Rough Seas Ahead
Stocks advanced again this past week and are in a short-term uptrend. The advance over the past two weeks has taken most stock market indexes back up to recent highs and this will act as resistance this coming week. Even with this rally, the long-term trend of the market is still down.
Below is a chart of the NYSE Composite Index. It is down over 14% from its peak as of Friday and down just under 20% peak-to-trough.
I believe that stocks are now at a point where they are probably going to have trouble advancing much more. The advance of the past couple of weeks has taken stock market momentum indicators to levels where they historically have topped out during previous bear markets.
In addition, some of those indicators are showing negative divergences. Meaning they have failed to advance recently with the market, and this is a sign that stocks are losing steam. In addition, the VIX is down to levels where it signaled market tops in previous bear markets.
This does not mean that the market will not continue to advance over the coming weeks, just that the odds don’t favor it.
Client Update
Both Aggressive and Conservative accounts are fully invested in various Bond Funds, with a small Short position.
We Can Help
“Don’t wait until you’re in a crisis to come up with a crisis plan.” – Phil McGraw
Craig Thompson, ChFC
Email: [email protected]
Phone: 619-709-0066
About Asset Solutions
Asset Solutions Advisory Services, Inc. is a Fee-Only Registered Investment Advisor specializing in helping the needs of retirees, those nearing retirement, and other investors with similar investment goals.
We are an “active” money manager that looks to generate steady long-term returns, while protecting clients from large losses during major market corrections.