Jul 30

The Market Today 7/30/15: China

ChinaChina

One thing is for certain, volatility is back. The VIX may not be saying that as of today. When you look at the price action of the market over the last month, it is back with a vengeance. We have had a plethora of headlines. First of which has been Greece, then you look at when is the Fed going to raise interest rates, and finally, there is China! Greece tried to play tough guy with the ECB, IMF, and it’s European colleagues. They failed, and caved into all the demands to get their third bailout! The pervasive thought is that the Fed will be raising rates in September. I personally do not see them raising rates this year at all. Then there is China. Last week, there was one trading day, which saw it’s market lose 8.5% in one day! In fact, 5% moves have been occurring on a daily basis. When you hear all the commentary, it is as if the Chinese market is crashing! Let’s put this move in perspective. Prior to the 40% or so drubbing of the Chinese market, this same market, has moved up 150% prior to the big decline! With this significant move to the upside, you wonder why the market has lost so much? It is ahead of itself. It is ahead of itself do to being over leveraged. Total leverage in January of 2015 was about 2 Trillion Yuan. As of the end of June, it stood at 4 Trillion! It doubled in 5 months! Kind of similar to our markets in 1999, and 2008! Nothing to worry about in the long term. In the short term however, caution is to be exercised.

China: Stocks

Yes, seeing the Chinese market get clobbored has had a negative affect in our markets for the short term. There is no doubt, that China will move our markets  in the short term. We have seen this when the S&P was going down. Since getting close to the important 2,040 support, we have seen a rapid move back close to the high of the range. When you look at the chart, you see an interesting pattern called the inverse head and shoulders. I also drew a yellow trendline(neckline). Should this line be crossed to the upside, be ready for a very strong move to the upside. However, should the market move at, or very close the the neckline, and fail, then expect a strong move to the downside. For now, we are in a waiting game. We are now in the midst of earnings season. With a few exceptions like AMZN, NFLX, and GOOGL, they have not been all that exciting. So, when the bulk of the season is over, then we should finally see, which direction the market will be going!

China: Bonds

China is not only causing volatility in stocks, but now we have seen it in bonds! Since the beginning of May, we have seen interest rates on the US Treasury move from 2%, to as high as 2.44%! When the range was near the 2.4% range, the banter on all the TV shows and twitter, was buzzing about the Fed raising rates in September. When you look at the Futures market, the Futures are giving a small percentage likelihood them doing so in 2015. Who do you believe? I believe we will not see an interest rate hike this year at all. In fact, I believe interest rates may resume lower, in terms of yield! Overall, I believe we are still range bound, between 1.8%, and 2.5%. Should the range trade outside of this, you can trade strong in the direction of the break!

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping protect their portfolio’s, especially when situations such as China moves the markets!

Jun 29

The Market Today 6/29/2015: Greece

GreeceGreece

We all knew this was coming to a head, the situation in Greece! They have an IMF payment due tomorrow, and from all the signs I see, this payment will not be made, therefore, a default. The futures market indicated a strong negative open. By the cash open, a significant part of the losses had been made up. Then, new’s from Puerto Rico surfaced, that they may not be able to pay their debt! This turned the early morning progress, and moved the markets back lower, closing near the low of the day. The problem in Greece is not the money itself, but the thought of contagion. Will this now spread to Italy, to Spain? That is where the real problem would lie. The heart of the issue, is that Greece has two problems. One, the citizens don’t pay much in taxes to support the government social programs. The Government, also does a horrible job at collecting the taxes. This situation will not turn around for a very long time, if at all. Greece seem’s as if they want the other EU countries to bail them out, and not do anything for themselves to get out. Thus, will Greece leave the EU? If so, will the contagion spread to Italy and Spain, which also have financial issues. If Greece leaves, will Italy and Spain follow? This is the real concern. As it has every other time, I feel a solution will follow, and the market will gain what is lost in short order.

