That Was The Week That Was-3rd Week April

 

‘A Confluence of Reasons to Go Lower. Not a single reason to move higher.’-Anastasia Amoroso, global market strategist for JP Morgan Asset Management on April 17th, and reported in Reuters. The Dow was off over 300 points at one time, the Friday before last, before closing down over 270 points to end the week on a losing note. ‘Confluence’ is usually used in context of a happy occurrence, or a peaceful event. On that trading day there were more sellers than buyers and the news of the day provided little excitement to buy. You can create all sorts of reasons why a market tanks but sometimes traders just want to sell. The reason is as simple as that. Especially on a Friday.Some traders may close their book early, take their profits, grab a bottle or two of Pinot at the local wine shop, and head to the Hamptons.

Trying to make sense of why a market falls for no good reason and no warning is like I’ve said before - because it can. They are like tornados these mega down days. They happen suddenly, do their damage and are gone. So why the stock drop? Here are a few things that happened that Friday that other folk smarter than I reported:

• Bloomberg terminals were on the fritz (These terminals are the lifeblood of Wall Street). Also put a kibosh on a bond deal scheduled for that day.
• China placed margin limits on some types of trading.
• U.S. data showed hints of strengthening and consumers feeling the most confident since January (It’s Spring!).
• Renewed fears of a Greek default. Stories of how Greek branches of banks have been told to dump their holdings of Greek sovereign debt ahead of potentially icky things that are to come. (Yep, they reported Icky as a real event.)
• And finally- apparently it was just time to sell.

And there was not a single thing that happened Friday that spelled an event that could have caused a massive global economic crash. Info gathered from WSJ, MarketWatch.com, Bloomberg.com and Reuters.com 4/17 & 4/18/2015

USA Today April 19, 2015

You have to wonder what took California so long to get tough on water use? Water has been and is an investment opportunity. Call me for more information.

 

  Misinformation is Rampant on the Financial Radio Air Waves & Nothing Seems to be Done About It! Fear & Greed Are Great Motivators. Sunday morning last I’m driving to my local market and the radio’s tuned to a syndicated financial radio show and the host is informing listeners that they can buy no brokerage fee Exchange Traded Funds and save themselves 90% of the cost of doing business. In other words you can buy ETFs that are free of commission charges by stockbrokers. He then went on a rant how stockbrokers were ripping off their customers by charging a commission whenever a customer bought an ETF. The way he presented it you’d assume every ETF in the universe of ETFs was  actually free of stockbrokerage charges, and brokers who charged a commission were bandits taking advantage of the small investor. The guy on the air is a RIA, meaning he charges a fee for his services. A fee that can be one, two or three percent of an investor’s assets on top of any expense charges that the funds or ETFS charge. What’s the truth? Yes, there are some commission free ETFs. Not all ETFs are commission free. On the other hand all ETFs have an expense charge that varies as to the type and the fund sponsor. There is no absolute free lunch like the radio host tried to infer.

The Radio host walked a mighty thin line and knew exactly what he was doing by phrasing his words that made the entire profession look as if they didn’t care for the average investor.

ETFs trade like stocks. There are open ended ETFs, and also closed-end ETFs; these trade at either a premium or discount similar to their mutual fund cousin. Some no fee ETFs charge a redemption fee if you sell them within 30 days of buying. (That doesn’t exactly mean free, does it?) You can trade, buy or sell, ETFs multiple times throughout the day. Janet Brown at Forbes.com in her article, ‘Are Commission- Free ETFs Really Cheaper’, revealed that not all the no broker fee ETFs are the best performing. And most of the free ETFs are proprietary.

Whenever you hear ‘free’ it’s best you do some homework because no one doing business is doing business for long doing it for free.

