In The News...

Here are two numbers worth seeing:

Stock returns from Nov. 4th last year thru March 1st: +16.0%
Stock returns since March 1st, thru May 19th: +0.0%

That is right, U.S. stocks have gone nowhere the past 2.5 months since rallying hard post-election (per S&P 500%). I am not surprised, as I wrote back in mid-March that I felt this would be the case. Here is a visual look at how the S&P index hit a wall right at 2,400:

I want to highlight the chart below the big chart above, which shows the percent of S&P 500 companies whose stock prices are above their 200-day moving average. This number is gradually declining and is currently at 67%.

Why does this matter? Because many investors (our firm included) does not like to buy/own stocks that are below their 200-day moving average. The 200-day serves as widely used barometer for a stock's long-term trend, in attempt to predict whether the price will move higher or lower in the future.

Why 200 days? Why not 150 days? Or 175 days? Or 250 days? I'm not sure, but it is one of those things where, if the 200-day matters to other investors, then it matters to us because it helps us anticipate what investors might do in mass. When investors act in mass that really catapults the market in one direction or the other.

I believe the market will continue to be choppy for the next couple months. This means we could see some bigger weekly gains followed by bigger weekly losses. Seasonally this would make some sense too as volatility usually increases in the summer months.

In The Market...

The S&P 500 fell -0.3% last week. Let's look under the hood...

Stocks: Last week's losers were this week's winners, namely Utilities (XLU) and Real Estate (VNQ). For only the second time this year, the S&P 500 fell in consecutive weeks. Financials were the biggest loser, as interest rates fell on the week. Which reminds me...

Bonds: A very nice week for bonds, which were up nearly across the board for the second-straight week. If you remember what I wrote two weeks ago, I showed a chart of the long-term Treasury bond fund (TLT) and suggested that it might be due to rally and rates would, consequently, fall. So far that is exactly what has happened. Our investment-grade bond position has benefited from this recent Treasury rally, as it possesses similar investment characteristics to Treasuries.

In Our Opinion...

A couple people called asking how the President Trump/Russia investigation might influence the market in the weeks ahead, especially as stocks fell nearly -2.0% on Wednesday after the news broke.

A friendly reminder: Ignore it. As I have written at-length, it has very little impact on long-term market movement. Binary events like this investigation can certainly influence the market in very short-term stretches (days), but they do not over the course of weeks and months. Everyone is entitled to their opinion, but in the same vein that Trump is not the reason the market rallied post-election he would not be the reason to explain a potential sell-off. To assume as much would be to conclude that every investor is thinking squarely about this investigation when they buy or sell securities. They are not.

In Our Portfolios...

Stocks: We sold our Consumer Discretionary fund (XLY) within many client accounts. My intention is to sell it for every client account. Some accounts are in the process of transferring from Scottrade to TD Ameritrade, which means those that own XLY will have to wait until such transfers are complete. Technology and Industrials remain the two sectors we are most likely to buy in its place.

Bonds: We sold our preferred stock fund (PFF) within many client accounts. (This is the same situation as just mentioned regarding transfers.) We will likely buy either investment-grade corporate bonds or long-term Treasury bonds in its place, depending on the specific account.

Q&A / Financial Planning...

I encourage you to read my latest blog post: Your Most Important Job Before Retirement. I outline 10 financial planning areas that you should prepare for if you are getting close to retirement.

The Nest Egg
Retirement Spending
Retirement Income
Social Security
Health Care Costs
Long-Term Care Insurance
Investing Needs In Retirement
Housing Plans
Managing Debt
Life Insurance

What's New With Us?

If you electronically signed your TD Ameritrade account transfer request this week, your account(s) should migrate over to TD sometime next week. Some accounts have already made the move. I will provide everyone with specific login instructions soon. You should also receive login instructions in the "welcome letter" you receive by-mail. So I would recommend that you not immediately throw away that letter when it arrives.

Let me know if you have questions about this transition. I appreciate your cooperation in advance for any hiccups we might experience along the way during this process.

Have a great weekend!

Brian E Betz, CFP®
Principal

Market & Financial Planning Commentary

Market Keeps Hitting A Wall... What Now?