I hope you like our subject title this week. This edition of our eLetter is not ALL about time but I thought it worthwhile to offer up a reminder that, come Sunday, most of the country will once again be moving that moveable hour. (I always feel bad for the Druids at Stonehenge, having to rotate all those giant stones one position to the left. (Or is it to the right?)).

What we shall address in today’s missive is a response to the ever-growing question of ‘Is it a good time to get into (or back into) the markets?” The reason for the renewed interest is what we call ‘the markets’ are back in record territory and thus bringing attention to themselves. Well, the answer is, as always, Yes and No. Among the arguments for Yes are: Positive corporate earnings, markets are trending higher, still low interest rates and declining Covid cases and more important, declining Covid deaths. That’s a lot to write home about. However, our famous in-house, two-handed economist says “Not so fast!” as he points to soaring inflation, lingering supply chain issues, weakening GDP growth, and the very stubborn labor market. As of last week, more than 50% of small businesses reported not being able to find workers to fill openings. At the time of this writing there are more than ten million jobs available right here in the good ole USA.

Getting back to the question of ‘Is it the right time to open an investment account, or increase weight of my current portfolio?” here is our answer: While we do see an environment that is not only positive but getting more so, the paramount issue is – and always will be: Maybe! It depends entirely on YOUR goals. Only you can know what your financial needs are. Only YOU can look into your future and see a vision that is more secure than today.

Unfortunately, choosing your goal is one thing and choosing the right path is a different thing entirely. And, to paraphrase Paul Harvey, that is why God made professionals.

A few of our clients have, in the past, managed their own investments. And a smaller few have actually done pretty well but all have run into unnecessary anxiety issues along the way. The reason being: there are many, many choices out there. It is hard to avoid getting caught up in things like FOMO (the Fear of Missing Out). That’s a common thing especially when you hear about the “Next Big Thing”. There is also the dreaded fear of opportunity cost: will you lose money by NOT buying something?

Typically, having a lot of choices is a good thing but there is also a downside. It’s called The Paradox of Choice. A core element in the paradox is that as the number of choices is increased the frustration of selecting the right one(s) goes up along with it. Narrowing the choices actually makes the selection process easier, and much more comfortable.  And that’s where we come in.

If you haven’t reviewed your personal situation for a while maybe it’s time to do that. As the world works its way through the recent challenges getting re-aligned with it could be a very good idea.

Ron’s Market Minute — Breakout (!)

A few of you watch markets often enough to have noticed (and mentioned to us) that something seems to have happened about the beginning of September this year. What you noticed (correctly) was that markets seem to have plateaued. So have a look at this chart of the S&P 500 Index* as represented by the ticker SPY. The chart plots this year to date, and the dashed line represents the pictorial value of the Index on November 2nd. Yes, you are seeing that ‘the market’ has been consolidating (going nowhere) since the beginning of September…until the last couple of days. The horizontal line I have marked as S1 was the line of resistance, and now that it has been penetrated; it has become a line of support. That means that the market will tend to bounce off that line and go upward. In addition, the RSI momentum indicator has now moved into the upper half of its chart, and that shows us that the momentum is upward.

Interestingly enough, the same chart characteristics have now appeared in all of the major US indexes: the DOW industrials, the S&P 500 Index, the Nasdaq, the Midcap Index, and the Equal-Weight S&P Index. It seems that the only areas NOT participating in the breakout are US Small Cap stocks and the Junk Bond index. 

If we can get some confirmation from the JNK bond index and the Small Cap Indexes, the stage would be set for a strong potential end-of-year rally. We’re watching!

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.

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