The stock market started the new year off strongly, advancing 2.76% over the first five trading days of 2018.
I have been bullish since the market bottomed at the beginning of 2016. Market technicals continue to suggest higher stock market prices. Of course there will be consolidations and pull-backs; however, technically there is nothing to suggest this market is at risk of a major correction or bear market.
In last weeks newsletter, I gave a detailed technical overview of what is going on in both the stock and bond markets. Nothing has changed since then, so I am going to simply restate my bullish bias for stocks and bearish bias for interest rate sensitive bonds below.
If you want more details on my analysis, you can click on this link to view last weeks newsletter:
Also, I wrote two newsletters last year that addressed the mounting risk in bonds. If you are interested, those can be viewed by clicking on the links below:
Bonds a Ticking Time Bomb I – October 4, 2017
Bonds a Ticking Time Bomb II – October 25, 2017
If you have any questions, please feel free to shoot me an email.
The Bottom Line
Bias:
Positive for Stocks
Negative for Interest Rate Sensitive Bonds
• Long-term, stocks are in an uptrend and we are in a bull market.
• When the S&P 500 is hitting all-time highs, international markets are advancing strongly, and market breadth is positive – there is no other way to view the market other than positive!
• Junk Bonds and Emerging Market Bond Funds look like they are breaking out to the upside.
• Long-term, the weight of the evidence continues to be bullish for stocks. At some point, this will change and when it does, I will have no problem flipping to a bearish bias and reallocating client accounts to a more defensive posture. However, market technicals continue to signal that we are in a bull market and thus we should be invested in stocks aggressively.
Client Update
I continue to viewed market risk as low, thus our accounts have high stock market exposure.
I have continued to add to our equity holdings by buying stock funds that have pulled back and are in long-term up-trends.
We hold High Yield Bond Funds and I am looking to add Emerging Markets Bond Funds this week. I am using leverage in our margin accounts to take better advantage of these two low volatility up-trending sectors.
Email me to schedule your free, no obligation retirement account allocation review.
Craig Thompson, ChFC
Email: [email protected]
Phone: 619-709-0066
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.
Asset Solutions is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.