 

Greek Exit Worries Emerge – Again. Do your own research if you have concerns that a Greek exit from the Eurozone means global catastrophe. You have to ask yourself how vital is Greece to the entire world of commerce. What does it produce that cannot be purchased elsewhere? Does it provide some extraordinary ability to contain extremists, or is it a global police force against those that mean harm to other civilized nations? Does the possibility of its banks defaulting create a catastrophic run on our banks? The answer is that if Greece leaves the Eurozone it would cause turmoil for a few days, and or weeks. After that it would be Greece’s problem. Like other countries that have failed before it could take Greece decades, maybe a millennium, to recover. In the meantime many of its citizens would leave, Greek businesses would fail or pull up stakes and begin operations elsewhere. Life in the rest of the world would go on. Source  Spiegel Online, 2/20/2015.

 

Markets Popped-  Monday.

The DJIA + 200, S&P 500 +19. That after a blow-up Friday. What caused the rally on Monday? According to Martin Weiss it wasn’t about earnings it was all about China’s decision to slash reserve requirements of banks; thereby freeing up over $200 billion for economic growth. And, Weiss writes, China has plenty more where that came from and can double that, triple it, and double it again. MoneyandMarkets.com 4/20/2015

 

 

WHERE DID THE DOLLAR GET THE SOBRIQUET ‘BUCK’?  Back in the 1700s American Hunters traded deer skin for a dollar. The term  ‘ for a buck’ stuck.

 

 

Diversification Not Asset Allocation for Stock Investors is Key. Jim Cramer recommends a personal portfolio of 10 minimum and 15 maximum stocks. That range allows you to keep track of your holdings. Here’s more rules to protect your stock portfolio from Cramer’s Smart Money Show April 19th.

• Gold
• A dividend paying stock with high yield.
• Growth stocks
• Speculative stocks
• Stocks from a healthy geography.

 

Medicare Covers Most Retirees Cost of Health Care

chart Fidelity 2011 Medical Expenditure Panel Study.

The average cost of healthcare over a retiree’s lifespan will be $220,000, according to Fidelity Investments. This does not include the cost of nursing home or long-term care. While Medicare covers most healthcare costs a significant amount needs to be paid out of pocket either as co-insurance or a deductible. An annual review of current insurance coverage, cost and what’s available should be done as a matter of prudent planning.

Markets Mixed Tuesday.

 

Deducting Energy & Materials  Sectors From Earnings Estimates Illustrates 1Q Earnings Estimate Not So Bad.  Blackrock Insights April 20th 2015.

Expectations are for lackluster due to a strong dollar, lower oil and horrid winter. You can see things are not that bad when you delete the above two sectors.

 

Huge News From China! Wednesday China State Council indicated that it would relax it’s  grip on bank and credit card clearing thereby leading the way for our two domestic giant credit card companies to enter a $6.8 trillion market. Consumer credit card transactions jumped 33% last year in China and are expected to grow as the country is trying to move from its industrial base to consumer focused spending. Our two major credit card brands accounted for $10 trillion in transactions last year. Up to now China’s UnionPay was the only allowed credit card in country. This is very telling news as it’s providing the length China’s government is willing to go to rebalance its economy. IBD 4/22/2015

Stocks bounced back Wednesday to close up. The 10-year Treasury closed up to 1.98%.

 

NASDAQ Closed Thursday @ A Record High. It took 15 years but the Naz finally pulled it off for a record breaking close 5058.06. Across the board stocks were higher and it was all due to a barrage of earnings reports. In other news Nymex crude surged 3%, The 10-year Treasury yield fell again 2 basis points. IBD 4/24/2015

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

Securities provided through Westminster Financial Securities, Inc.,Member FINRA/SIPC.

That Was The Week That Was-2nd Week April

 

 

Earnings Season… Once again upon us. What is it and why is it so important? Earnings Season is a reporting month for most public corporations. It begins a month after the quarter ends. For example December is the end of the 4th quarter so January is the reporting month, then 30 days after April, July and October you have the reporting month for that ending quarter. Investors and investment managers listen and read carefully when these companies report. They look for what the company did, but also at what the company announces what it‘expects’ to do. A company that had a great quarter but announces that looking ahead things don’t look so good is likely to see its share price go down. Not only is the company’s forward ‘guidance’ an important factor in the reporting company’s business but the ‘guidance’ also gives investors, and economists, a clue as to what the overall domestic or global economy is doing. This past week started the 1st quarter Earnings Season. Expectations are for lower earnings. A strong dollar has hit multi-nationals bottom line. Also a harsh winter and an energy sector that has seen a huge decline in the price of oil, are two  other significant reasons in that we can expect modest, if not overall, negative numbers for the quarter.