Greece: Stocks

Today was a rough day to say the least. Thanks to our friends in Greece, the market was hit pretty hard today.  We broke, and closed below the 2,070 level support. The next level support for the S&P is now around 2,040. Perhaps we will see this level being test tomorrow. Should this level break, especially on a closing basis, then this may in fact, be more to the picture, resulting in more downside pressure to come. Until then, I am holding, and perhaps using the sell off as a buying opportunity. Again, should the 2,040 level break, I will look to take profits, and become defensive. On another note, the futures market has officially, by pricing, the likelihood of any Fed rate hike as Zero chance in 2015! This is what I had thought of as the likely case for interest rates anyhow, but the futures market has affirmed my belief here. From this, I may be looking at taking profits in the financial positions I have for clients. These stocks have been moving steadily higher, to to rising interest rates, due to the fact that the increasing in interest rates increase profit margins for financial companies. Let us see what the next few day’s brings, before getting caught up in all the Greek drama!!

Greece: Bonds

You certainly would expect the volatility to be playing out in the stock market the last few weeks. The real volatility has been playing out in the bond market. A few short month’s ago, the key ten year treasury interest rate was around 1.85%. Last week it was pushing around 2.45%. Today it closed at 2.33%. Should the Greek drama continue to play out, I would expect interest rates to dip further. The dip my continue until a solution is found, or the worst case scenario play’s out, and Greece leaves the EU!

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping protect their portfolio’s, especially when situations such as Greece wreak’s havoc on the market’s!

May 06

The Market Today 5/6/15: Weakness

Weaknessweakness

The last eight days of trading certainly has been difficult. We saw weakness come in eight day’s ago, the the market roared back. Then, the last two day’s, have been awful! While there was a late day rally to mitigate some of the losses, we have seen some damage being done.  This may lead to a relief rally tomorrow, It seem’s as if the market wants to move lower. While it did break 2,070 support, it did close above it. What is the reason for the weakness the last week? You could put several reasons as to why. First, we have earnings. Earnings have not been exceptional.  In addition, the guidance going forward hasn’t set the world on fire. Let’s take a look at the economy. Last week on April 29th, the GDP was released, and it was bad. It was reported as an increase of .2% for the first quarter of 2015, versus 2.2% for the fourth quarter of 2014. On top of all this, you look at the price of oil back on the rise, moving over $60/barrel, and interest rates on the 10 year treasury moving up to about 2.25% today! These are all big tailwinds for the market. Let’s face it, the market look’s tired, and the reason’s just cited are reasons for a correction to start.

Weakness: Stocks

As I mentioned above, weakness has entered the market over the last week. Between earnings, the economy, and oil and interest rates, these are major headwinds. Looking at the chart, while significant weakness has come in, there are some positives. The bollinger bands are trending higher. The price of stocks are moving higher. The market came close to hitting the ascending trend line, then bounced higher. The negatives are the price movement of the last few days. The MACD has turned lower, as has the RSI index. The market is overdue for a correction. Most if the reason’s that I cited, are basically noise. The bottom line, a pull back is healthy. Let it run it’s course. Even though  interest rates have moved higher, where else will you earn a return? Stocks are the only game in town. Again, looking at the chart, should 2,063 break, then looking at 2,047, then the major level of 2.040 as the next levels of support. I would be surprised to see the 2,040 level broken.

Weakness: Bonds

Some fireworks have been going off in the bond market this week! Some major weakness has come into the bond market in terms of price. In the last few weeks, interest rates have moved from about 1.85% to 2.25% in less than two weeks. This is a very big movement in a very short period of time! Will the bond market force the Fed’s hand in raising interest rates? Perhaps, but I don’t think so. The move higher in rates have been too high too fast. I think rates will pull back. The only way the Fed’s hands would be forced, would be if the dollar kept it’s parabolic rise. We have seen the dollar pull back nicely here the last few week’s.

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping protect them, and take advantage of opportunities that market weakness present!

