Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

1st Quarter | 2022

Market insights and analysis

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Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

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The major stock market indexes finished substantially higher last week. The Dow Jones Industrial Average gained 12.7%, the S&P 500 Index rose 12.1%, the NASDAQ Composite rallied 10.6%, and the Russell 2000 small-capitalization index bested all of the other indexes with an 18.5% gain. The 10-year Treasury bond yield rose 12 basis points, sending Treasury bonds generally lower. Last week, spot gold closed higher at $1,683.63, up $62.92 per ounce, or 3.9%.

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When I was a kid, it seemed that Good Friday afternoon was always the same. The spring sunshine of the morning would be transformed into a cloudy afternoon. This Good Friday was no exception. Yet, as I sat looking out from my backyard deck on Friday afternoon, a small patch of blue sky stood out, like a turquoise broach pinned to a cable-knit sweater of multiple shades of gray.

Last week, gold prices hit a seven-year high, breaking through the $1,700-per-ounce level and closing at $1,752.80 per ounce—a gain of more than $100 per ounce (see the following chart).

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​​​​​​​One of my favorite novels is Joseph Heller’s 1961 best seller, “Catch-22.” As a teenager, I found the novel hilarious and surprisingly relevant given my father’s experiences in the U.S. Army Air Corps. He, like the chief protagonist in the novel, flew bomber missions in World War II. He spent three years dealing with the Air Corps’ regulations and bureaucracy, and he loved, as Heller did in the novel, to recount their absurdity.

After falling below the 100-day and 200-day moving average the previous week, gold prices climbed above both averages and continued up through the 20-day moving average last week.

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Seems like I have been mostly writing about the crazy, non-normal world we have been living in lately. And, since I just did so last Thursday, today I’m going to provide a market update that is probably a little heavy on charts and analysis.

Last week, gold prices finished the week at $1,654 per ounce, up more than 10%. This was after a volatile week that saw gold prices shoot back up to $1,700 per ounce at one point.

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“These are not normal times!” I keep hearing and reading comments to this effect, and I have to ask myself, “What’s normal in a pandemic?”

After testing lows hit during the end of last year, gold prices rebounded last week to trade around the 200-day moving average, which is currently around $1,500 per ounce. Prices closed the week at $1,484.60 per ounce.

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Isn't it crazy?

Are you hearing this line over and over again as friends and associates get together and have the chance to talk? I sure am.

Gold sold off dramatically late last week, breaking through the 50-day moving average on Thursday (3/12) and testing support at the 200-day moving average on Friday (3/13). Gold prices closed the week at $1,516.70 per ounce (see the following chart).

While the stock market has tumbled since making a new high on February 20, giving back all of its 2020 gains, I want to provide you with some good news. Accounts here at Flexible Plan Investments, Ltd. (FPI), are weathering the storm very well.

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I was listening to one of my favorite radio broadcasts last Friday morning (March 6), about 45 minutes before the market open. Tom Keene, of Bloomberg Surveillance, was reviewing various pre-market levels. Dow futures were down at the time around 700 to 800 points, and other indexes were similarly heading south in a big way. He made the curious comment, “It just does not feel like a 49-level VIX for equities at the moment”—even though that is where the VIX stood. (The VIX, also known as the “fear index,” is a measure of stock market volatility. On Friday, it went on to make a 52-week high over 50 before closing at 41.9.)

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Gold prices rebounded last week after an end-of-the-month sell-off the previous Friday (2/28). The sell-off may have been related to margin calls for investors dealing with the previous week’s precipitous decline in the equity markets.

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In one week, major indexes fell into “correction” territory, logging a drop greater than 10% from their recent peaks. Last week, the S&P 500 fell 11.49%, the Dow Jones Industrial Average fell 12.36%, and the NASDAQ 100 was down 10.54%. The main factor in the worldwide selling in the equity markets, according to most financial news stories, was the coronavirus. COVID-19 fears resulted in the fastest market correction in history.

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Two weeks ago, I wrote about behavioral finance and how investors are often their own biggest barriers to investing success. The market action since February 19 has presented us with the perfect stage to see these common investing behaviors play out.

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Most of the major stock market indexes finished moderately higher last week: The Dow Jones Industrial Average gained 0.67%, the S&P 500 Stock Index rose 0.58%, the NASDAQ Composite climbed 0.91%, and the Russell 2000 small-capitalization index lost 0.17%.

The following criteria is used (since January 2011) to objectively determine the members of ETF Deathwatch each month based on the most recent month-end data

“Nothing is certain except death and taxes.” How often that phrase has been quoted since Ben Franklin penned it in a letter to his friend, the French scientist Jean-Baptiste Leroy, in the midst of the French Revolution.

Successful investors know managing risk is as important in good times as in bad. Last week I heard a couple of unrelated items that brought to mind a good investment practice every investor should follow: risk management. However, as with many things in life, good practices often slip in importance when times are good.

With Labor Day now in the rearview mirror, most schools are back in session, and fall weather is going to be very welcome in many parts of the U.S. It has been a brutally hot summer in several regions, including my home base in Connecticut. Sunday’s heat index here was 97 degrees and Monday’s was also about 100. Officials at the U.S. Open Tennis Championships in New York City have had to implement an unprecedented Extreme Heat Policy this year to help protect the tournament’s players.