 

Option Buying During Earnings Season is Sporty. Without getting into a lesson on options, some traders look to Earnings Season to find those ‘mispriced’ option prices on certain stocks. There is software that will do this heavy lifting for you. Once you find your stock you have to decide whether to buy out of the money or in the money calls or puts. Steven Sears at Barrons.com had an excellent article in ‘The Striking Zone’, published 4/10/2015. If you are thinking of trading options you better know exactly what you are doing.

 

The Retail Investor Remains Missing. I read somewhere that the retail investor, that was ga-ga over stocks in the 90s, is MIA. That ultra-conservative mindset, that came out of the Great Depression almost a century ago, has been renewed with those investors that experienced the Market Crash of 2008-2009. The idea that lightening strikes twice seems to be the concern of people that should be investing, and are not. Even those that are invested have the urge to sell on the most banal of negative economic news. North Korea is at odds with the movie industry. The Federal Reserve plans a rate hike. They ignore the most fundamental and basic investment concepts that should keep them satisfied. There is a deep seated fear in some retail investors, after experiencing the recent global market depression, that another global economic crash is imminent and every public company will go out of business at the very same time. There is little to change that emotional fear. One way to alleviate it is to spend more time educating investors. This will not get rid of the emotional desire to sell every time the markets hit some economic turbulence but could slow down the ‘flee’ process and allow common sense to enter the equation.  Here are a few ways to minimize investment portfolio risk, and allow investors to sleep better at night:

• Invest in mutual funds or ETFs rather than individual common stocks.
• Choose funds/ETFs that have a history of paying dividends.
• Compare fund/ETF Beta’s and choose those that have less than market risk but still have a history of providing solid returns.
• Keep a set percentage of your portfolio in cash. 10%-15%.
• Do not concentrate in one particular investment sector.

 

Global Economic Risks Remain but Appear to Be Diminishing. –Robert C. Doll, CFA, Nuveen Asset Management. Were it not for the strong dollar and the fall in the price of oil corporate earnings would be 8%-10% in 2015, Doll goes on to report that both the dollar and the price of oil may start to fade. Don’t expect the dollar to weaken but likely to continue to strengthen at a weaker pace. Also expect a rate hike later this year and that the equity technicals appear supportive of further price gains. Weekly Investment Commentary 4-14-2015.

 

Eurozone earnings per share revisions have broken into positive territory for the first time in four years, according to analysts at J.P. Morgan Cazenove. On a sector basis the analysts expect banks, energy, industrials, steel and construction materials to offer the most upside. MarketWatch.com 4/14/2015

 

A Rocky Road For Domestic Equity Markets Monday- Off at the Bell, Up by Noon and Down at the Close.

In the short term the markets are about as rational as a March Hare.

 

 

LifeLine Response. I saw this on cable Fox and went to the website. LifeLine Response is an app that you can have on your phone that if you are in trouble, unable to speak, will get help to you no matter where you are. Dialing 911 doesn’t always tell help where you are. It seems that this would be a great app for both young and older people. I can see the benefit if someone attacks you and you need immediate help. It also would be an excellent app in case of a serious health issue such as a stroke and you cannot speak. Check it out yourself. Go to www.llresponse.com 

 

Markets Up on Oil Wednesday

The WSJ reported Wednesday that oil prices surged to their highest point of the year on signs that crude production could be peaking. This was the biggest one-day dollar gain for U.S. oil prices in 2 months. DJIA up 75.91 for the session. WSJ 4/15/2015

Thursday markets closed off a tad.

