Volatile

No question today was a difficult day. The last three of four day’s have traded lower. Before today, yesterday’s trade made up the gain’s from the previous two down day’s. Today certainly had a different tone. Financial stocks were absolutely buried today. They traded just like they did in January and February. Financial’s are trading lower primarily because interest rates, as shown by the 10 year Treasury, have been trading lower. Back in the sell off of January/February, the key 10 year traded as low as 1.56%. Today, they closed at 1.69%. The main thought by the financial pundit’s out there were the market moving lower due to the threat of the Fed moving interest rates higher. My question, is how can the Fed raise rates? With Europe and Japan at negative interest rates, along with them moving them even lower, there is no way the Fed will be able to raise rates in the foreseeable future, in my opinion. This is the reason the 10 year is moving lower, the European and Japanese Central Banks are moving interest rates further into negative interest rates. So much money coming from over sea’s and into US treasuries are moving our interest rates lower. The Fed will not be able to raise any time soon.

We are on the cusp of earnings season. Alcoa kicks it off next week. The street is concerned about the quality of earnings that are about to be released. The key will not be so much as to what the earnings actually come out to be in for the fourth quarter, but what will be the guidance going forward. Last quarter, the US dollar was moving strongly higher, negatively affecting the earnings of US multi-national companies. Since the first quarter began, the value of the US dollar has moved lower, which should help. The key to the stock market performance this year depends on where the dollar goes. With all this noise, expect the market to remain volatile!

Volatile: Stocks

Since the low’s of the stock market on February 11th, the market has moved up strong. What is key, is that the market  still need’s to break the cycle of lower high’s, and lower low’s. In order for the market to do this, we need a close on the S&P first, above 2,080, then even more importantly, 2,116. This will break that cycle, and let the market move up significantly into new high territory.

In the short term however, the market simply need’s to pull back. The market hit a low of about 1,810, and moved as high as 2,072! Looking at the chart, you can see the market closed today on a weekly pivot point. From this, I expect a short term bounce to the upside tomorrow. Should this not happen, the market could move and test the 2,020 support level. This is where I would expect a bounce then. If that support does not hold, then a defensive tone may need to be taken in the short term. No matter which direction the market decides it will go, expect it to be a volatile market in the week’s and month’s ahead!

Volatile: Bonds

The volatile market does not only apply to stocks, but to bonds as well. Earlier this year, the key 10 year interest rate traded as low as 1.56%, came close to touching the 2% level, before closing today at 1.69%. I can make the case that interest rates on the 10 year can get to the 1.25% level. This will happen if the Central Banks overseas will continue to move even more negative.

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 client’s navigate through market’s that are volatile!

Cautious

Last year was one of the most frustrating years in investing that I have had in my 23 years in the business. So far, in 2016, it hasn’t been any better! January was extraordinarily brutal, and February has not been a picnic. As we stand as of today’s close, there is some optimism. Before I go there, I want to touch on what has caused the significant selling. First, the slow down in global economic growth. This was sparked in China in January. While the Chinese markets have not improved at all, their currency situation may have. In other words, the decline in the Chinese Yuan has at least temporarily abated. Then, the Japanese central bank went to negative interest rates, joining their counterparts in Europe. Negative interest rates are a combination of low interest rates, and then subtract the inflation rate, that is how you get negative interest rates. This week, since markets were in rapid decline, the flight to safety into bonds, pushed down interest rates on the key 10 year interest rate below 1.6% mid-week. Due to this, many thought that the US would be next, to go into negative interest rates. Late in Thursday’s trade, one Fed Governor stated that there is no way the US would go to negative interest rates. Just before he said this, the market briefly broke the January low of 1,812, then rallied sharply higher. Then, the market rallied sharply today. What will be interesting, is that since China was closed all week due to the Lunar New Year, and our markets closed on Monday, is how will the China’s market do on Monday, and how will the reaction in the US be? We will find out on Tuesday. For now, I am cautious, but optimistic, depending on how our markets open and close on Tuesday!

