US Stocks Near All-time Highs!

Well son of a gun! The S&P-500 is within 3-4% of the all-time highs last August. On Christmas Eve, I wouldn’t have thought that was possible. However, here we are!

On Monday, April 1, 2019, All three of our stock asset classes established intermediate (approximately 6 month) uptrends, bringing ALL of our asset classes back into the uptrend category. So, we added to the stock portions of our portfolio, investing almost all the cash, and continue to see slow, steady gains. Gold, bonds and real estate continue to climb as well, although gold has become more volatile since hitting an 8 month high recently.

One of the emotional challenges to following a methodology is that you feel “right” when things move the way you thought they might. Indulging that feeling is not too smart, though, because when the methodology disagrees with what you thought would happen, there is a tendency to avoid following the rules you so carefully researched years ago. You start evaluating what was “right” based on whether you see gains shortly after the move, rather than realizing that “right” means sticking to your discipline, knowing that you will do better in the long run.

So, even though I was surprised to see the stocks trending back “up”, I invested accordingly when our signals changed. If the trends turn down, or if volatility increases, I plan to reduce those asset classes accordingly.

Let’s see how the test of all-time highs goes over the next few weeks!

Have a great weekend.

Stock Are Almost in an Intermediate Uptrend

The S&P-500 has now climbed back to equal the highs of December and November of 2018. Quite a bounce after a 20% free-fall. There is still a ways to go to reach the all-time highs from last August, but the mathematics of our methodology are close to declaring a new uptrend for this asset class.

Today, Friday, 3/23/2019, stocks have been pulling back, perhaps because US housing purchases were much much weaker than expected. However, they could just be taking a rest after this strong bounce-back rally since Christmas. As the volatility in stocks has decreased, we’ve been gradually adding to our stock positions and reducing cash. If the upward trend materializes, we’ll add more stocks.

Gold continues its bumpy climb. After reaching about $1,350 / oz. the sellers came out and knocked it down to about $1,285. Today, though gold is hanging around $1,308, so the intermediate trend is still positive. When gold volatility spiked on the pullback, we reduced our position in gold accordingly.

There has not been much change in our allocations in spite of all the wild news, so I have not been writing as many blogs for the last few weeks. I expect the excitement to pick up over the next month or so.

Have a great weekend.

Gold Continues the New Uptrend

I just noticed today that the Gold ETF (GLD) is now at a new 8 month high. The Gold Miners ETF (GDX) is at a 12 month high. US Stocks are still hovering just above the half-way point between the all-time highs last August-September and the lows the day before Christmas. Bonds have recovered somewhat since the Fed started hinting they may stop raising interest rates for awhile. In fact, bonds have started a new uptrend.

Stock risk has dropped as volatility has dropped, so we have gradually been adding back to our stock positions. However, we are still very underweighted in stocks because they have not yet reestablished an intermediate uptrend. A quick glance at a chart over the last six months or so will show you why. Gold and bonds are still the only major asset classes in our portfolios in an uptrend.

Have a great week.

$22 Trillion – From $21 Trillion Ten Months Ago

It boggles my mind how far in debt the US is. It is even more staggering to realize the downward spiral is accelerating. It doesn’t look like tax revenues will increase to reduce the deficit. I surely don’t see enough spending cuts to balance our national budget. Good grief … all the politicians talk about is “reducing the deficit”. That’s like you and me talking about spending $5000/month more than we make instead of $8000/month more than we make. We are still going further under water every month. No talk at all about actually having a positive cash flow as a country or paying everybody back.

Yikes.

Sooner or later there is likely to be a huge financial “reboot” for the US dollar. Probably sooner. I don’t know anyone who actually thinks we will pay our debts.

Manage your portfolio risk accordingly. Do not be a big bond holder.

Cheers.

The Jury is Still Out on Stocks

It looked like the Fed’s Policy reversal last week might push stocks over the hump (the “half-way” mark of the huge drop in Q4 2018). Stocks even edged up above the 50% mark. However, the last couple of days have seen a pullback to the vicinity of that half-way point. So, the jury is still out.

