April Showers Bring Lower Markets
To our Clients, Friends and Family,
Spring has arrived and so have April showers. The basement flood control system has been checked and is ready to go.
Preparations must be made before the big storm arrives.
THE STOCK MARKET
Like basements in the Midwest, we’re preparing for a “negative event” in the stock market. Here is why we’re anticipating weakness on the immediate horizon. We are seeing weakness in the Utility Index and Transportation Index.
These two indexes are like the legs of a 3-legged stool. Kick two of them out, and the third leg is bound to crack. Any weakness in the market should still be viewed as a normal, healthy correction within the confines of a bull market.
Higher interest rates will NOT kill this bull market. See the 3 charts below.
(charts courtesy of Dorsey Wright & Assoc.)
INTEREST RATES & THE U.S. DOLLAR
Interest rates are still at generational lows, while the strength of the US Dollar has quieted all those who were taking great pleasure in its early demise. Sell the US Dollar, and buy Euros. The greenback is no longer the world’s reserve currency. Maybe even learn Mandarin Chinese. Trillion dollar deficits, the Federal Reserve gone mad, higher tax rates, Zero Interest Rate Policy were all the disaster de jour….waiting.
This rally has been a total flight to quality. The quality, innovation and efficiency of the United States of America.
(courtesy of freestockcharts.com)
The market always does what it’s supposed to do; but never when.
CURRENT CONDITIONS
As they say, “past performance is no guarantee of future results”. The stock market is experiencing recent volatility, but as of this writing, we are far from entering a bear market. The US Markets are as strong as Rearden Steel.
CONCLUSION
Any decline, even the 15%-20% kind should be viewed as a normal pullback within the confines of a bull market. It’s my personal opinion that the market is “rigged” to go up. For the next 6 months we’re expecting diminished upside strength, and would not be surprised to see a wisp of downside selling.
The stock market is like canned food, coffee, clothes, iPhones or diapers. The lower the price goes, the more we should stock up on our favorite brands.
Each decline in the stock market contains within it, the seeds of the next rally, which historically takes it to glorious new highs. It’s always something; then it’s nothing.
Interest rates have been trading in a range for over 200 years; but the market always continues higher.
Thank you for your continued trust
Bill Ulivieri- Principal
141 Fernwood Drive.
Glenview, Il 60025
Ph: 847.686.4800
Fx: 847.686.4800
SKYPE: bulivieri
Twitter: cenaclecapital
www.cenaclecapital.com
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