Cautious: Stocks

This has been a very volatile week to say the least. There are still many questions that need to be answered. For that, I expect the volatility to remain elevated in the near term. I mentioned earlier, that I see some optimism. First, investor sentiment is now worse than it was during the financial crisis!! Then, this week, we have seen the re-test of the January low’s of 1,812. So far, the retest has been successful. As I mentioned on my video to my clients, we really need to see the market move back above 1.950. Should this happen, I would then feel convinced that the market has turned the corner, and the uptrend remain intact. As i mentioned, we briefly broke the January low’s, and bounced. It did close above the important 1.850 resistance, but closed just below the 1.880 resistance. Now, if you look at the chart, I highlighted the three resistance levels of: 1,880, 1,920,and 1,950. Since the Fed Governor stated there is no way the US will go to negative interest rates, the market has rallied. Going with the thought, that China will not be a disaster on Monday, our markets should continue to the upside from today. For these reason’s, I am cautious, yet optimistic!

Cautious: Bonds

Not all the fun has been seen in the stock market. For those who watch the bond market, there has been plenty of fireworks in the bond market. We have seen the interest rate on the key 10 year US Treasury note break under 2%, and get as low as 1.56%! Following the events of today, it did rebound, to close at 1.74%. Being the fact the rate is still below 2%, I have to remain cautious on the stock market. I would like to see the S&P break back above 1,920 in the short term, and see the interest rate back above 2% at the same time. This would increase my confidence that the stock market has found a bottom. Stay tuned, this will be another fun week!

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 client’s navigate through market turmoil, and letting them know whether I am cautious, optimistic, or perhaps, both at the same time!

Bounce

This has been the worst January on record! We finally saw buyers come in in the later half of this week. As I have mentioned before, the 1,820 level was key support. I sent a video email to clients letting them know this was the key level to the downside. On Wednesday, it broke this level on an intra-day basis, going as low as 1,812. Once it hit this level, we saw the bounce I was looking(hoping) for! It moved from 1,812 to 1,872 until the last half hour of trading, where it gave some of it back to close in the 1,857 level. Personally, after a miserable Friday from the week before, and entering a three day weekend, I thought the selling to breach the 1,820 would have happened on Tuesday. Nonetheless, it happened on Wednesday. The following day saw some consolidation of the prior afternoon, and went sideways, until some buying came late in the day. Today, we finally saw buyers come in force, and close up nearly 40 points at 1,906. There is no doubt, that sentiment is still extremely low. First, what is the cause behind the sell off? What it really comes down to, is the global economy is slowing. The IMF just lowered their global GDP down for the third time this past week. That is the main cause of the selling. The next concern, is it just slowing growth, or is the global economy in deflation? Still too early to tell on this one, but by the fact that prices on pretty much everything are dropping(ie stocks, commodities), that this may be the case. This is not what we want. The good thing here, is for the first time in month’s, we saw a rebound in the price of oil. Oil had a strong move to the upside today, I do expect this to continue at least in the short term. This may help brings stocks up along with it.

Bounce: Stocks

We finally saw the bounce in stocks starting on Wednesday, with strong follow through today! Stocks bounced off of the key 1,820 support, and closed at 1,906. By looking at the chart, I put two yellow lines at key levels I would like to see stocks break above, in order for the market to resume the uptrend. These levels are at 1,950, and 1,990. I believe the 1,950 is very important. If we could close above this level this upcoming week, this would be a strong positive. Even more, getting a close above the 1,990 would be much better. I do not believe we will see the 1,990 level this week. The market always surprises, so it is in the realm of possibility. Stocks have been very correlated to oil in the last few weeks. Whenever there was an uptick in oil, there was an uptick in stocks. Oil closed above the $32.10 resistance, and may move up to the $35-37 area before consolidating. This move would be very reassuring to the equity markets, and finally bring calm to the storm. Barring any news over the weekend, I do expect buying to continue on Monday morning. What would give me greater confidence in a move to 1,950, stocks to open slightly weaker on Monday morning, and then see strong buying coming in, and lift the averages to positive territory to end the day.

