To our Resonate family, your families and friends,
Recently, I have been receiving emails from clients worried about the U.S. and global stock markets.
I thought that Stephen Leeb’s comments in the June 13, 2016 Complete Investor Hotline were interesting.
“One number we continue to watch: the relative performance of so-called secondary stocks, stocks too small to qualify as making an individual difference in the big-cap averages such as the S&P 500, as compared to the S&P, itself. We have reported on this number before because it is a simple way to note the vulnerability of the market. In no case for more than 40 years has a major market setback occurred when this indicator averaged above 1.”
“For example, during the 20 percent decline in 2011 the average of the indicator was about .19. On the other hand, from May through December 2008—the heart of the last bear market—the indicator’s average fell deep into negative territory.”
“Over the past three months our trusty measure of underlying market strength has averaged about 4, a number wholly consistent with a bull market, one that suggests the market will likely make a new high in the not-too-distant future. In a worst case, under these conditions, we would be surprised at anything more than a 7 percent correction.”
If anyone reading this is not currently a Resonate client, we offer a complimentary second opinion on your existing portfolio. We’d love to hear from you!
Until next time, live your purpose every day!