Apr 12

The Market Today 4/10/15: Resilient

ResilientResilient

First, I realize I have not posted in about two weeks. I have been traveling, meeting with clients. My posts will increase from this point going forward. Heading into last week, and followed by the trading on Monday and Tuesday, it looked to me as if the market would be choppy, with more of a bias to the downside. There is no doubt, how resilient this market is. What helped this week, is that Greece actually made their debt payment to the IMF. Many believed that they could indeed default. Then, GE announced a big restructuring of their Capital Unit, along with a massive $30 billion buy back! This propelled GE strongly higher, and the market with it. The S&P closed above 2,100 for the first time in a while. Now, looking at the open interest on the S&P options, the highest open interest on the call side is 2,100, and 2,075 on the put side this week. This tell’s me that we may see some weakness to begin the week, and open under 2,100. The downside in my opinion is the 2,075 area. Should the market move to this area, I would recommend buying aggressively at this point. Keep another point in mind, that we are beginning the earnings season. This past week, we started it with Alcoa. Now, we will be getting into the meat of earnings season. I would expect volatility to increase due to the earnings releases. We have also seen the VIX close at the low end of the range. Wouldn’t surprise me to see the VIX spike, meaning a slight move down in the market to begin the week.

Resilient: Stocks

This week really showed how resilient this market is. Last week, I tweeted that the market looked tired. The funny thing is, as soon as I tweeted this, that is when the market seemed to power up, and move up. Yes, there was significant news that was announced to help, but this was a strong move. The overall trend of this market is no doubt is to the upside! Although I had sent out that tweet, I was not expecting a major move down. I was expecting the market to move lower however. This did not materialize. As I mentioned above, looking at the open interest in the S&P options, I do expect some choppiness to begin the week, representing a good entry into the market at that point. Looking at the weekly chart above the 40 week moving average is at 2,047. As you can see on the chart, we have only seen this level broken twice in the last year. Both times, it was a false breakdown, and we have seen V bottoms on each occasion. I do not think we will see the market move anywhere close to this level. I can see it move to the 2,075 level, where I would buy aggressively. There has been, and will continue to be significant noise in the market, especially in terms of earnings reports. Don’t fall into the trap of listening to the noise, and acting on it. Be focused, disciplined, and have a plan.

Resilient: Bonds

The bond bull market has also been very resilient. For years now, bond market experts have been telling us that interest rates will march higher. The rates continue lower. This week is a prime example. We saw rates move from about 2.25%, to close at 1.95% Will we see a retest of the 1.65% low of a few months ago? Tough to say at this point. Being that the consensus say’s no, I wouldn’t be surprised if it did. Due to this, I do not see the Fed moving interest rates higher this year at all. The June hike has been all but ruled out. Now everyone is looking at September. I do not see it at all this year! Should interest rates on the ten year move higher, use this as an opportunity to increase bonds in your overall asset allocation.

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping them realize how resilient this market is, and participate fully in the opportunities it presents!

Mar 28

The Market Today 3/27/15: Range

Rangerange

This has to be one of the most frustrating week’s I have seen in quite some time in the market. For now, it appear’s as if the market is simply trading in a range, between 2,050 and 2,090. Last week, we saw the dollar finally pull back, and as a result, we saw an improvement in the price of oil, as well as gold. Today however, the dollar seemed to have found support on the 40 day weighted moving average. Should the dollar bounce higher, expect the prices of oil and gold move back lower. Oil moved very strong to the downside today. Although, oil moved sharply higher Thursday, due to the military strikes from Saudi Arabia onto Yemen. This week, the calendar turns to April, which we all know is the beginning of earnings season. I believe this is why the market had somewhat of a negative tone to it. The market is simply adjusting to lowering earnings estimates, due to the strong rise in the dollar. That being said, I expect the range bound trading to continue this week. The end of the quarter ends as of trading on Tuesday. So I expect we should see a pop to the upside to start the week, and end the quarter from some quarterly portfolio window dressing. I feel the real market will show itself starting on Wednesday. Buckle up your seat belts, it has the markings of a wild ride!