Bounce: Bonds

Once again, the bond market is doing the complete opposite of what the majority is thinking it would do. During the market turmoil, yields moved below the crucial 2% level, and reached as lowof 1.93%. Once it hit that low on Wednesday, we finally saw the bounce in yields, and it closed today at 2.04%! I believe the close above the 2% level was important. To give me greater confidence, I would like to see the key yield on the 10 year to get above the 2.17% level. This would tell me the bond market believes the worst is behind us.  Keep a close eye on yields!

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 client’s navigate through market turmoil, and keeping them aware of each bounce level, and to act accordingly!

Crash

This weeks sell off sure feel’s like a crash, doesn’t it? No doubt, this weeks 6% draw down was a bitter pill to swallow. It has the appearance that all hope is lost, and the stock market will never move up again! For a few brief fleeting moments, I had those thoughts also. Once I removed the emotions from my system, I realized that all is ok. While I am not happy with this move, and I know that clients and other investors are bothered and frustrated, but this will pass! Look back just a few months ago, in August and September. The sell off then was worse than the current one is. I feel the market could retest the low’s we saw in September. What did the markets do from that low? They rebounded sharply! They will again this time. Now I am sure your next question will be when? I wish my crystal ball was working, and I could give you an exact answer. The problem is, that crystal ball is in the repair shop, and no longer working. That being said, what I can tell you is, due to China, due to the overall investor sentiment being as negative I have seen since the financial crisis, this has the recipe of a rebound. This weeks sell off was started with the much more violent sell off in China, and their currency devaluation. Just remember, we are not in 2008, when the mortgage market was the reason the market lost 40% of it’s value, this is simply a correction. Which is healthy for the long term. Not easy to go through, but we have to remember, and not let our emotions get the best of us, and do something which we know will would regret real soon.

Crash: Stocks

Will the market crash in 2016? While it certainly feel’s like it, I hardly think so. The situation in China is bad, but certainly is not as bad as the mortgage issue here was in 2008. Remember, the Chinese market was up well over 100%, mostly due to high leverage. Chinese investors were trading on margin. The Chinese market now, looks very similar to our market in the late 1920’s. Now we see the ramifications of leverage when the market moves against you. Selling only brings on more selling. We do not have that problem here in the US, or in any other part of the Developed markets. We briefly discussed the reasons for the market moving lower, let me tell you some reasons why I feel it will bounce soon, and move back higher. First, they always do. Even in the depression, and again during the financial crisis, the market rebounded. Generally, when investor sentiment is as low as it is right now, that signals a bottom. Look at the chart above!! Look at the four yellow circles that I drew on the chart. We are now in the fourth circle. In the previous three, what did these yellow circles show? A deeply oversold market, that rebounded. Right now, the market is very oversold. I expect the market to do the same, as it has done the three previous time….rebound higher!!

Crash: Bonds

Courtesy of the “crash” in stocks, the bond market has been rallying! This is what happens when stocks melt down, that money goes into the bond market. Which is the reason the bond market rallied this week. The interest rates however, have not broken support on a closing basis, so I do not feel, at least right now, that we are looking at a severe downturn from these levels. I would get real concerned if the interest rate on the key 10 year treasury broke back under 2%

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 client’s navigate through a crash like market!

