January has certainly started out with a pop! The S&P 500 finished the week up 2.6%. I don’t know if this is euphoric or just another breakout to be followed by additional highs. But, one thing is for sure, the bulls are large and in charge right now. On a side note before jumping into the stock market stuff…two quick things. If you want a free copy of my new book, “Home Run Financial Planning,” let me know and I’ll get a copy out to you. The second, if you would rather see the details of below in video format, go to my YouTube Channel and Subscribe.
Bull / Bear Market
Both the S&P 500 and MSCI All World (ex-USA) index are greatly outpacing short-term treasuries. As it stands right now, it is going to take a lot for the bears to take meaningful control. It is more probable to see pullbacks met with willing bulls and at the least some sideways movement before the bears can cause fear in the eyes of investors. The MSCI All World (ex-USA) index is barely ahead of the S&P 500 on a 12-month rolling basis, so we are still focusing on the international markets.
The list of indices for swing plays are as follows: Canada / United Kingdom / Japan / Oil / Extended Treasury / Australia / Brazil / International Government Inflation-Protection Bonds
All of the indexes were up for the week except for Extended Treasuries, which was down only slightly after all said and done. The stops on Canada, United Kingdom, and Japan were adjusted up as the indexes clearly broke to new levels. This is a way to curtail risk in case we are in fact, close to temporary or otherwise market highs. A few more of the stops could arguably be adjusted, but will be left alone for the time being. All the second purchase ranges are fairly far from current prices with the exception of extended treasuries index. This index is by far the weakest of our index swings. Overall market conditions remain bullish as we are witnessing the majority of equity indexes march on to new highs.
It’s the first full week of trading of 2018 and we’ve got a little bit of economic data coming out this week. The Producer Price Index and Consumer Price Index numbers are scheduled for release later in the week which could be market movers. The health of the market is mixed. The number of stocks advancing declined against the rising S&P 500. This in itself is bearish on the shorter-term, but the market is certainly not a vacuum.
Our stops are pretty far off on almost everything even after adjusting up. We will continue to adjust stops up if in fact the markets do continue to rise. No new indexes are in the cross hairs for this week…we will continue to manage the current.
The Education/Gratitude Book Club
The book we are focused on this month is Viktor Frankl’s “Man’s Search for Meaning.” So, last week I said I would break down the biggest findings within a paragraph. Wow…I really feel like I’ve bitten off more than I can chew simply because it would be an insult to try and do so with what I’ve read. Dr. Frankl is detailing his experience in the concentration camp. So, if you haven’t read this book…you must. If you have read it, read it again sometime soon. In closing, this book certainly puts things in perspective in short order.
Have a great week!
Adam Straseske, CMT