There are no changes to our allocations this week. Gold continues a quiet uptrend.

Have a great weekend.

Fed Boosts Everything, Especially Stocks!

Well the Fed announcement this afternoon has sparked a nice rally in stocks. To a lesser extent, bonds and gold are rallying.

What has traders excited is the Fed reversing its prior rhetoric about continuing rate hikes because the economy is so strong. Now, they are saying that they could raise or lower rates, depending on inflation and employment. President Trump has been loudly complaining about the Fed strategy for months and should be much happier with this announcement.

Let’s see if this boost is enough to push stocks above the “half-way” point where they have been hovering.

Cheers.

Happy Friday, January 25th

We are seeing a nice rally today in everything but bonds across our portfolios. Gold, silver and the miners are up from 1.3% to 3.7% today.

The S&P500 is up 0.9% at this writing, so the jury is still out on which way stocks will move (up or down) from this halfway point in the recovery since the day before Christmas. Volatility is beginning to subside. . . a good sign for stocks.

We invested 10% of our cash, now holding 40% cash in our diversified, non-speculative accounts.

Have a great weekend.

Friday Before Christmas Raises Questions

I’m not “into” politics, but I was disheartened by the resignation of our Secretary of Defense. The open acknowledgement of fundamental differences about US foreign policy creates great uncertainty around the world, in my view. That may very well benefit only those who wish our great nation ill.

The financial markets do not “like” uncertainty. Business leaders around the world are less prone to make big investments in the future when the political and regulatory environment seem unstable. No-one likes the idea that policies, tax rates, regulations or interest rates could take unexpected turns after they make a big bet on the future. So they don’t.

People are less likely to buy goods and services when they are uncertain about their jobs and future prospects. This uncertainty increases when big auto companies downsize and stop making certain products. This contraction in spending, this reduction in optimism, have self-reinforcing effects.

We seem to be at a turning point for our nation and for the world. This may just be another momentary blip in the markets like January of 2018 was. But it may be more.

Since we don’t predict the future in our methodology, we look at the behavior of different asset classes over recent months and respond accordingly. Gold has started an uptrend after a seven year bear market. All other major asset classes are trending down. It is time to be cautious.

Have a blessed Christmas and Happy New Year.

Dale

Two Steps Forward, Three Steps Back

At least that’s what it looks like on Monday, 11/19 at 11:30 Central Time. We had a nice rally last Thursday and Friday. Things were looking better going into the weekend. This morning, however, we are down 1.75% on the S&P-500, giving back all the gains from that rally, and then some. Ouch. For 2018, the S&P-500 is up less than 1% at this writing.

You may have noticed that I don’t try to explain the daily or weekly stock market behavior. That’s because, in the short term, markets move pretty randomly. The explanations you see on the news are usually pretty bogus. On any given day, I can give you three reasons why the market is falling . . . or three reasons why it is rising. That doesn’t mean I really know exactly what caused the movement on any given day. Very few people do, and they are probably not talking.

By now, though, enough things have happened that you should see the value in our methodology raising cash over the last two months. Predicting the future is a pretty sure way to lose your shirt. BUT, reducing portfolio risk when market risk increases does pay off in the long run. . . and that is our goal.

We are well positioned. No need for any action at this time.

Cheers,

Ugly Start to Friday

Wow! After yesterday’s bounce, many people were beginning to feel better after Wednesday’s huge down day. But at this writing, 9:51 AM Central, the S&P-500 is down about 2.4% from yesterday’s close. This is well below where we closed the day on Wednesday.

Once again, the miners, the metals (gold and silver) and bonds are up, mitigating the losses from stocks. Also, thankfully, we went into this situation with 43% cash for our clients with balanced portfolios.

The speculative clients have much higher allocations to gold, silver and the miners, so those accounts are doing well today… creeping closer and closer to turning positive. This is starting to look like a Bona fide crash to me.

Please be careful out there. US stocks are now solidly negative for 2018.

Dale