Market Update for September 16th, 2019

There is so much noise out there today, sometimes you just need to mute it,

and focus on what's important. The Data!

Today's agenda, big charts, Treasury's current signals, what keeps me up at night and of course, we will discuss oil after what happened this weekend and what is on my radar with our game plan going forward. What does this all mean to you as an investor? Let's go to the big charts.

First up, S&P index daily chart. Why? Because everybody knows the S&P, but please…. The market is much bigger than that. So, what do we see here? Two weeks ago, on our video, we talked about this box forming that could go either way. Well, it went up. What did it go up on? Nothing. Absolutely nothing. Trade, China? NO! Everyone knows this is not going to happen. We went up on false pretenses. Volume was declining, momentum is up and then we're hanging there at 15 on the VIX. Really nothing has changed. This is positive today.

Don't forget, every week we releaser signals, as they can change on a day's notice. Most importantly, I do not make changes on daily charts. One of the reasons is when you look here a little bit closer, we were stuck in this box. I'm not surprised at that although we are positive, but we have a negative view, that’s why we are going to end back up in the box before you know it.

Next up is our weekly chart, any change? Not really, we still haven't had a true positive turn over on momentum, you can see that wedge, that wedge is going to be answered. we're barely in it right now. Let's see what happens. We'll wait to the end of the month. But as of today, that is still negative.

Our last one is our monthly view, which gives us an idea for the long-term picture. We have spoken about this before; you have to be careful here. We're up right here at all-time highs. But this is the most important part of it. Relative strength of the market. Each time we've had highs, it's been a series of lower highs that is called negative divergence.That is another reason why I continue to be negative on the long term.

Now to take a quick picture of the background. Whoa, look at all of that information! This shows Advance stocks minus not declining, Stocks divided by total issues, So the S&P highs minus lows divided by 500. When you look over here the most recent time, look at that weakness, the weakness is unbelievable across the board in all aspects. We're just not seeing that surge. Another reason why I still don't believe the most recent move up to the top.

Moving on to Treasuries. Yes, we had a big move to the downside and we just had a big move to the upside. When you're looking at where we are from just a couple weeks ago, a real big move. Now, that being said, has anything changed as far as I'm concerned? No! We trimmed our treasury position about a month or so ago now for new clients, I bought into it last week. I might add as we go into this week, because again, when you look at everything that's going on, I still believe we will go lower AGAIN on treasuries.

What keeps me up at night. I have added oil because of what happened this weekend. I ran bond, Saudi Arabia, one of their refineries, not only their largest refinery, the world's largest refinery. This is a big-time geopolitical risk. I had an opportunity to be in a webinar this morning with an energy specialist, Great call. Bottom line is, retaliation is going to come. So, oil right now, is up 10 percent roughly today. But be careful folks. You're still in a downtrend here. I am personally going to stay away from oil when you have this type of geopolitical risk. You have to be careful. This is a big deal. There is a lot of speculation. Did Russia push Iran to do it? Is China behind it? Who does the Saudi work with? Did they do it themselves? Do they work with their allies like the U.S. to combat? In fact, possibly retaliate? With all of this, I am really going to continue to watch what happens in this sector.

Let me move over to some of my daily data points. As I said in the beginning, DATA DATA DATA! You can't just look at this market, it's gone up…. with what?? Not the data, that's for sure. We peaked in Q 3 2018. You can see it’s all green, good numbers. We've gone down from there. Wait, just wait another five weeks for earnings. All this stuff that's going on, it is going to be worse. Retail headline, retail, industrial production, you name it, we have peaked.

Here's our earnings and sales growth. Obviously, if we feel we have peaked, we peaked in earnings. When you buy a stock, when you buy the market, when you buy an index through an ETF, you're buying based on future earnings and growth. We have peaked again. Wait until we get to the next quarter.

Some of the data when we look at it, CPI, PPI, this is what the Fed has been looking for. So, we have in fact had a turn up on inflation. That is the next part of our cycle that we are expecting. How about auto sales? You can see that slow line grind down, we really have not had big auto sales. Most importantly, you can see auto delinquency. We are now back at levels of 2009. What does that mean to you as an investor? People are starting to have problems paying their bills.

Manufacturing activity is likely to remain underwhelming. This shows recession in gray. As they say, the trend is not your friend.This is a big sign…. Manufacturing. We can look at small business optimism. It is the same thing, when did we peak? 3rd quarter 2018. We've gone down.

I have a digital journal on my iPad, every morning I like to track everything from around the world. This is this morning's information. Most of the reds are China. Their number is at a 17-year low, they are really struggling big time right now.

Moving on to what's on my radar. A couple things…. Health Care. It just can't get out of its own way, it is stuck. the blue line is your 50-day moving average. It does not want to go above that blue line. Health Care just can’t seem to break the trend line. I am hoping to see a breakout soon.

Let’s revisit Gold. I’ve had a few people ask; how come we’re not selling gold right now? Well, I actually sold, and cut my position about a month ago, and then added it again last week. Why? We were looking for that pullback and we got it. Discipline is a major part of my process. You set a price target and you go with it.

