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The S&P 500 finished the week up .52%. The bulls started the week out with a lot of strength, but they could not hold on. The later in the week it got, the weaker the grip the bulls had on the S&P 500. The bears were able to pull the S&P 500 back into the trading range that has held the market for the past 4 weeks. This basically puts us right back where we started the week.
Bull / Bear Market
The S&P 500 is still slightly ahead of the MSCI All World (ex-USA) index. Both are still a healthy distance above treasuries. This continues to put us in a risk on stance on the longer-term, or bull market territory. I have received and had a lot of conversations about whether or not we are ‘close’ to the end of the bull market. Maybe, maybe not.
The truth is that nobody knows with absolute certainty. Investing is a risky endeavor by the very nature of it. What it makes it absolutely brutal is the uncertainty. By our very nature, we want certainty…especially with our finances! However, certainty is not a reality when it comes to the stock market and to convince one’s self of certainty within the markets is a recipe for immense psychological damage.
OK, that is why we are focused on controlling risk. Said another way, measuring things that happen prior to bear markets and taking the appropriate actions…this measurement of momentum is just one of those measurements and right now the measurement is saying no bear market just yet.
The swing indexes we like are the following: United Kingdom / Japan / Oil / Extended Treasury / Australia / Brazil / International Government Inflation-Protection Bonds / EAFE Value / Global Natural Resources
Most of the indexes were flat to up this past week. Worth noting is that Brazil has come back to life again and has bounced a little on support. Treasuries…ohh Treasuries. They cannot catch a break. They were down this week and we are close to being stopped out. We did adjust the stops up on a few positions…Oil, International Government Inflation-Protection Bonds, and Australia. By adjusting some of the stops up, we have taken some risk off the table if the markets do turn south.
US GDP is scheduled for release on Friday morning. We are starting the week out right at the very top of the trading range from the last many weeks. The bulls still have a great shot to disappoint the bears thinking we are going to get another leg down in short order. We don’t see any buy signals that we are really excited about coming into this week so we are going to hold off on buying and watch the current positions very closely.
The Education/Gratitude Book Club
This month’s book is “The War of Art: Break Through the Blocks and Win Your Inner Creative Battles” by Steven Pressfield. I can’t believe how fast time is flying. Back in college, my freshman year, a very wise senior told me while we were running during pre-season of swimming, “Adam, enjoy this, it is going to be over before you know it…you will be a senior and graduating soon.” Of course, he was right. Now, college is a distant memory. I don’t know what the future holds, but I’m certain that it will come to pass in short order. The book is about helping to make the most out of the present based upon one’s highest callings. Hope you have a great week!
Adam Straseske, CMT
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