Range: Stocks

I was just looking at the open interest in the SPY for this week. The largest strike for the call side was 208, and the put side was 205. This tell’s me that the market should trade in the range mentioned above on the SPX, and on the SPY between those two strikes. With the pop that I am expecting on Monday and Tuesday, the bull’s need a move above the 208 strike, and for the market to be able to stay above it. If the market cannot break 208, then you should expect a move towards the 205 level. Should the  205 level not be able to hold, then expect the bear’s to make a strong showing and move down toward’s the 198-200 level. We also will have the employment numbers being released this coming Friday. This will be a very important release. Should the employment numbers continue to be strong, then the June rate hike from the Fed will be back on the table, and the market to move lower initially on that release. Right now, the market is simply on a tug of war with the interest rates and earnings news. With this news being released on a daily basis, expect possibly strong movements in both directions on a daily basis.

Range: Bonds

Interest rates have been the primary focal point of the market in the past few weeks. It will again this week, especially this Friday, when the employment numbers are released. Following the recent low of 1.65%, they moved strongly higher to about 2.25%. Since then, the have moved back down, to the 1.85% low this week, before settling around 1.94% today. It appears as if the new range for interest rates is the 1.85-2.25% for the near term. As far as interest rates are concerned, the only place to focus your attention will be the release on the employment numbers on Friday!

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping them navigate the trading range of the markets!

Mar 21

The Market Today 3/20/15: Dollar

Dollardollar

This sure was a wild, roller coaster week to say the least! The beginning of the week was relatively benign, with everyone anxiously awaiting the Fed announcement on Wednesday. As expected, the Fed delivered on Wednesday, with taking out the word “patient” from their wording, but added many dovish statements. The extra dovish statements was not expected, and as such, caused the market to change their thinking from a June hike, to the hike coming later! This caused the market to race higher, gaining most of what has been lost in the previous few weeks. What has been pulling the market lower the last few weeks? The continued parabolic rise of the US Dollar! The dollar has gained about 25% since last May. This is a very significant move for any currency! With the rapid rise of the US currency, the negative effects were being seen in the earnings, and earnings guidance being pulled lower, commodity prices moving lower, especially oil. Thanks to the dovish statement by the Fed, the rate hike may be on temporary hold, and stocks rallied sharply, the dollar dropped hard, oil rose sharply! In fact, the S&P closed today only 11 points off of the all time high!

Dollar: Stocks

The strong rise in the dollar, along with the steep decline in oil, has been weighing heavily on stocks in recent weeks. Thanks to the Fed, the market raced higher this week, and the dollar dropped significantly, and oil bounced higher! Looking briefly at the chart above, I feel this move may have some staying power in the day’s and week’s ahead. You can see where I highlighted in yellow in three different area’s. First, the topping pattern on the price. The price of the currency appears to be rolling over. Second, we see a MACD crossover to the downside. Finally, on the relative strength, we see a cross under, from being over bought. All three a a sign that the price of the dollar should correct. This will be bullish for both stocks, as well as commodities such as oil and gold! This being said, this still may be short term in nature. It is still way too early to say that the long term downtrends of oil and gold are broken, they may be just bear market rallies. Only time will tell if these rallies have a long life! As for stocks, I can see the S&P moving quickly toward’s the 2.15-60 level.

Dollar: Bonds

With the dollar moving lower this week, it has brought interest rates lower with it. Following the January/February low’s in rates of about 1.65%, rates rebounded to just above the 2.2% This does concern me somewhat. Rates moving back below the important 2% level, should it stay there long, would tell me that the economy is not as strong as the Government thinks it is. Although, with all  the QE gong on in Europe and Japan, this may be the real culprit for rates moving lower. Considering the sovereign rates of Germany, Spain, Italy, and France are significantly lower than rates in the US, the US bonds have considerable value, and as a result, will see major foreign buying of US Treasuries, pushing rates lower yet. The point that I want to make, is that it is still too early to make long term call’s on directions of stocks, commodities, and interest rates, and that we need to pay close attention to them all going forward.

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping them navigate the the market, and fluctuations in the dollar!

