Jeff Voudrie’s Weekly Stock Market Commentary – Oct. 13th, 2014

Jeff Voudrie’s Weekly Stock Market Commentary – Oct. 13th, 2014

Jeff Voudrie’s Weekly Stock Market Commentary – Oct. 13th, 2014

Trending Indicators

US Stock Market     Trending Down

Canadian Stk Mkt   Trending Down

US Bond Yields       Yields Trending Down

Jeff’s Weekly Stock Market Commentary:

The stock market correction (possibly even a crash) that I have been talking about for months may have already started. This is NOT a time for retired investors to be or remain aggressive. Protection is the first priority. The Russell 2000 growth index has now declined for 6 straight weeks and is back to where it was in September of 2013. It is down 13% from the Alibaba Bubble High set on July 3rd and it is likely to decline to further.

Remember, in bubble markets risk can happen fast. Markets can drop further and faster than anyone expects. And there are times when it behooves retired investors to not be in the market and to instead move to cash. I have been increasing the cash positions in my client accounts for the last several weeks (based on their individual risk tolerances). I have warned of the threat of deflation and the dangers of relying heavily on mutual funds. Over the last two weeks I have liquidated equity mutual funds that I have held for several years. I have even sold a defensive well-performing bond fund because it is mainly invested in high-yield bonds and those types of bond may not hold up well should this deflationary environment continue. I have maintained my favorite bond fund because it tends to focus more on government bonds. It is still up 7.67% year-do-date and is currently out-performing 95% of its peers.

 

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Where do we go from here? Caution is the order of the day and as long as the stock trend indicators I use continue to signal a downturn, then I will avoid moving new money into equities. To say that differently, I believe that the risk of being invested in equities is elevated and should only be done with caution. I have decreased my equity positions in both US and Canada from roughly 70+ down to around 20. Each of the positions has a sell-threshold and will be liquidated in the event that these thresholds are breached.

Some updates:

The S&P 500 is down 4.5% from the YTD high set on September 18th and is only up 2.89% YTD now. (My trend indicator signaled a down trend on September 15th.)

The NASDAQ is now only up 1.91% YTD and has pulled back 7.4% from the September 2nd high.

The Canadian TSX is now only up 4.45% and had pulled back 9.2% from the September 3rd high. (My trending indicator signaled a down trend on September 19th.

Have a wonderful and Blessed week!

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