THE FEDERAL RESERVE SHIES FROM JUNE RATE HIKE –WSJ 4/16/2015.

Soft economic data has created ‘uncertainty’ inside the Federal Reserve, dimming the chance as early as June for the expected rate hike. March slowdown in hiring numbers, tepid consumer spending, weaker than expected home sales and a drop in industrial output has given impetus to the view the economy doesn’t have the momentum moving into the second quarter. WSJ – Central Banks 4/16 

 

‘Laissez les bons temps roulez!’

After Wednesday’s gains BP CEO Bon Dudley warned that oil prices could stay low for several years, and he isn’t optimistic that they will bounce back soon. In a MarketWatch.com report Dudley explained, ‘We got to plan in BP for a lower for longer world.’ For the rest of us tired of $4 a gallon gasoline this can only mean, ‘Let the good times roll!’ More money for other stuff rather than seeing it burn out our tailpipe.

Got Questions on Your 401k, IRA or 403b? Call me or send me an E.

Questions for Paul call him @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

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That Was The Week That Was- 1st Week April

 

 

 

There has been a lot of noise, confusion, misinformation and just plain fear tactics strewn about on the coming Fed interest rate hike and the market reaction. This is nothing new. The spreading of disinformation benefits some  and also those that want to see stocks cheaper.

No One Knows if a Market is Correcting or Crashing Until We’re There.

What we do know is that there hasn’t been a 10% market correction for some time. We are way overdue. Most Market Corrections, like controlled forest fires, are good things. This week I’ve devoted most of the time and space to help you understand where we are and what could possibly happen. As we move closer to a Fed rate hike I’ll keep you abreast on what’s happening and if there is anything special you should do. Here’s my compilation of news for the week…

 

 

 

  WHAT TO DO IN CASE OF A SIGNIFICANT 20% MARKET CORRECTION. There are those that’ll tell you to sit tight, others that it’s best to sell; and then there are those that think you should have some cash on the sideline and buy when others are selling. My opinion is that if you know what you’re doing all three make sense. It is acceptable to get out of the market if you are able to time your selling and buying dead-perfect.  In other words sell just as the market starts to correct and buy back in at the very bottom. Unfortunately, most all of us cannot time that perfectly. Of course timing also involves creating a taxable event and assorted brokerage fees, something the ‘talking heads’ don’t spend a lot of time explaining. Almost all corrections are considered healthy corrections because it is a natural part of the stock market. Those corrections that fall 20%+ are of a more serious nature. The problem is not knowing if a correction is ‘normal’ or a harbinger of a severe market slowdown. There are investment methods that can limit the downside risk of a correction. For example a mutual fund with its diversification may fall far less than an individual stock. Shares in companies that pay dividends may not correct as much as those that do not pay a dividend. Then, of course, there are bonds and other fixed investments that do not fall as far as equities. For the vast majority of retail- non-professional- investors a buy and hold is a sensible alternative. All it takes is guts and a ‘grin and bear it’ attitude through the tough times. One thing to remember, and see the chart I’ve attached from Wells Fargo, is that those that try to ‘time’ the market don’t time well. And the ‘timers’ often miss some extraordinary days. For example if you ‘missed’ the best 5 investment performance days between January 1, 1994 to December 31, 2013 versus staying the course  you would have missed out making a lot of money. Understand that this is not five days in a month, a year or a decade. But missing just five days out of 20 years!  

Source: Standard & Poor’s Stocks are represented by Standard & Poor’s Composite Index of 500 Stocks, an unmanaged index that is generally considered representative of the U.S. stocks market, Past performance is not a guarantee of future results. Performance shown is not indicative of the performance of any particular investment. This illustration from Wells Fargo article ‘How to Weather a Stock Market Correction’ on the web site Wells Fargo Financial News. The above chart supplied in the article depicted a time line from January 1, 1994 to December 31, 2013. The chart illustrates how a $10,000 investment would have been affected by missing the market’s top performing days over that 20-year period.