Mar 15

The Market Today 3/13/15: Euro

EuroEuro

There is no denying the strength in the market over the last five years. In fact, the market just hit all time high’s in the past couple weeks. However, in the last week, the market has taken it’s cue from the Euro. This year, the Euro has lost about 20% this year alone. This week, it has lost about 2.5%, which is a big move in the currency market. The market has been moving strongly lower since last Friday, March 6th. Notice the correlation? The Euro moved lower, as did the market. With the massive QE currently underway by the European Central Bank, as well as the Bank of Japan, and the interest rates cuts elsewhere like China and Canada, there is no other way for the currency to move, which is lower, and for the King Dollar to move higher. The ramifications are huge. With a major rise in the dollar, the value of commodities have been moving sharply lower. Look at all the coal stocks, almost at $0, look at oil, almost five year low’s. Gold has been taking it on the chin as well. In fact, gold sold off sharply last Friday following the employment report. The market interpreted the report as Fed will start raising rates in June. This is also a big factor in driving the stock market lower. The market simply has to readjust to higher interest rates in the near future.

Euro: Stocks

The market has broken two key support’s this week, 2.063 and 2,040. The market spent most of the day under the 2,040 support. It did however stage a late rally in the last 30 minutes of the trading day to close at 2.053. The Euro has been the main driver dictating the direction of the market. The Euro has been tanking, and now is bringing down the US markets.  With the major drop in the Euro, as well as the Yen, this has prompted a parabolic move to the upside in the value of the dollar! This will have a negative effect on the earnings of multi-national companies, as well as values in the commodities. The market has corrected about 3%! With all the chatter in social media and CNBC, you would think the move would be much worse. Is there more selling on the way? Perhaps, but I feel the market is due for a bounce. The market is significantly oversold, and due for a bounce in the short term.

As far as the Euro is concerned, it is also significantly oversold. Many currency “experts” have been calling for the Euro to be at parity with the dollar. This seem’s all but inevitable, since it traded just under $1.05 this week. Some have been saying we may get to the $.85 level that it reached when it first was introduced. I don’t see this as happening, thus, we may be very close to a bottom in the Euro, and top in the dollar, at least in the intermediate term. Once this occur’s, then the market has a green light to new high’s once again!

Euro: Bonds

The bond market has been in rally term’s of yield, and a sell off in term’s of price! Following the low of 1.65% last month, we have seen yields move all the way back up and touch the 2.25% level, before closing the week at 2.12%. So, while the Euro has a strong effect on the value of the stock market, we have seen it have it’s effect on the bond markets, pushing yields back higher. Perhaps the bond market can re-establish it’s last trading range of  2.2%-2.8% in the near term.

Going back to the Fed, the market is under the notion that they will begin to raise rates in June. Thus, the negative reaction in the stock market, and the prices of gold. I do not share this feeling. I do not see the Fed start to move interest rates higher until next year, 2016! That being said, I view the recent weakness as a buying opportunity.

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping them navigate the market and the effect of the on the market!

Feb 28

The Market Today 2/27/15: Trend

TrendTrend

There is no doubt about the trend of this market…it is a strong up trend! Following the bottom almost 6 years ago, the market turned up, and has not looked back. You can cite many reason’s as to the reason the trend has lasted this long. Whether it is the quantitative easing from the Fed, then the subsequent quantitative easing by the other central banks, or the the economy is actually improving, the growth is starting to accelerate, all are good reason’s for the market to continue the upward momentum. Other forces that can help this momentum, would be with the uncertainty around the globe, the US would be the safe haven. The uncertainty would be slowing growth in Europe, and the Russian/Ukraine situation, as well as the slumping price of crude oil. Down the road, will eventually be the “great rotation” trade. This is when interest rates begin their upward move, there will be a great allocation shift from the bond market to the stock market. Long story short, there are plenty of ammunition to continue this strong uptrend for years to come.  Please keep in mind, this does not mean that the market will only move higher, there will be periods of selling, such as what we have seen in October, December, and January. These periods of selling are healthy for the long term trend to continue. These periods of selling should be viewed as a buy opportunity. Remember, the market sell off’s of October, December, and January were marked with V bottoms. Until this trend stops, buy aggressively at the bottom of these sell off’s.