China

Happy New Year!!! The market certainly has not started on the right foot! Starting Sunday night, the futures were positive at the start, then news from China surfaced, that they opened down 3%! It got worse, trading curbs kicked in, and the Chinese market closed down 7% before the shut trading for good well before the normal close. This trading action spread like wildfire through out the globe. Our markets were down over 2%!! Not the way we would like to start a new year. Of course, it is not good when you look at the trading proverb, how the first 5 trading days in January, determines how the year ends up. If this is the case, don’t expect a good year! If you believe this bull, then sell, and hold cash all year. Last year started the same way. While we ended up flat, it would have been worse if those proverbs were correct! News about the breaking down relationship between Saudi Arabia and Iran also surfaced, causing the price of oil to spike! The move was short lived, once the afternoon came, oil went down with the rest of the equity universe!! Not a good sign if your bullish oil. I have been buying oil lightly down here, so it is not what I want to see!  The sentiment is certainly negative on the markets as a whole. There are not too many bulls out there right now. As long as the trading continues to act like it has at the end of last year, and the first day of the new year, sentiment will only get worse. The positive spin, markets tend to reverse with such extreme pessimism.

China: Stocks

As mentioned above, stocks are off to a rough start thanks to China! The chart above certainly is not the most promising. As you can see, we closed below the red line of the triangle. This is a bearish sign. The bottom of the triangle is at the 2,023 level in the S&P. Market bulls need to reclaim the 2,023 level for bullishness to re-assert itself! The news from Saudi Arabia and Iran should have been bullish for oil. The problem, oil moved down, and is continuing to move down today! For the last month or so, it seems as if the market direction is takings its cue from oil trading. If oil continues to falter, will it bring the rest of the market with it? The Dow Jones Transports continue to hit daily lows, this is not a positive at all. These are strong headwinds for the market right now! What catalyst is out there to move these markets ahead? As of right now, I certainly do not see one. Other that the fact that the markets are nearing an oversold condition. Right now, I do not see a massive decline. That being said, I am holding on to what I have. I think we just need to adjust to higher interest rates, and get the weak investors out. Once we see a sustained break above 2,023, then 2,060, will become more bullish.

China: Bonds

China has not had the big effect on the bond market, like it has the stock market. The main event driving the bond market is the Fed. Last month, the Fed raised rates. Since that point in time, the key 10 year rate has bounced between 2.2-2.3%! When the Fed raised rates, the prevailing thoughts were the Fed would raise an additional 4 times in 2016. Today, the prevailing thought is maybe one more time, if at all! This is a big shift in thought. Should the bond market return to the thought they they will raise multiple times this year, then interest rates could break the 2.3% range, and move to possibly 2.5-2.8% area! Since growth seems to have been slowing on a global scale, I am more thinking that the Fed will not be rasing rates too much this year.

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 client’s navigate news, like that coming from China!

Posturing

The last week and a half have not been good for the markets. I believe this is and understatement! The market was trying to push it’s way back above the 2.100 level, before this retreat began. The question I am being asked everyday, is why is this happening? What is behind the violent selling? I believe there are two culprits. First, the price of oil. Since Thanksgiving, the price of a barrel of crude oil has slipped about 25%!! This is a remarkable move, in such a short period of time. This move in itself is due to two things also: the appreciating dollar, and supply issues. We have Iran and Iraq coming online, and the main OPEC nations producing at full capacity. The second reason for this market melt down is simply the market posturing for the upcoming Fed move on interest rates. As we have seen in the past year, when it came time for the Fed to move on interest rates, the market would sell off, preventing the Fed from hiking rates! Volatility is certainly on the rise as a result. When volatility rises, the markets move lower. I have mentioned that volatility would remain on the increase. While it was high in August and September, it came down near the low’s in November, and early December. We are getting pretty close to volatility trading at elevated levels.With this strong sell off, now you see all the bears creeping out of the woodwork, dictating their doomsday scenarios. While there is plenty to be concerned about, I think a bear market scenario is out of the cards. Only a move below 1,820 would change my mind on that.

