In recent news, retail sales via the Redbook report showed year-on-year same store sales increasing at a 5.1% pace. That’s a good move up from last month’s 4.7%. Meanwhile, the Richmond Fed Manufacturing Index jumped to 24 vs. last month’s 20. Details showed the ‘strong growth’ was ‘broad-based’ as all three components (shipments, new orders, and employment) increased. Richmond survey respondents remained optimistic in August, expecting growth to continue in the coming months.

The Consumer Board’s Consumer Confidence Index soared to 133.4, well above expectations for 126.8. Analysts noted this was the ‘strongest result since the dotcom fever of October 2000.’

A pundit suggested that prosperity is breaking out in America – and then wondered aloud; “Can we stand the good news?” (Fox News on Monday the 27th)

Is this too much good news?

The economy is firing on all cylinders. And many think we could see this pace continue for quite some time, including me…

Important milestones: Over the past week we saw the S&P500 Index* close above its previous all-time high, set just this past January.

After a wild ‘up’ January, stocks peaked (about the last week in January) and have slowly drifted down since then… Until recently!

It’s been a grinding market – back and forth and up and down. But within the past week the index touched its January peak. This is important because this is the most widely followed index.

The January peak has been an example of very extreme resistance, and getting close to the peak caused all kinds of speculation – will it hit the peak and drop back down?

Resistance levels are very important because, like their inverse counterpart of Support levels, traders and investors look at these points to test how serious the market(s) may be about the strength of a trend. It is a battle of inertia: If prices fall below Support, they will have to look even lower for a new level of Support. Conversely, if prices move to the upside and break above Resistance, they may well continue to rise until they find a new level of Resistance. Often the earlier Resistance in fact becomes the new Support. So, the big question of the week is will it finally pass through the peak and suggest higher markets? If the answer is yes, the next question is…is the bull market still intact?

Now we know. In the short term, the past four days have been positive for markets. We have seen the S&P 500 Index reach all-time highs, and the Nasdaq Index* and Russel 2000* (smallcaps) as well. On top of that we’ve seen several of the S&P Sector Indexes (Technology and Consumer Discretionary) also reach all-time highs. It’s true that the market is now technically ‘overbought’, and that we could see a pullback at any time. However, this is NOT the setup for a bear market, as many have been predicting. Money continues to migrate toward the aggressive parts of the market.

It’s well known that September is, on average, the weakest month of the year for markets. It’s not unusual for casual investors to reduce their risk in September in anticipation of a weak month.  That said, market action and stock prices take precedence over averages.

Recent data suggest to me that the strong fall market season may likely be starting early this year. While anything can and does happen in markets, it is becoming increasingly likely that the probabilities favor an ‘up’ market’ this September. And that would be even more good news.

Market Minute – Watch This Space

Markets are looking generally positive, although we would expect a bit of a pullback on the day before the holiday weekend. But…….and this is unusual.  Something is happening today that may be significant.

It may impact the planning of people near retirement, or in early retirement.  In case that’s not yet you, here’s a quick catch-up. The great 401k or similar retirement plan which has allowed you (and many others) to accumulate significant sums of money for retirement must be tapped beginning at your age of 70 ½.  At that time you are currently required to begin taking distributions from your plan, and that normally creates taxable income- which many of you do not yet need or want.

Our President is expected to sign an executive order today directing the government to review rules requiring retirees to start taking withdrawals from retirement funds after they turn 70 ½. In order to better prepare workers for retirement, the Treasury Department would review the rules on required minimum distribution from plans to see if investors can keep more money for a longer time in their 401k, Individual retirement accounts (IRA’s) and other similar savings plans.  If successful, it could allow retirees to spread retirement savings over a longer period. 

Look for more details this afternoon.  And although we’re anxious to know more, and will keep you updated, that’s all we know at this time. 

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw(at)denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

The Update provides information of a general nature regarding legislative or other developments. None of the information contained herein is intended as legal advice or opinions relative to specific matters, facts, situations or issues. Additional facts, information or future developments may affect the subjects addressed in this document. You should consult with an attorney, accountant or DSWP planner about your particular circumstances before acting on any of this information because it may not be applicable to your situation.

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*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.

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