 

Poor Jobs Report Friday Starts The New Month Off Rocky?

If You Were To Bet On Which Day The Market’s Would Be Negative Monday the 6th Would Be The Day- And It Would’ve Fooled You! Picture this: A crummy jobs report, a long weekend and not so special results overseas ending up with a negative pre-market. That would’ve been, you’d think, the catalyst to an awful day. It was for about a Nano-minute. The Dow was off 100 points and by noon, while I was spooning soup and gumming saltines, the Dow reversed itself and was up triple digits. You can see that trying to time short-term is difficult, if not impossible, for the average investor.

 

 Oil Exploration Stocks Have Bottomed, reported Michael Kahn in ‘Getting Technical’, Barrons.com 4/6/2015.  ‘…every bull market has to start somewhere,’ Kahn wrote, ‘and there are plenty of technical signs to argue at least that the bear is over.’

Oil Prices Will Stay Low Longer- Goldman Sachs 4/7/2015

Investors Business Daily reported that the S&P 500 Earnings are Expected to Fall – First Time Since ‘09. The reason is that exporters and energy companies will drag down earnings. Sectors that are expected to do well: Financials, Industrials, Health, Consumer discretionary, S&P 500 total ex energy and Technology. Consumer staples, telecom, materials, Utilities and Energy (the biggest drag), are all expected to see negative results. 4/6/2015 IBD.

 

Made me smile

 

 

Stocks are in a ‘stealth correction’, whatever the heck that is, according to  Ralph Acampora, director of technical analysis at Altaira. Acampora is a true advocate of The Dow Theory. He is troubled with the underperformance of the transports, which have trailed the S&P this year. The Theory is that if either need to make a high or low the other does too. He also believes the rate hike would precipitate a selloff.  CNBC 4/7/2015

Jim Cramer added his voice to the concern regarding the transport index saying that while the Dow averages have been up, transports have been performing terribly in relation to the rest of the market. On his show, Mad Money, Cramer asked his technical colleague Bob Lang what he thought. Lang said he thinks there could be more downside ahead, especially when the DJ Transport Index fell below its 200-day moving average for the first time since October.  CNBC.com 4/7/2015

Wednesday’s markets started off higher and closed down. Morgan Stanley managing director Adam Parker reiterated his belief that despite current earnings and U.S. dollar headwinds, the stock market is in the middle of a long expansion that could last until 2020. He repeated that the S&P 500 Index could hit 3,000 by 2020. CNBC 4/7/2015

 

We May Be in A Secular Bull Market So Just Enjoy The Ride. On my radio program, many moons ago, I discussed a Secular Bull and Bear Market. The one thing that the average investor doesn’t understand about either of them is that they last an awfully long time. The average is 17 years, according to experts. The latest Secular Bull was from 1983 to 2000. Within either a Bull or Bear Secular market are corrections either way. The one thing to remember is that in a Secular Bull the markets may fall but always correct and go higher. In a Secular Bear we may see indices go higher but always finish lower. The last Secular Bear was 1966-1982. Stocks finished in 1982 basically where they were in 1966. Secular Bear markets offer excellent buying opportunities for an extended period of time. Additional Info from Investopedia & Joshua Kennon’s Investing for Beginners Expert.

CNBC Thursday at the Closing Bell discussed the possibility we have not recovered from a Secular Bear Market.

We can only tell if we were in one or the other is after it is over.

 

VIX is trading lower than it was last October. The volatility index, a measure of future implied volatility of the S&P 500 Index options, is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index. It is also called the ‘fear index’ and a measure of the market’s expectation of volatility for the coming 30 days. I got tired of some financial experts screaming correction that I decided to check and see if there was any real ‘volatility’ as expressed by the VIX. The fact that the VIX is trading approximately 40% lower than it was last October, 2014 and (ending April 8, 2015), told me that the Street appears to be relatively unconcerned.

