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If it were possible to forecast the market, then this update would detail the weeks and months ahead of us.  Unfortunately, no one can accurately predict what the market will do going forward.  However, tools are available to know the market conditions today – therefore what is, is.  With current information, we can know if markets are on offense or defense and whether risk is high or low.  Armed with that information, we then make the decisions based on what we see today.

Please see the 8-minute video for current market conditions.  You can select full screen viewing (at lower right of You Tube window).  It will take a few seconds for the screen quality to become clearer.





The postings on this site are my own and do not necessarily represent Dorsey, Wright & Associates positions, strategies or opinions.  This post and video is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Capital Retirement Planning, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Capital Retirement Planning, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing or video.

Market Update

June 6, 2013

Declining S&PIn my last post, I talked about the stock market being at an all-time high and interest rates in the bond market beginning to rise. Both of these situations are pointing towards higher risk in the stock and bond markets, and  evidence of deterioration from high levels is now appearing – see the chart in this post and you’ll see the decline.

The technical indicators that I follow to measure the market include short-term, intermediate term, and long-term. This week, the short-term indicators moved to a negative trend.  How long they will stay negative is anyone’s guess.

After seeing the run-up the market has experienced over the last few months, it’s hard to watch a pullback. We have now seen two weeks of back-to-back losses in the S&P 500, totaling about 4%. On the surface that doesn’t seem like a big deal, but to add to that, the short-term indicators for the market have now turned negative.  This is the first time that we have seen back-to-back losses in the market since November, 2012.

Normally, we don’t see losses in both the stock market and the bond markets in the same week, but last week Ben Bernanke spooked the bond market when he talked about the Fed curtailing the purchase of bonds. When the Fed finally ends its purchase of bonds it will be both good and bad. It will be bad for those who own bond funds and target date funds (typically found in a 401(k)), but it will be good going forward because it will produce higher interest rates.

What to do now?

One approach is to work more like a dimmer switch than  a light switch. In other words, while it may not make sense to move completely out of the market, it may make sense to manage individual positions and move out of them as they begin to deteriorate.



The chart above was created by Dorsey Wright and Associates.  The postings on this site are my own and do not necessarily represent Dorsey, Wright & Associates positions, strategies or opinions. The information in this post should not be construed as investment advice.  You should consult an investment professional prior to making any changes.