market activity remains positive on Monday, I will redeploy some cash into the market. 

The recent market decline has only been in the 4 - 5% range on the Dow and the S&P 500, The small caps stocks as well as many S&P sectors have been hit much much harder.

Given the number of disconcerting global events making headlines daily, I believe we should expect more market volatility. The upside will probably be capped for the next month or so. But, I think buying a little on the dips (at possible support levels) makes more sense than buying a breakout to new highs. 

The European Central Bank Cuts Rates to Bolster Flagging Economy

Today Mario Draghi, ECB President, took dramatic steps to kick-start the European economy, include cutting rates to below zero on bank funds placed with the European central bank. I think this is a first. What this will do is provide the banks with an incentive to loan more money to businesses, stimulating the economy and mitigating the prospects of a dangerous deflationary environment.

Because the US is part of the global economy and the European economy is actually larger than ours, this move by the ECB is a big plus for markets worldwide.

The markets, which have been lackluster so far this year, sprang to life with the Dow Jones Industrial Average up around 100 points as I write. Additionally, David Tepper, a very well known and widely respected hedge fund manager, stated that ECB's move serves as a green light for stocks going forward.

Market Bounce

After the Nasdaq Composite Index hit it's 200 Day Moving Average, representing a 10% decline and a valid
market correction, the market bounced nicely. While this bounce may last a couple days, it is not confirmation that the short term down-trend is over.

(Click on Chart for Easier Viewing)

Nasdaq Composite Index

Has a Nasdaq botton been put in at the 200 DMA?
We won't know until until there is evidence of a trend change.

I will probably add to our position in energy, which has been outperforming lately.

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.

The Nasdaq Composite Now Down about 8% - This is the Average for a Pull-Back

The Nasdaq composite, which is home to many of the high flying growth stocks, was down about 8% from it's recent highs this morning before bouncing back a bit.  The average market pullback is historically about 8%. If this level does not hold, we will probably see this pull back turn into an 8 to 12% correction.


GWM Model Portfolios currently are invested in a very defensive manner. Accounts have a very high cash position and the invested positions are primarily in the defensive Consumer Staples and the Utilities sector.

The market remains very volatile with 100+ point up days followed by 100+ point down days. Gil Morales, a  well known investment manager, says the market is acting like a chicken with it's head cut off, just running all over the place with no rhyme or reason. In the current environment it is very easy to get chopped up trying to pick a bottom; that would be a fool's game.

The market index averages are concealing a lot of carnage going on under the surface. Many individual growth stocks are down 20, 30 and 40%. While this is creating opportunity, the time to buy is not yet at hand.

Gold is Up and the Stock Market is Under Pressure

World headlines concerning the Russian's involvement in Crimea and negative economic news out of China are being blamed for the stock market weakness.

It is always a guessing game as to a specific reason for stocks coming under pressure. I happen think the market is still consolidating last years gains, gains that were really fueled by excess liquidity in the market as a result of  unprecedented money printing by central banks all around the world.

The primary trend remains to the upside, however, we cannot ignore the downward pressure on stocks at the moment. Consequently, I will be reducing market exposure in the GWM Major Markets 2 Folio and GWM Sector Rotation Folio 2.

I will be adding to our gold related positions in both Sector Rotation folios because gold is now breaking out to the upside.

Year to Date Returns

The Market has recovered from it's January pull-back..  The S&P 500 Index is now up 0.96% Year-to-Date.

S&P 500 (Benchmark) Y-T-D:   +0.96%

GWM Golden Year: Y-T-D:       +1.67%

GWM In Betweener Y-T-D:      +1.73%

GWM Go Getter Y-T-D:           +1.85%

S&P 500 Index

S&P 500 up 0.96% Y-T-D

The market is having a little trouble breaking through its recent highs at this juncture.  We may chop around for a while as world events unfold in the Ukraine. For the moment, my optimism has been dampened a bit because of Putin's latest military moves.


Addendum: Performance broken down by Folios

GWM Folio Performance Y-T-D

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.