Posturing: Stocks

As mentioned above, last week was a brutal week for stocks. This week, was off to a rough start. All this volatility and selling is simply the market posturing itself, and thus, trying to promplt from hiking rates.  I couldn’t sleep last night, so the futures were up about 12 points on the S&P around 3am. When I woke up at 6am, they were down about 10! Oil was only down about 24 cents a barrel at 3am. When I woke up, they were down almost $1 a barrell. The market rebounded in the late morning and early afternoon, closing at the high’s of the day!! I tweeted out earlier in the day when the market was selling off, that it looked as though the S&P would visit the 1,992 level. While I didn’t think it would happen today, it did. Once it did, it bounced higher, and closed at the high’s. This is a good sign. While I feel tomorrow and the first half of the day on Wednesday will be very volatile in both directions, I feel the market will move higher once the Fed decision is out of the way! This decision comes out at roughly 1pm cst on Wednesday. Based on this, I would not be afraid of adding to positions at this point, heading into the Fed decision! Should the market break today’s low’s, on a closing basis after the decision comes out, this may change my opinion, and then take a more cautious stance.

Posturing: Bonds

Investors are used to volatilty in the stock market, not as much in the bond market. As with stocks, the bond market is also posturing itself prior the Fed decision. We have seen rates nearly touch the 2.4% level, then retreat, and hit into the 2.17%, and closing today at about 2.23% level. Prior to last week, it was a foregone conclusion the Fed was raising interest rates. My opinion all year, was that the Fed will not hike interest rates at all in 2015. However, my view certainly has been challenged, and I was beginning to think that they very well may hike interest rates on Wednesday. Now, I am more inclined to stick with my original opinion, and go with they will not move on rates. The junk bond market is all but imploding, and emerging market currencies are getting slaughtered. With these events, I am more inclined to think they may stand pat on interest rates. We will find out in less than 48 hours!

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 client’s navigate market posturing!

Rates

Today was certainly an interesting day in the markets. We started the day with the release of the employment numbers from the Department of Labor. The expectations were for an increase of 183,000 jobs. Every Economist out there was right around that number. The increase of 271,000 came as quite a shock to everyone! The market did sell off sharply to begin the day as the reaction to that number. Why the negative reaction? Higher interest rates are more competitive with stocks, thus, slowing the advance of the stock market. First and foremost, there should never be a swift reaction to these numbers, as they are subject to revisions over the next two months. The last two releases have been very weak, and then suddenly, we see a strong report! Coincidence? I think not. If you look at the comments from Fed Chairwoman Janet Yellin last Wednesday, she stated that we should not rule out a hike in rates in December? Funny how such a strong employment number comes out just two days after her statement! Plus, the Fed should not make a judgement based on one economic release! Obviously, we like seeing a strong employment picture within our economy. We should not be thinking just because we have one good release, all of a sudden, the Fed will be releasing interest rates! Even if they do, is it really a big deal? No, it isn’t. This is because when they start raising, they will not be raising rates at a fast pace, it will be very slow, and methodical.

Rates: Stocks

As mentioned above, the stock market had a swift negative reaction to the release of the employment numbers. This was do to the belief that with higher interest rates, is the belief that it is more difficult for stocks to move higher in a rising interest rate environment. Is  rising rates really impede stock growth? In the current case, I don’t think it will. I say this, because the Fed will rates on a very slow schedule. Considering interest rates are basically at 0, it has a long way to go before being at historically normal levels. Interest rates on the 10 year level would have to be above the 5%-6% level for me to be overly concerned about interest rates affecting stock growth! Even though stocks sold off swiftly at the open, they closed nearly unchanged! That say’s a lot about the strength of the stock market! Plus, when the interest rates are moving higher, which sector is the greatest benefactor of this? The Financials, and they are one of the biggest weighted sectors in the market. When Financials move higher, this will pull the rest of the market up with it!

Rates: Bonds

Interest rates on the 10 year level had a strong up move in terms of yield, and strong negative move in terms of price! The 10 year closed at 2.33%. I could see it move up to maybe 2.5% in the short term. I do not see it moving much higher than that in the short term. As you can see by the chart, I highlighted two yellow circles. Those yellow circles represent an overbought level. As you can see from the first circle, rates moved lower after that. We are now at the second. From that, it would not surprise me to see rates move a little lower, then moving higher into the December Fed meeting. We will see some volatility between now and the end of the year in bonds!