 

If everybody is so darned concerned of a stock market crash why are we seeing takeovers booming? The M&A volume is on track to make it the second biggest year in the history of Mergers and Acquisitions. The WSJ reported  April 8th that companies are gaining confidence about the economy, using their stockpiles of cash for future growth and getting boosts from ‘low interest rates and a surging (yes, they wrote ‘surging’) market! Executives and business directors know these conditions won’t last forever. In 2015 there have been 15 deals announced in excess of $10 billion. The current M&A wave, reported the Journal, is centered around traditional company to company mergers. And sometimes the strength of the dollar doesn’t hurt when looking to do acquisitions outside the U.S. Here’s a chart of where the action is:

 

 

WELLS FARGO ARGUES ‘SHORT-TERM BLIP’ FOR LOWER EARNINGS THIS QUARTER.  Fundamentals still look promising Wells argues in a Barrons.com article posted April 8th in ‘Wall Street’s Best Minds’ section. Lower first quarter activity due to record snow and cold in most of the country. U.S. Large Cap Dividends increased 14.8% year-over-year in the first quarter. Investors, Well states, will see this and quickly look through a short-term blip in earnings. (of course it’s a blimp. does anyone know what a blip looks like?)

 

 

Looking to Hedge the Dollar? Nothing Fancy? Just up your allocation into Mutual Funds that invest in Foreign Companies. When the dollar weakens you’re investment should strengthen depending on the fund management philosophy and holdings.

Do You Know Someone Who Should Be Getting This Blog & More Importantly Talking To Me? Send me an email with their name and best to reach phone along with an email address if you know it.

Finally- Friday Morning CNBC reported European shares hit 15-year peak.

QUESTIONS CALL PAUL @ 586 295 0430 OR WRITE HIM @ pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

SECURITIES OFFERED THROUGH WESTMINSTER FINANCIAL SECURITIES, INC. MEMBER FINRA/SIPC.

That Was The Week That Was-5th Week March

 

END OF 1st QUARTER WINDOW DRESSING OR?  Simply put window dressing is an activity that managers will use that ‘dresses’ up a portfolio to make it look better than it is. Usually an investor will see ‘window dressing’ at the end of the year as managers vie for bonuses. This year’s first quarter was looking as a loss for the first time in several years until Monday when the Dow got up and ran right from the opening bell and finished up over 250 points. Monday’s action didn’t help as the quarter ended down following Tuesday’s selloff.

 

JIM CRAMER ON MAD MONEY SAID THAT IN ALL HIS YEARS HE’S NEVER SEEN A RALLY LIKE THE ONE THAT HAPPENED MONDAY WHERE EVERY BIT OF GOOD NEWS TRANSLATED INTO A STOCK MOVING MUCH HIGHER. He also said don’t be surprised we could give back some of the winnings at the beginning of the new quarter. CNBC 3/30/2015 More later in the blog.

Tuesday Markets Fell 200 Points.

 

DOW 20,000 FAIR VALUE!  Wharton Professor of Finance Jeremy Siegel has been predicting it for close to a year, and said it again on CNBC last week (March 27, 2015), that he feels much more comfortable with stocks and believes that “20,000 is Fair Market Value of the Dow”. But, he said it won’t get here today, next week or even next month. He also said on CNBC that the ‘Fed gets it.’ He once thought they were being way too aggressive in projections of interest rates.  Siegel expects the Dow to be trading between 17,000 and 18,500. I remember the Nixon years and the Dow struggling to climb over 1,000 now we’re expecting 20,000.

INVESTORS FLEE MARKET AT ‘CRISIS-LEVEL PACE’

Outflows from equity based funds in 2015 have reached their highest level since 2009. There have been $44 billion in outflows or redemptions this year to date, according to Bank of America Merrill Lynch. In the last five of the previous 6 weeks equity funds have seen outflows. Last week $10.8 billion, reported BofAML. The trend, CNBC reported, could be interpreted as a ‘Buy’ signal.

Made me smile…

 

 

This Chart From JP Morgan.

