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Market Update - September 29, 2017

Economic Comment

The third quarter ends today; and with a close above 2,423.41 on the S&P 500, this will mark the eighth quarter of positive returns for the S&P 500. Not much else to say about an impressive streak like that. Next week the Government employment report comes out, which may set the tone for the fourth quarter of 2017.The hurricanes are expect to skew the employment report, but investors will look for clues on the revisions to this number for July and August. Let’s check our indicators.

Bullish Percent’s, (Data source: Dorsey Wright, see definitions at the end of this report.)

10 Week- Bullish Percent (Short-term): the month of September has seen this short-term indicator go from oversold at 36% to an overbought reading of 64%. Now slightly overbought, a quick pull back could happen at any time.

Optionable-Stock Bullish Percent (Intermediate term): Still on DEFENSE, and still no real movement for the month of September.

NYSE Bullish Percent (NYSEBP) (Longer-term): Still on DEFENSE and in September we have seen this longer-term indicator actually float up to almost 60%. It would need to hit 62% in order to reverse the current bearish position. (Source: Dorsey Wright)

Point and Figure Charts (Source: Dorsey Wright)

S&P 500: September has seen new highs. Just when it appears this index will break down, it breaks out. At some point a 3-5% pullback would be normal. This would take the S&P 500 down to 2,410, which is where a strong uptrend line is. (Source: Dorsey Wright Website)

S&P 500

SP500 9.29.17

Horizontal Axis: Time (numbers represent months, for example, 1=January 2=February and so on, when you reach October, months are represented as letters, A= October, B= November & C= December).
Vertical Axis: Price

NASDAQ

Although the NASDAQ has not been able to break through to a new high, it has equaled the high made in July. Leadership may be changing hands from the NASDAQ to the S&P 500. (Source: Dorsey Wright Website)

NASDAQ

NASDAQ 9.29.17

Horizontal Axis: Time (numbers represent months, for example, 1=January 2=February and so on, when you reach October, months are represented as letters, A= October, B= November & C= December).
Vertical Axis: Price

US 10- Year Treasury note: The fear trade continues to come off as the equity markets rally. After hitting a low of 2.05%, the 10 year has backed up to 2.27%. The intermediate outlook is now turning neutral. The question now is whether or not the July high of 2.375% in rates is being challenged. Remember, equity indices hit highs for the year back in July as well. (Source: Dorsey Wright Website)

10-year Treasury

10YearTreasury 9.29.17

Horizontal Axis: Time (numbers represent months, for example, 1=January 2=February and so on, when you reach October, months are represented as letters, A= October, B= November & C= December).
Vertical Axis: Price

Relative Strength: International Equities continue to close the gap on US Equities for the #1 spot. Domestic Equities are #1; International Equities #2; Fixed Income #3; Cash #4; Commodities #5; and Currencies #6. (Source: Dorsey Wright Website)

Conclusion

Investor sentiment seems to have won the month of September. After a rocky finish in August, the US equity markets have made a comeback during a typically weak seasonal month. October is another notoriously poor month for equity markets to get through. We still maintain our cautious position.

Have a great weekend.

Beirne Wealth Consulting Services, LLC (“BWC”) is a growing, privately owned, SEC Registered Investment Advisor with just over $2 billion in assets under advisement and 23 employees in Connecticut, Pennsylvania and Florida. BWC provides independent, fee-based investment management services and customized financial planning solutions. Our institutional business provides consulting expertise to defined benefit and defined contribution plans, endowments, foundations and non-profit organizations. Our private clients include high net-worth individuals and prominent families, many of whom bring complex wealth management challenges and multigenerational planning needs. For more information, please visit www.beirnewealth.com or give us a call today at 888-231-6372

© 2017 Beirne Wealth Consulting Services, LLC (BWC). All rights reserved.

This report is not intended to be a client‐specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.

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The findings, ratings and/or opinions expressed herein are the intellectual property of BWC and are subject to change without notice. They are not intended to convey any guarantees as to the future performance of the investment products, asset classes or capital markets discussed. Past performance does not guarantee future results. BWC’s ratings do not constitute individualized investment advice.

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Bullish Percent Definitions

NYSE Bullish Percent: This is a major market indicator, which tells us whether to be on the offense or defense. It is calculated by dividing the number of NYSE stocks trading on point and figure buy signals by the total listed on the Exchange. The percent of stocks on buy signals in is then plotted on a grid from 0% to 100%, where each box equals 2%. Levels above 70% are generally considered overbought, and below 30% are considered oversold. The best buy signals come when the NYSE Bullish Percent goes below 30% and then reverses up (must reverse 6%). The best sell signals come when the indicator moves above 70% and then reverses below 70%. The most important concept to keep in mind is field position and what team is on the field. When the NYSE Bullish Percent is in X's, the offensive team is on the field and wealth accumulation strategies are the focus. Conversely, when the NYSE Bullish Percent is in O's, the defensive team is on the field and wealth preservation strategies are the focus.

The Bullish Percent can also be calculated on various indices, for example, the 10-week BP is a short-term indicator and is calculated on 10 weeks’ worth of NYSE price data. The optionable stock bullish percent is calculated off the index of all optionable stocks on the NYSE.

Asset Indexes

An index is unmanaged and not available for direct investment.
Dow Jones Industrial Average is a price-weighted average of 30 U.S. stocks traded on the New York Stock Exchange and NASDAQ.
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.
S&P 500 Index is a capitalization-weighted index calculated on a total-return basis with dividends reinvested. The index includes 500 widely held U.S. market industrial, utility, transportation and financial companies.
A 10-year treasury note is a debt obligation issued by the United States government that matures in 10 years. A 10-year Treasury note pays interest at a fixed rate once every six months and pays the face value to the holder at maturity.

The NYSE Composite (^NYA) is a stock market index covering all common stock listed on the New York Stock Exchange, including American depositary receipts, real estate investment trusts, tracking stocks, and foreign listings.

Historical Futures Prices: Crude Oil Futures, Continuous Contract #1. Non-adjusted price based on spot-month continuous contract calculations. Raw data from CME. For more on the roll algorithm used please see this page: https://ww.quandl.com/collections/futures/continuous.

https://www.quandl.com/data/CHRIS/CME_CL1-Crude-Oil-Futures-Continuous-Contract-1-CL1-Front-Month

Relative Strength Calculation Explained: Tactical decisions are made utilizing the research and evaluation techniques of Dorsey, Wright & Associates who has extensive expertise in a technique known as Point & Figure charting. This type of analysis attempts to evaluate the supply and demand forces of particular asset classes and ranks the asset classes from strongest to weakest based upon relative strength (RS). We feel asset classes can be ranked similar to the way one might rank sports teams. If you think about your favorite sport, they rank teams based upon how well they perform against their opponents. The more games, matches or races won, the higher in ranking the team will go. We believe the same thing can be done in the investment markets. In the financial markets, a “game” is played each day and it consists of comparing the daily performance of one asset class to another. Each day we compare asset classes to one another to determine which asset classes are the strongest or weakest compared to one another. The ranking process is comprised of the following 4 steps and represents DWA's Tactical Portfolio Research strategy ("the strategy").

5steps

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