Finance - HL 246 (2)

Helpful miscellaneous articles regarding our retirement plan and planning.  Like you, I review my retirement nestegg and plan from time to time.  Recently, I went though some continued education for some credentials I maintain and it occurred to me that we all could use a review about these issues.  So with your help, we will share and post articles and info that may be helpful and of interest to many of you in this section.

Oh Boy!  Which Way Will It Go?  Two Views – One Bull & One Bear!

My personal opinion?  Stocks pretty volatile short-term and risky to own a large allocation of at our age. Keep on top of it and you decide.  Mark 

2016 Stock Market Outlook: Why Wall Street Expects 7%-11% Upside

Ky Trang Ho ,

Forbes Contributor

A best-selling personal finance guru, a behavioral economics columnist at MarketWatch, a Harvard-educated economist and other notable financial experts all warn the stock market is going to hell in 2016. Wall Street’s major powerhouses, on the other hand, beg to differ. They see the S&P 500, tracked by the SPDR S&P 500 ETF (SPY), rallying anywhere from 7% to 11% from current levels amid continued economic growth, robust consumer spending and reasonable stock valuations among myriad other reasons.

The S&P 500’s bull run that kicked off 81 months ago has advanced 200% from its March 2009 low.  As the third longest uptrend since 1932, it surpasses the average bull market gain of 138%, according to UBS. Julian Emanuel, a strategist at UBS and his colleagues, wrote in a “U.S. Outlook 2016” report this week: the S&P 500 will end 2016 at 2,275 amid modest earnings growth and rising interest rates. That level translates to $227.50 for the SPDR S&P 500 ETF (SPY) — up 11% from Thursday’s close.

Traders Mathias Roberts, left, and Edward Curran work on the floor of the New York Stock Exchange, Tuesday, Nov. 10, 2015.  (AP Photo/Richard Drew)

“Though skeptics could point to the extent of gains, as well as the length of the rally since 2009, as sufficient rationale to believe a bear market is ‘due,’ we highlight that although the current rally is extended in both time and price, it is only the third longest and fifth largest rally since the Great Depression,” UBS wrote.
“That said, no bull market since before the 1970s has ended without a recession and both our U.S. economics team and our U.S. credit strategy team do not forecast a near term recession.”
UBS added: “Simply put, barring an unforeseen external shock or a recession, if earnings continue to improve, 2016 should be a positive year for U.S. equities. Regardless, we continue to expect further volatility – which, in essence, means higher risk, both upside and downside.”
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Opposing View: (Article representative of the many bear voices not jumping on board)

Stock Market Crash: This Is Why Stocks Could Get Crushed in 2016

By George Leong, B.Comm.

Published: January 16, 2016

If you believe the bull market is still in place despite the hiccups, you may want to read what I have to say…
It looks more and more like we are in a bear market and a pending stock market crash may be in. Small-cap investors already know about a bear market.
At this point, it doesn’t make sense to sugarcoat the stock market activity. If you are expecting stocks to rally and continue higher, you may be in for a rude awakening, as a stock market crash in 2016—or at least a major adjustment—is probably more likely.
The China risk and the uncertainty of oil prices are continuing to drive stock market weakness, as investors hold their collective breathe for the fourth-quarter earnings season.

Are We On the Verge of a Stock Market Crash?

There is minimal confidence in the ability of stocks to hold, as demonstrated by the selling that emerges after rallies. Even as stocks are upgraded, they decline. The failure of the stock market to hold on to gains is a pretty good indication of underlying technical weakness.
Take a look at investor sentiment in the stock market. On the NYSE, investor sentiment has been extremely bearish, with the emergence of a massive number of fresh new 52-week lows each day, scattered with only a few new highs.
Over the past seven sessions to January 14, there were an average of 404 new lows and only 12 new highs on the NYSE.

Chart courtesy of www.StockCharts.com

The underlying breadth of the stock market is equally bearish in the near-term. We are seeing excessive declining issues versus stocks moving higher.
Yet, while the selling does not at all surprised me, there appears to be extreme selling capitulation with investors randomly running for the exits in fear of losing more. At this point, the selling has been broadly based in the stock market with no place to hide.
On the charts, the NASDAQ Composite, Dow Jones Industrial Average, S&P 500, and Russell 2000 are all in correction territory, below their respective 50- and 200-day moving averages (MAs).
The stock market is trending lower, as the bears take charge. Only about 19% of all U.S.-listed stocks are above their 200-day MA, versus 35% a month earlier. The short-term outlook looks dire, with only about 11% of stocks above their 50-day MA versus 33%.

Chart courtesy of www.StockCharts.com

The major area of risk continues to be in the small-cap segment. The Russell 2000 is showing a bearish death cross and appears to be in a technical bear market, down 22% from its high in 2015.

Chart courtesy of www.StockCharts.com

There are some attractive valuations in the small-cap space, but the downside risk remains high for the potential of more losses.
At the end of the day, there is simply no leadership from the technology or the banks, which were largely responsible for the buying momentum in 2015.
In technology, investors are clearly nervous about adding new positions. Even when major stocks are upgraded, investors sell into any rally. This is bearish, but at the same time, it provides good opportunities for those willing to ride out the volatility.
Over the next few days and weeks, watch if oversold buying support emerges.

Here’s My Thinking for This Bear Market

The current stock market is suitable for those with a higher risk appetite; others should step aside and wait it out. I expect the selling into strength to continue in the foreseeable future unless there is some fresh buying catalyst.
Of course, investors should make sure to have some hedges in place, with put options to help guard against further weakness and a stock market crash—especially for buy-and-hold investors.

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(As with any of these informative articles, anyone who needs someone to talk to about

this very subject contact me and I can direct you to a knowledgeable advisor).

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