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 client’s navigate markets when interest rates rise!

Bullish

The market has certainly played to it’s seasonal tendancies. During the traditional weakest time of the year, which is the third quarter from July through September, the market sold off strong. The market’s traditional strongest bullish period, is from October through January. This month has been extremely strong, since it bottomed on September 29th. Has there been any real new’s or events, that caused the August/September swoon, and the subsequent October rebound? Not really. The earnings release period this seasonhas not been all that strong, nor has it been all that weak. The rising dollar has impacted multi national companies earnings, oil is still trading near their low’s, so that part hasn’t been a real market mover. I feel the real reason is two fold. The main reason is the seasonal tendancies. The second, would be the correlations with the German and the Japanese markets, which have bottomed, as well as rebounded at roughly the same time periods. In addition, the key 10 year treasury has stayed above the important 2% level. There was a slight dip below, but nothing that I am worrying about.

There are some concerns that I am keeping an eye on. First, is interest rates. Today, the FED decision was to leave interest rates the same.They did however say in their commentary, that a hike in interest rates was on the table for the December meeting. In order for this to happen however, the job’s market would have to improve, and that inflation would have to pick up. I do see the job market picking up, but I do not see inflation picking up anytime soon. Therefore, I do not see the FED moving interest rates higher in December. I have said since early this year, that I do not expect them to move rates higher until 2016 at the earliest, and possibly even 2017. If the 10 year interest rate were to have a sustained move under 2%, this would concern me. It bother’s me only because the rate would stay below 2% if there were concerns that economic conditions were to deteriorate. Next, global conflict. Should the situations in Iraq, Afganistan, and Syria get worse, and military confict escalates, expect a pull back in the markets.

Bullish: Stocks

By looking at the chart above, you see the two yellow cup’s below the market bottom’s of August 25th, and September 29th. This two yellow cup’s highlight the swoon we saw in those months. What caused me to become very bullish, for the first time in quite some time, was the fact that the bottom in September was higher than the low in August. I reallocated my clients accounts on October 6th, about a week after the latest bottom. The bottom was actually confirmed on October 15th, when it broke the high of 2,020, between the August and the September low’s. Due to this fact, this move tell’s me that the market should be moving towards new high’s, and should move higher, to roughly the 2,150 to the 2,250 levels. That being said, should the market pull back during the strong October through January period, look at that as an opportunity to either add to current positions, or initiate new positions in this bullish market!

Bullish: Bonds

The bond market has been just as volatile as the stock market. We have seen the key 10 year rate move from as low of 1.85%, to nearly 2.3%. Then, the bullish bond market briefly reasserted itself recently, by touching the 1.9%! level. Today, the 10 year rate closed at 2.09%. I expect the next move to be a move towards the 2.3% mark, and possibly the 2.5% level. I would be very surprised if it went above that. Should the rate move above 2.8%, or even the 3.25%, that would tell me to lighten up on equities, because this would make bond rates more competitive with stocks. Just to let you know, I do not expect this to happen.

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 client’s participate in this bulllish market!

Panic

What a week this was! A week ago today, everything was great. Market was near the highs, shrugging off Greece, and China. The news of a slow down in China’s economy are ramping up, and finally having an effect on our markets. The selling that we have seen over the last three day’s, has been strong. It certainly intensified today, and really in the afternoon. There was a sense of panic in the air. Most investors have not been used to seeing this much selling. Afterall, it has been a whopping seven years since the financial crisis began. Everyone seemed to forget that the market can actually move lower! Who can blame them? Any sell off that we have seen over the last few years, has been made up in just days! We saw some strong selling on Wednesday, then Thursday, and it really ramped up today.  Yesterday, the market closed below the very important 2,040 on the S&P, closing at 2,036. I felt we would see some selling following yesterdays close, but I did not expect the intensity, and the amount of selling that we saw today. Following a day like today, and it being a Friday, I would expect investors to get scared over the weekend, and see the market sell at the open. It is here, that I can determine if the selling is over for the short term, or more ison the way.

