Sucker’s Rally

Download PDF here – The Suckers Rally

 

We believe that odds are high that stocks and mutual funds will again decline, maybe to the lows reached in March or maybe lower.

The rally we just experienced off the March 23rd low was likely a classic Suckers Rally, and we believe very strongly that people need to reduce exposure to stocks when measurable conditions suggest risk is high.

First, when we look past the headlines at stock market sectors like Small- and Mid-sized companies, Financials, Industrials, Materials, Energy, Discretionary (Ex AMZN), Europe, Emerging Markets, International Markets and Dr. Copper, they have ALL failed to rally above their 200 week moving average. By this stage in the rally, that should not be happening.

Second, The Schenk Group Risk Models remain on the defensive.  A good way to think of what our risk indicators do is like measuring an advancing military force. A healthy market is like an army with a deep and disciplined line. That line has strength and weight behind it. It can move and push through barriers. A weak market shows the soldiers leaving the field and the generals all alone.

Finally, investors are demonstrating high complacency by buying very little portfolio insurance (Put Options), very much like levels reached in January this year.

For those that say we never went into a Bear Market or we are no longer in a Bear Market, I say that as long as these indices that I mentioned are below the 200 week moving average and our Risk Models are Bearish, we are still in a Bear Market!

We are not predicting the future with this article, but we are systematically measuring market data and harnessing the power of probability.

It is time to have the defensive team on the field, be selective in stocks, keep your stops tighter and diversify in currently excellent opportunities in corporate bonds and alternative investments.

Call us if you would like to learn how to protect your savings from the next bear market, whenever it comes.

Stay vigilant as this Bear Market is still alive and well, no matter what the headlines tells you.

 

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The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.