Trend: Stocks

As mentioned above, the trend of the stock market is overwhelmingly higher! Earlier this week, the S&P hit another all time high of 2,119! As long as the market continue’s the pattern of hitting new high’s, then continue buying on the dip’s! The market has been rewarding you handsomely by doing so! However, I would like for you to consider, that even though the trend of the market is very strong, you have to have a plan, and remain very disciplined in this market. You cannot buy indiscriminately. Throwing darts at the dart board to pick stocks, and believe they will go higher will not work here. This is not 1999. Focus on where the growth is, such as technology, and health care for example.

Looking at the chart above, as you can see, the S&P hit an all time high this week. I would use the prior high as support, which is highlighted in yellow at around 2,093. Should this level be indeed tested, and hold, buy at this point. Should it break, I would look at 2,067 then 2,044 as next level’s of support after this. Nonetheless, no matter should the market drop from here, be patient, wait for the selling to subside, then buy aggressively at this point. From looking at the chart above, I do expect the market to see some weakness. the market has looked somewhat weak the last three trading day’s. Also, looking at the MACD indicator, it look’s as if it is telling us some weakness is ahead of us. I say this due to the fact that the fast(blue) line is about to cross under the slow(yellow) momentum line. Also, looking at the RSI, which is the relative strength, is pointing lower(highlighted by yellow arrow). If you are looking to buy, use discipline, and have a plan and exit strategy to protect your capital.

Trend: Bonds

The trend of the bond market for the last 20+ years has been very strong to the upside in terms of price, and very strong to the downside in terms of yield. In the last month, the opposite has been true. Following the bottom at 1.65% last month, we have seen yields pop up to the 2.15% level, before ending the week at just above 2%. Barring any negative political events, I would expect the bond market to stabilize. However, due to the situation in Greece changing every day, I would expect the yields to trade between the 1.8% and the 2.2% level for some time.

As far as the Fed is concerned regarding interest rates, the Fed Funds Futures market seems to have strong likelihood of the Fed raising interest rates in September, and even stronger in October. Despite what the Futures market is saying, I feel very strong that the chance the Fed moving this year on interest rates are very small. Unless the growth really escalates which I doubt, or the US dollar continues it’s parabolic trend higher, which I doubt also, I can’t see how the Fed will be able to raise rates in 2015.

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping them participate in the strong trend up in the market!

Feb 14

The Market Today 2/13/15: Bull

Bullbull

Another amazing week! Following the sell off in January, The bull market is now raging in February! We closed today at a new high on the S&P! The major reasons as to the recent market strength, are the rebound in oil prices, and the agreement between Greece and it’s creditors. Regarding Greece, the agreement is only in principle at this point. Knowing how Greece is, this situation can change. It does seem to change almost on a daily basis. That being said, the market will continue to see volatility. Since the market did close on a new all time high(on the S&P), any weakness should be bought. We also have seen interest rates close the week above the 2% level. This is significant to me, confirming the strength we have seen this week in equities. For the most part, earnings have also been coming in very strong. This is the most important aspect of this bull market, as long as earnings remain strong, and the guidance that goes along with it remain strong, continue to add to your equity exposure. Going back to oil, has has been relatively strong since it bottomed about two weeks ago. Bottom in the case of oil, I say that with caution. The supply issues are still very much the issue. We have not seen any reason to believe that the supply of oil will be coming down. Therefore, to see a retest of the low two weeks ago would not be a surprise. Should oil try and retest, and hold the low of two weeks ago, I would then be aggressive at buying energy names at that time! As far as the overall market, I would add to equities on any weak trading days.

Bull: Stocks

The market has been very strong in the last two weeks. Including this year, January has been rather weak. The last two years, the market turned in strong years. Will this year follow that same path? As of this writing, I believe we will see this bull market continue with another positive year! The path may be rocky some times throughout the year, but I see another positive year! As I stress, just filter out all the noise out there, and let price be your guide. Price is telling you, quite convincingly, to remain long! Looking at the chart above, the recent breakout of the channel, gives us a measured move to $2,150 on the S&P! The upper channel also gives the same $2,150 target! No matter the type of market we are in, stay focused on your process, and buy discipline. Just because the market is as strong as it is, does not mean you buy stocks at a whim. Always stick to your trading plan, and you will be successful! If you have no process or plan, contact me, I have them!