Panic: Stocks

There was panic in the air today! The Dow closed down over 530 points, and the S&P closing down about 65! Following the break of the important 2,040 support yesterday, the next support is 1,970. That is exactly where we closed today. Should we get a close below 1,970, the next support is at the 2014 low of 1,820! Should the 1,820 level break, things will get ugly, real quick. This would signify that much greater problems are out there, just not visible. My plan of attack right now, are to wait and see if these support levels will hold. Should they hold, which I expect them to hold, I will then buy aggressively. I have my clients in mostly cash, just waiting for this. That being said, lets put this into perspective. Today, we just hit the 10% level, thus, we are in correction territory. This is the first 10% correction since 2011!! There is no reason to panic!! This is healthy. I would be more concerned if our economy looked horrible. It doesn’t, it looks really good. So, there we go. Sit back, and relax. There is no reason to get overly concerned. Based on the plan of attack I mentioned earlier, go by that! Until then, let the market run it’s course.

Panic: Bonds

While there was panic in the stock market, there was buying in the bond market! Interest rates on the key 10 year interest rate closed at 2.05% Should the selling in the stock market continue, you can reasonably expect the interest rates can go as low as 1.85%. I do not see this happening, but the case can be made. If you are looking to get a mortgage, now is the time. This will be the last time we see interest rates hit this low.

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, during time’s of market panic!

Correction

Over the last few week’s, the market has been weak. The question that my client’s have been asking, are we in a correction? Right now, it is still too early to say. It sure has the feeling of one. the majority of stocks have been moving lower. The amount of stocks hitting 52 week low’s are soaring, and the stocks that have been hitting 52 week high’s, have been anemic. The amount of stocks that have been holding this market higher, are getting fewer and fewer. This is not a good sign. There is not much leadership. The biotech sector, which has led the market higher for quite some time, have broken down. This market reminds me of the way the market was in 1999. When the few stocks that were moving the market higher, wasn’t going higher anymore, the tech wreck ensued. Will we get the same reaction here? Very possible. With the release of the latest job’s report today, the market is preparing for the Fed to raise rates, beginning next month. Should this in fact occur, then a correction is very close. I, however, do not subscribe to this notion. I do not feel the Fed will be raising rates at all this year!! So, should the market move lower, I would be a buyer of the dip!

Correction: Stocks

As you can tell by looking at the chart, there is support at the 2,063, and 2,044 levels(marked by the yellow lines). The market could easily bounce off of one of these important support levels, just as it has over the last few year’s!  Should the market break below the 2,044 level on a closing basis, then we may well be entering a correction! It has been several year’s since the market has seen a 10% pull back. I do not see a 10% pull back, unless the Fed were to begin raising rates next month. Besides the technical condition of the market being poor, other reason’s point to the market moving lower. First, the poor market breadth, or number of leading stocks moving higher, has been smaller and smaller. The bond market is saying that the Fed will not be raising rates next month. The futures market is saying the same thing. All this being said, I feel the pull back will be in the 5-7% range. Of course, should the Fed raise rates next month, then a 10% down move is likely.

Correction: Bonds

Last month, the key ten year bond rate came close to hitting 2.5%. As of today, it closed at 2.17%! If the Fed were to begin raising rates next month, I don’t see how the rate moving down to 2.17% could be possible. I see this rate moving down to the 1.85-2% level, before moving back to the upside. I believe that the Fed will not begin to raise rates at all this year. Should our economy continue to improve, and the global economic situation improves, then I see the Fed beginng this quest sometime in the late first quarter of 2016. This being said, I do not see the stock market entering into an official correction.

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, during time’s of market correction!