The most recent rally started on April 2nd. Subsequently, there has been a series of back and forth days in each of the major indexes. We’ve not seen much in the way of back-to-back ups or downs, and if you look at the chart, you’ll note that there are more green days (‘up’) than red (‘down’) since the beginning of April. It is important to note that during the entire March month-long crash we never saw back-to-back ‘up’ days.  It appears at the moment that markets have possibly hit a temporary ceiling. We are anxiously waiting to see whether the bears are ready to make their next drive, or whether the bulls will regain the advantage in the near term.

In today’s chart of the Dow Industrials* you can see that the rally appears to have paused around 24,000 which is about halfway back from its lows to its old highs.  The blue lines on the chart show where I thought the bounce from the bottom would lose steam and potentially turn back down (as has happened in almost all of the similar markets with VERY large drops).  This has been a reversing mark most of the time in the past.  (But of course, you will remember that past performance is not necessarily an indication of the future!)  At the moment there is NO CLEAR DIRECTION for the markets.

While the larger trend since the top in mid-February is down, I suspect that further upside by the bulls MAY lead to the Dow* reaching toward the next round number at 25,000.  Fingers are crossed!

Ron’s Market Minute — Time to Reflect   

I’ve often mentioned that the hardest part of what we do is trying to understand what a client’s actual risk tolerance is.  Many people suggest that they are conservative only to discover as markets head skyward that they are less conservative, and others discover that although they had firmly stated that they were aggressive investors, when markets are dropping, they may begin to feel pretty conservative.  So, as I mention each time there is a stock market decline, whether we planned for it or not or were successful or not, please use the correction to take your own temperature on your risk tolerance and investing objectives. If you are watching the market trade all day because you are worried, that’s not healthy. I watch it every day anyway so that would be two people both watching the same thing and only one of us gets paid to do that.

If you are unnerved by the correction, then I would suggest reassessing your risk tolerance and making a change on the next rally rather than into the teeth of a decline. If you feel really comfortable and want to add more money or risk, I also suggest revisiting your risk tolerance, but taking action now and, if in doubt, give your advisor a call. I am personally using this decline as an opportunity to add to my 2020 money for my retirement account and also to my grandkids’ investing accounts.

Yet if I’ve learned anything in this business over the past 30+ years, it is that Ms. Market really enjoys frustrating the masses. It seems the more “obvious” the next move looks to be, the less likely it can become.


And now, a bit of trivia:

YEAR FOUR IN THE WHITE HOUSE – This year (2020) is the 4th year of Donald Trump’s 1st 4-year presidential term.  The S&P 500 has been positive on a total return basis during 19 of the last 23 “presidential 4th-years,” i.e., 4th-years dating back to 1928, including 17 of the last 19.  The average performance for the S&P 500 during the last 23 “presidential 4th-years” has been a gain of +9.9% (total return) (source: BTN Research).

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw[@]denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

The Update provides information of a general nature regarding legislative or other developments. None of the information contained herein is intended as legal advice or opinions relative to specific matters, facts, situations or issues. Additional facts, information or future developments may affect the subjects addressed in this document. You should consult with an attorney, accountant or DSWP planner about your particular circumstances before acting on any of this information because it may not be applicable to your situation.

Lincoln Financial Securities and Denk Strategic Wealth Partners and their representatives do not offer tax advice. Please see your tax professional regarding your individual needs.

*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.

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