Bull: Bonds

As with 2014, the bull market in bonds has been strong. This week however, we have seen the bull market start to slow down. This week, we have seen the key ten year interest rate close above 2% for the first time in a while!. In my opinion, this is a very strong sign, that the market should remain strong, and that the economy is strong, and will help asset prices continue to appreciate. With the interest rates above 2%, this shows that the bond market is showing that it does in fact believe that the economy is indeed getting stronger, and that growth of the economy is continue to ramp up. This all bodes well going forward. Should we continue to get positive reports from Greece, Ukraine, and stabilization in the oil market, you should continue to see interest rates firm up, and equities move higher!

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping them participate in the strong bull market!

Feb 05

The Market Today 2/5/15: Range

Rangerange

We talked about in my last commentary, about all the noise going on in the marketplace. Whether it was Greece, the Swiss National Bank, or the ECB and them finally acting on their QE program. We have seen a slew of earnings reports being issued, and they have been less than stellar. Yet despite all this, the market has traded within a 80 point range for the entire year so far. Last week, it looked as if it may break the range to the downside. With earnings from Microsoft and Caterpillar disappointing the market, and a dismal GDP report released last Friday, it had all the markings of breaking market, and a possible test of the October 2014 low of 1,820 on the S&P. Then, Monday came, and we have rallied to the top of the markets trading range as of today’s close. Being that tomorrow is Friday, it is very important that the market close above the top end of 2,065! I say important, because it will close a week on a breakout! Many intermediate to long term investors make their investments decisions based on weekly charts, and a close above the 2,065 would give them a very strong reason to buy. The other major story that has everyone’s attention is oil. Last week, oil traded under the $44 level. Then, last Friday, oil moved sharply higher, and traded briefly above $53 on Tuesday. From what I see, oil is in the bottoming process. It is too early to say that a bottom has definitely been put in. This is the first bounce we have seen. Considering how far we have fallen, a bounce was due. Considering how strong the trend was, to see a retest of the recent low, would be expected. Not only expected, but healthy. This retest would then really show if a bottom is truly in place.

Range: Stocks

As I mentioned above, the S&P is range bound between 1,985 and 2,065 since the beginning of the year. Tomorrow is Friday, and a close above the top end of the range would be significant event for the bull’s. I have mentioned on many occasions, that you need only pay attention to price. Let’s face it, the noise out in the market has been very loud. That noise has been negative for the most part. If you listened to the noise, you have lost money, significant money. Those losses will not be recovered if you keep acting on the noise you hear. Consider this, with all the negative noise out there, why has the market not broken down? If the market has not broken down, why would you sell? Listening to CNBC, and reading every article in the Wall Street Journal or on the internet, is only going to cause you pain. You need to have a system, an investment plan in place to be successful. If you have neither, we need to talk. I have both in place for my clients, and my clients are doing very well.

As far as the market is concerned, I see the market breaking out of the range, and making new high’s. I could see the S&P moving to anywhere between 2,150 and 2,300! Following this strong move, then I can see a move back down to test the October 2014 low of 1,820. At this point, I would buy aggressively at that point.

Range: Bonds

The bond market has been just as volatile as the equity market. For the better part of 2014, the bond market has been range bound between 2.2% to 2.8%. This year has been quite different. The breaking down, in terms of yield, is significant. It broke the 2% level, and went as low as 1.65%. I could see a test of the financial crisis low of 1.38% sometime this year. There has been so much chatter about the Fed raising rates sometime last year. I do not see how this will be possible. With all the Central Banks across all the developed world engaging in QE, I find it hard to believe the Fed will be able to raise rates. With sovereign rates trading well below 1% in Germany, Japan, and even France, Italy, and Spain, how could the Fed be able to raise rates? The foreign inflow’s of capital will support rates in the US actually moving lower, not higher!

Author Sean Rhodes is an expert in financial markets and helping you manage your money. For a no-risk consultation, check out Sean at the following link for more information, and expert advice on portfolio construction, and helping them navigate the range bound market!

.

Older posts «

» Newer posts