If you were one of the many Americans who watched (at least some of) each of the ‘Townhall’ presidential candidate events last night I’m willing to bet that the thing you noticed most was the huge difference in style and tone of the different moderators. On ABC, George Stephanopoulos was having a chat with Joe while on NBC Savanna Guthrie and President Trump had a more contentious exchange.

If you’re a poll watcher, you have no doubt noticed that most of the trackers are now within, or close to being within, the margin of error. Jump ball? Many theories abound but the net take-away for investors is that history suggests that — irrespective of the election outcome — we should expect rising markets. What will be different is the type of investments that will hold the greatest promise. And of course, past performance is no barometer of future events.

Meanwhile, we were quite pleasantly surprised to note a very good number for this morning’s retail sales report. Some highlights include:

• Month-on-Month Core Retail Sales up 1.5% while economist’s consensus forecast was a plus 0.5%. That’s an over-performance of 3X.
• More impressive was the September Year-on-Year gain of 5.36%. It’s hard to think that would have been much better had we had no interference from the Covid19 pandemic.

And, speaking of the pandemic, the spikes we are seeing both at home and in some EU countries are disturbing. Fortunately, hospitalizations are only up a fraction of the new cases curve. Part of the answer is demographics: most of the new cases are in younger people who are very much less affected by the virus.

We continue to live in ‘interesting times’. Fortunately, as Paul Simon once sang “And after the rain, there’s a rainbow”. As noted above, markets in 2021 will likely be elevated from their current levels. The challenge for investors and advisors is to perform well by identifying where the returns are most likely to shine best. Of course, the good news for you is, that’s our job.

Ron’s Market Minute — Market ‘Logic’!

First: A note to those of you who have kids or grandkids in their last year of high school. It is definitely time to get those FAFSA forms filled out and submitted. (Free Application for Federal Student Aid). Whether your student is looking for federal or state aid, loans or Pell Grants or some of the other options, you can’t qualify if you don’t submit the FAFSA in a timely manner! Check out this link from Horsesmouth (one of our resources) for some tips.

And now, on to our Market Minute:

Given all of the market-moving headlines, it is my expectation that I should be seeing negative indicators when I analyze the market’s movements. In fact, when I see good news, I even tend to discount it a bit because it’s NOT what I’m expecting these days. Good news, like bad, often gets undone within hours or days.

With that in mind, we like to look at charts that show us what percentage of stocks in the market are improving. This week I see that the market (the S&P500 Index*) has moved from having only 25% of its stocks showing better than the index’s shorter 50- day average (in September) to currently 78%. What an improvement in a short time! I also see that 75% of the stocks in the index are now above their long-term average (200 day moving average). That means that three quarters of the stocks in the major market index are in major uptrends, which shows a broadening out of the current market rally. Earlier this year there were fewer stocks in the index showing strength.

Digging deeper: Instead of looking at just the broad market, we like to look at the individual sectors. The largest 6 (Technology, Healthcare, Consumer discretionary, Communications, Financials, and Industrials) of the 11 sectors make up about 82.5% of the market, so those are the ones we care about. (For those of you who care, technology is the biggest sector- making up about 27.8% of the market, and Healthcare is #2 at 14.1%. Of the 6 big ones, only the Communications sector is not showing bullish breadth.

So … despite my inclination to put some weight into those negative headlines, it appears that the bigger picture is that we should expect positive results over the near-term. So, fingers crossed, and let’s hope that MS Market’s indicators are spot-on!

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


This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners for use with advisory clients only 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.
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*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.
Ron Denk is a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.
Mr. Denk is also an Advisory Representative offering services through Denk Strategic Wealth Partners, a Registered Investment Advisor. Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation.
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Past performance is not a guarantee of future returns.