We see a LOT of "risk-off" behavior.
In the grand scheme of things, that's not a good sign.
First, it should be noted that this is being written at ~2:00 pm Eastern on Thursday, the 5th of March. It is entirely possible that many stocks could rally into the close. However, if that happens, the point I am making here is still valid.
So, what's the point?
The point is we are witnessing a very key technical test. If that test fails, there's an increasing argument for further downside movement. And, if you've read my book, Evidence-Based Investing, you know that large market drawdowns can begin at any time.
Since the majority of our clients are near or already in retirement, defending their hard earned capital is one of our top priorities. Yes, we want to take risk and grow the portfolio, but when the data starts screaming "risk off" we want to respond appropriately.
In an attempt to keep this brief ...
Look at the chart above. This is IWV, the Russell 3000, which captures about 90% of the U.S. stock market. Two things to note:
1) At the top, notice the blue gray bar that I've added to the chart. I see that as a critical area of support. At the moment, IWV is testing that support. That support was most recently tested Tuesday of this week.
2) Now look at the bottom pane. The green and red bars represent advancing stocks (green) and declining stocks (red). So, this test is being conducted while the vast majority of stocks are declining.
Regardless of how the markets close today, I would argue that tomorrow, Friday, March 6th, is a critical day. If this support fails to hold and we close the week below this support area - which is only ~1.5% lower - that would be a very concerning sign.
This is one of many reasons why our tactical models are positioned as they are right now. If you are a client, you can see this on your statement(s). If you are not a client, and want to learn more, just send us me a message to my email:Theodore@Hicks-Associates.com
This information is intended to be educational. Hicks & Associates Wealth Management does not provide tax or legal advice. You should consult with a qualified tax, legal or financial professional before making any decisions.
Investment advisory services are offered through Hicks & Associates Wealth Management, LLC (“Hicks & Associates”), an investment adviser registered with the Securities and Exchange Commission. Registration as an investment adviser does not imply a certain level of skill or training. More information about Hicks & Associates can be found in Form ADV Part 2 or Form CRS which is available on our website.
Past performance is no guarantee of future returns. Hicks & Associates reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. The visuals shown are for illustrative purposes only and do not guarantee success or certain level of performance. This material contains projections, forecasts, estimates, beliefs and similar information (“forward looking information”). Forward looking information is subject to inherent uncertainties and qualifications and is based on numerous assumptions, in each case whether or not identified herein.
This information may be taken, in part, from external sources. We believe these external sources to be reliable, but no warranty is made as to accuracy. This material is not financial advice or an offer to sell any product. There is no guarantee of the future performance of any Hicks & Associates portfolio. The investment strategies discussed may not be suitable for all investors. Before investing, consider your investment objectives and Hicks & Associates charges and expenses. All investment strategies have the potential for profit or loss.