 Andy Kiersz writing for The Business Insider reported that big stock market selloffs happen all the time. However major downturns don’t happen just because prices are too high. History suggests he wrote, ‘… bear markets more often result from factors external to the stock market, such as recessions, wars and credit bubbles.’ The argument is that one or all is happening now somewhere.

 

Buy High and Sell Low. This wasn’t  phrase that someone made up. There are investors that do this - a lot. I can only assume that these are the people who want ‘market returns’ without ‘market risk.’ If they are nervous investors they’ll sell every time the market’s burp and there is no amount of common sense or fundamental knowledge that can help.  Those that lost money because they sold early and often, for whatever reason, continue to do so again and again. They can never put together the connection that they are their own worst enemy. Market corrections are buying opportunities.

Patience is also an investor’s best attribute.  If you are an investor who is constantly checking what the market is doing you may not be emotionally comfortable to be invested in stocks. Warren Buffett once cautioned that homeowners don’t check the value of their homes every day, and investors shouldn’t their investments.

 Déjà Vu All Over Again

On January 16th The WSJ’s Weekend Investor reported that the S&P 500 Index had fallen 8 out of the 11 preceding trading days in 2015. Reasons  were low oil prices and potentially weaker global economic growth. The markets bounced back. Last week more news  similar to January’s caused the markets to retreat. In January experts reported that the economic data didn’t seem to be signaling an imminent recession. Low gasoline prices, strong auto sales and the potential for more housing construction indicated an economy that does not seem on the verge of collapse. Other than the Fed announcing it may well raise interest rates in 2015 not much has changed in the last 60 days. WSJ 1/16/2015

Interesting News Tuesday After The Markets Close.  Carolyn Boroden, a technician who runs FibonacciQueen.com thinks its time to become cautious. Boroden is one of Jim Cramer’s colleagues at RealMoney.com. She’s been an analyst and student of Fibonacci.  This is a type of analysis based on medieval mathematics of Leonardo Fibonacci. Boroden said she sees a similar chart pattern in the S&P 500 Index that she saw recently in the Russell 2000 before it had its fall. (The Russell started to fall end of August, 2014 and began to recover by October 1st of last year. It was about a 20% tumble before regrouping.) What Boroden found was that when a security reaches a certain level, in this case an extension over a large upside run, it becomes vulnerable to a correction. Currently she sees market resistance about 2% from current levels. Jim Cramer on his Fast Money program clarified it by saying Boroden isn’t saying its doom and gloom or even go short the market. What she is saying is that she thinks that there is going to be a significant pullback, and that she thinks this could be a great buying opportunity. Our colleagues at our Advisory Firm suggest raising cash assets by a reasonable 10%.

Smart Investors Learn to Use Market Corrections As Buying Opportunities. Watch stock indices here. If the Russell 2000 was any kind of a timetable guide and a correction begins here then the summer should bring markets back for another run.

‘LIKE A BRUSH FIRE CLEARS AWAY DEAD WOOD TO ALLOW NEW SHOOTS TO EMERGE- A MARKET SELLOFF CREATES BUYING OPPORTUNITIES.’-Michael Kahn, ‘Getting Technical’- Barrons.com 4/2/2015 “The current market turmoil can continue, but overall the underpinnings are still good. Investors should stay engaged.’

 

And, if you didn’t have enough to think about- The Institute for Supply Management’s March index slid 1.4 points Wednesday 4/1, the lowest in almost 2 years. ADP reported March private payrolls rose by 189,000 the weakest since January, 2014. Jennifer Lee, senior economist for BMO Capital Markets, blames a stronger dollar for the recent economic sluggishness. She also believes the energy sector retrenchment has widespread spillover effects. Investors Business Daily 4/2/2015

Wrapping this up early for the week. Have a good Easter and if you need me you can send an email to pstanley@westminsterfinancial.com or call me @ 586 295 0430.

SECURITIES OFFERED THROUGH WESTMINSTER FINANCIAL SECURITIES, INC. Member FINRA/SIPC.