December 30, 2011



August 10, 2012

 

Dear Investors:

Since the Bradley Model turn date of July 26th, the markets have moved higher in 8 out of the last12 trading days. This week the markets traded in a very narrow range and appear to be forming a sideways pattern or a rounded topping pattern. If a sideways pattern is unfolding, then there is a high probability that the markets will retest the 2012 highs. If a rounded topping pattern is forming rather than the sideways pattern, then the markets are likely to fall sharply from these levels. What further clouds the current situation is that this week’s narrow range occurred during the lowest average daily trading volume for a non-holiday shortened week this year. Finally, the McClellan Oscillator is suggesting that a large price move is coming early this week; therefore its direction should help clarify which pattern is occurring.

At this point in time the downside risk is far greater than the upside potential. The Relative Strength Index (RSI) of the S&P 500 Index is higher than it was at the start of the last four 2% - 3% market corrections, and approaching the over-bought level that kicked off the 10% market decline from April 2nd through June 4th.

The S&P 500 Index finished the uneventful week at 1,405.87, up 14.88 points, or 1.1%, and is up 11.3% year-to-date. The Dow Jones Industrial Average gained 111.78 points, or 0.8%, this week to close at 13,208.00, and is up 8.1% this year. The NASDAQ Composite finished the week at 3,020.86 after adding 52.96 points, or 1.8%, and is up 15.9% for the year. The Russell 2000 added 13.07 points, or 1.7%, this week to close at 801.55, and is up 8.2% in 2012.

It was a rather quit week for economic news which could have been another reason for the anemic trading volume this week. However, the week ahead is filled with relevant economic news that should bring volume and volatility back to the markets.

A general retirement guideline is that you need 20 times your annual income in retirement savings to retire comfortably. I use 20 times your annual living expenses. In either case many Americans do not have that much in retirement savings, and there are many ways to generate retirement income. If you, a friend, family member or colleague are retiring soon and do not have 20 times your annual expenses saved, then I encourage you to contact our office to get started on your financial plan. It is more important than ever to be proactive with your retirement and financial plans to navigate through these difficult times.

The next market letter will be on August 24th. If you have any questions or would like an interpretation of technical market indicators, please feel free to call my office.

Best Regards,

Vincent Pallitto, CPA, CFP®   

Certified College Planning Specialist

Summit Asset Management, Inc.



973-301-2360

973-301-2370 Fax

A branch office of, and securities offered through LPL Financial

Member FINRA SIPC

 

You cannot invest directly in a market index, market indices are for benchmark purposes.  The information in this market commentary is obtained from various news sources, and .  Fibonacci Phi Date (also known as Fibonacci Time Extensions) is a technical indicator used to seek to identify the timing of significant price movement in the market, and is based on the Fibonacci Number Sequence. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you consult your financial advisor prior to investing.  There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results.

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