Special Bulletin: August 19, 2020

All-Time Highs and the Shortest Bear Market Ever

You may have heard about the ‘P.P.P.” (Payroll Protection Program). But have you heard about what it and other recent stimulus programs have led to? The “R.R.R.” or Remarkable Republican Recovery.

We are not trying to be political, but we feel we should give credit where credit is due. The S&P500 has just experienced the shortest bear market in history, and that was in large part due to the immediate and massive response by the current administration. We understand that Congress has had a hand in it too. But their part was slower and smaller in comparison to the actions taken by the Federal Reserve and the Treasury Dept (both led by appointees of the President), and the President and his cabinet. 

To us, the stock market seems to be cheering those actions and hinting at another Trump victory. Only time will tell.

Our Current Market Outlook remains “Uptrend Under Pressure” with a “yellow” light. Two of the Core Four indicators are still green reflecting the current major trend, while the remaining two are yellow and red throwing a dose of caution on the party (see Core Four above). Certain sentiment indicators are at excessively bullish levels that often precede a sharp pullback. While we are well invested in our strategies, and would prefer the signal to go green, the “math of the market” continues to suggest some caution is warranted.

Areas of industry strength can be seen in technology, precious metals/miners, materials, home building, HVAC, retail, and solar among others. True clarity of new persistent industry leadership, though, may not come until AFTER the election. 

What can investors do now? Eliminate losing positions that have not participated in the recovery (aka: sell your losers). Prepare an “exit strategy” in case things go awry into the election. Update stop-loss orders, but bear in mind the necessary technical conditions for a bear market are not present.

Have a Triumphant day! ®