I like to save the best for last. This is the large value index

My core holding is split between large cap growth and large value. Those are two of my biggest positions. It has done really nothing; it’s been stuck in a rut. Yeah, it's gone up year to date, like a lot of things, but it has really gone nowhere. All of a sudden last week, another change in the cycle, a rotation out of high beta growth into more value-oriented plays. We are up well over 10% in a week and a half. That's why you have to have patience. If you believe you have the conviction, you've got it in there. Patience is the key to making good decisions.

Lastly, fear and greed. No surprise, everyone has become greedy again….FOMO (Fear of Missing Out) All CNBC has talked about is… Buy Buy Buy! With no fundamentals or data behind it. So, it's not surprising to see our greed at 75 when just two weeks ago we were at 23.

Indicators positive, short term with a negative bias, two others are negative. So, what does that mean to you as an investor? I am staying put. I'm waiting, unless I see that window for treasuries, then I'll add to that position.

I'm Behind on My Retirement Savings, What Should I Do?

I want to share with you how to catch up on those #retirement savings! There has been a lot of articles about Americans being behind on retirement savings and yes this is true. You can look at the 08 crash, where you are now, everything has become so expensive, college tuition, I get and I absolutely understand it. Let’s go over some high-level ideas to help you get on track and hopefully, reach your goals. First up, let’s talk about the investment side. Always start with your 401k, your SIMPLE your 403(b), your TSP, etc… If you are working, and your company has some type of plan, that is the best place to start. Why? Because it's tax free! Then you want to make sure you are taking advantage of the companies match program. Now if you're over 50 you make a catch-up contribution. The catch-up rate is $6,000 and contributions for these plans are limited to $19,000. That's a lot of money over time.

So from there you should look at your Roth IRA and your #IRA. Personally, I like the Roth IRA better because when you retire, you want to have some money you can get to without having to pay taxes. The next thing is having it automated, like you would a bill, so that it comes out of your account every single month.

Moving on to health savings accounts, these are great because you have an opportunity to put money in tax-free and take it out tax-free. Here is a fun fact for you, did you know you can make a one-time transfer from your IRA to your HSA and it's tax free? Take advantage of it, let it grow, great idea!

Lets shift gears and talk about needs/wants... Nobody likes to cut budgets but sometimes you have no choice if you want to retire in the near future. Figuring out what you need and what want can be challenging.

Another idea, the minimalist revolution. Minimizing your life is indeed the way to go, especially if you are trying to save for the big picture.

I WANT TO LEARN MORE ABOUT CREATING A FINANCIAL PLAN

You can also take up a "Side Hustle" For those of you who aren't familiar with that term, this means a second job, or a weekend gig. Or maybe you could look into a rental property? Something along those lines.

Our side hustle is marketing. We support several advisers around the country with social media advertising and video content. You have to be creative and think outside of the box! I strongly believe that people do not plan to fail, they fail to plan. It is as simple as that, create a financial plan, stick to it, and everything else will fall into place.

#savingforretirement #financialplanning #playingcatchup

Dollar Cost Averaging: What is It and When Does It Pay to Use It?

Dollar Cost Averaging. What is it and when does it pay to use it? First off, in our business, we love acronyms so for DCA, it is dollar cost averaging. Basically it's a strategy that allows an investor to buy the same dollar amount of an investment in regular intervals.

So, for instance your 401K. Let's say you're contributing to that every week or two weeks, depending on your pay cycle. Each time you make that investment, it's a set amount, for example twenty-five dollars to fifty dollars per pay period, however, you'll be buying different level of shares.

Let's look at some examples:

First example, let's say if you start with a lump sum. You have ten thousand dollars to invest, fifty dollars share price, two hundred shares owned. Pretty simple. But of course with investing, what happens when you sell it? So here I show three scenarios, forty, sixty, and eighty dollars. As you see at forty, of course, that would be a loss because you bought it fifty and then at sixty and eighty you would have profits. Now you see the two hundred shares so let's now look at a flat market. Hello. Where are we right now and 2018 to May 2019, flat. No question about it.

Let's take that same ten thousand dollars. Split it up into four different transactions. Fifty dollars, forty dollars, sixty dollars and fifty dollars. Now in this scenario you own two hundred and four shares. Sell it. Strike price, forty, sixty, eighty. Two losses and then a profit on the last one.

So let's look at a falling market. Ten thousand dollars, split it up, fifty dollars, forty dollars, thirty dollars and twenty-five dollars. So now, as you see, we've accumulated two hundred and ninety five shares, which is pretty good. Same investment, more shares to sell at forty dollars, sixty dollars, and eighty dollars, all scenarios are profitable. That is obviously a good time to do this.

Let's look at a rising market. So after a cycle, you had the crash, you're doing the same thing. Split up, four transactions, fifty dollars, sixty-five dollars, seventy-five dollars and eighty dollars. As you see, in this scenario, we only buy one hundred and fifty five shares. Again it's all about owning those shares. And, as you see, similar scenario, worse loss, flat at sixty dollars , strike price, and then eighty, profit but obviously not as strong.

So conclusion, we showed you four different scenarios, a falling market is the best time to really utilize this strategy. So if you're a new investor start doing it this way. Now if you're in a 401K, continue it, but obviously you should have some type of strategy to put something on the sidelines, if the market breaks and if you want to know about that click on our latest market update. So, dollar cost averaging, DCA, great strategy in certain markets, okay strategy in others.