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Market Update - December 30, 2015

Wednesday, December 30, 2015

Economic Comment

As 2015 winds down it is not going to be remembered fondly. Just to refresh your memory, on December 31st, 2014 the Dow Jones Industrial Average closed at 17823.06, the S&P 500 at 2058.90, the NASDAQ at 4736.05 and the 10 year treasury at 2.17%. Investors have been used to positively advancing equity markets the last several years and 2015 has broken that string. We will be writing our market preview next week, but for now we will focus on the last two weeks and what looks to be happening near term. 

Bullish Percent’s

10 Week Bullish Percent (Short-term) for the month of December this short-term indicator has gone from overbought at 60% to oversold at 20% to neutral at 40%. Very active for the month of December and at 40%, slightly oversold.

Optionable Stock Bullish Percent (Intermediate term) this indicator is now on DEFENSE at 40%. There was enough selling two weeks ago to get this intermediate indicator back to DEFENSE. It had a good run of 10% in October and November, but a 6% negative change pushed the DEFENSE on the field. (Source: Dorsey Wright) 

NYSE Bullish Percent (NYSEBP) (Longer-term) this indicator is now on DEFENSE. After hitting a peak at 50%, on December 8th enough point and figure sell signals were generated to get this indicator back to 38%. (Source: Dorsey Wright)

Point and Figure Charts (Source: Dorsey Wright)

S&P 500 a trading range seems to be shaping up for the S&P 500. In early December the S&P 500 saw a trip down to 2000 and now has bounced back and forth between 2010 and 2070-80. If the S&P 500 is to move higher in the New Year it is developing a good base from which to do it. (Source: Dorsey Wright Website) 

NASDAQ the NASDAQ peaked in December at 5160. A quick trip down to 4880 was contained and now the NASDAQ is trying to get back to 5160 and maybe even over 5200. This chart has a much more positive and upward bias than the S&P 500. (Source: Dorsey Wright Website) 

Russell 2000 the Russell 2000 broke below an important uptrend line at 1140 in December. It is now showing a series of higher highs and higher lows which is good, but the Small Cap Santa Rally hasn’t materialized like we thought it might. (Source: Dorsey Wright Website) 

US 10-Treasury Note:  December has been a back and forth month for rates. 2.35% to 2.15%, really a tight range. (Source: Dorsey Wright Website) 

Relative Strength No change here! US Equities still number 1, Fixed Income number 2 and Money Funds are number 3. (Source: Dorsey Wright Website) 

Conclusion

We feel the frustration of investors in 2015. persified portfolios with an emphasis on pidends underperformed. persified fixed income portfolios under performed. The only strategy that works was concentrated stock positions in technology, healthcare and biotechnology. This is not the type of strategy we advise on. However, even though some of our indicators fell back in late December, we are still more constructive on the US Equity markets. Relative strength still points to US Equities and the trading range pattern that we are in could help to spring board the markets higher in the New Year. We will keep you updated!

Have a wonderful New Year and here’s to a better 2016!

Christopher P. Englebert

Managing Director

Beirne Wealth Consulting, LLC 

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