By Edward Leone Jr. CFP RFC MBA DMD
Contact Information: 303-478-6793 edleonedds@gmail.com
What’s up with financial markets? Is it trick or treat? An indicator that many technical analysts use is the S&P 500 200 day moving average. It works by collecting the closing prices over the past 200 days and averaging them. This shows a chart line that smoothes out volatility. During bull markets, prices are above the 200 day moving average and during bear markets, prices are below it. The direction of the 200 day moving average is also an indicator of future market trends. A bull market is likely if the S&P 500 moves above its 200 day moving average and closes above 2131. Let’s see what happens. Is this a disaster or an opportunity regarding the trend line direction? Do you sell in a panic or buy while equities are on sale. Is it time to hold and enjoy the ride to higher values? Only time will tell. Get the help of your professional adviser to make a sensible judgment.
The US economy continues to perk along, but slowly. The manufacturing economy is hurting some due to falling commodity prices, the strong dollar and a weak global economy. Other aspects of the economy appear to be improving slowly. Consumer sentiment is improving. The FED appears to be moving toward a policy of restrictive action, but is on hold until employment issues improve. The US appears to be the most favorable place to invest although many foreign companies may represent an opportunity to get in cheap depending on valuation analysis. Those who are seeking income cannot achieve that with the zero interest rate policy of the FED at present. Many are looking at master limited partnerships, preferred stocks, closed end funds and REITs instead of the US bonds and CDs.
Those in or approaching retirement must watch debt levels and medical costs in order to navigate the challenges of adequate long-term cash flows. For some, annuities may be a part of the ingredient for success. Be aware that these products can be expensive and restrictive. It is also important to understand the impact that community property state law may have on estate planning issues. If you live in a community property state such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin or Alaska, be sure to consult an estate planning attorney to make you legacy issues work in your favor.
The Security and Exchange Commission is contemplating some rule changes regarding ETFs and Mutual Funds. They may be required to categorize their portfolios to demonstrate how quickly assets can be converted to cash. This is a good way for funds to handle redemptions quickly and handle inflows. This action should not affect the value of other share holders assets. It is evident that this action could cause adjustment in how funds invest perhaps hurting returns and even causing some funds to close opportunity to potential new investors. Lets see what happens.
FOR THE RECORD:
DJIA 17,646.70
NASDAQ 5,031.86
S&P 500 2,075.15
SUGGESTED READING: ” Tools and Techniques of Investment Planning” By Leimberg
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