Market insights and analysis

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

3rd Quarter | 2020

Market insights and analysis

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

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.