One would think that the investor community, particularly professional money managers, would not be sentimental creatures. Oh sure, we all have families and even pets that we care deeply about but at our day job we rely on numbers…and numbers can be clinical things. No matter how well or poorly the economy may be doing, its various components can all be measured, evaluated and judged. Values will be placed at X and someone will respond ‘Y?’. Between the two — value is agreed, a trade is made and thus there is a market. Is the non-tangible ‘market sentiment’ then, a ‘thing’? If it is, does the sentiment agree with the numbers? It seems the answers are ‘Yes’ and ‘Not always.’ The closest we can get to measuring it is with the Volatility Index. The VIX has one big problem though — like the weather in Chicago, there’s no telling what it will be in an hour. We can watch the bungee jump while it’s happening but it’s a very difficult thing to forecast.

As we are always quick to say, the economy and the markets are not the same thing, but they are inextricably linked. If the general economy is doing very well and the markets are doing very poorly, well, somebody’s either not paying attention or they’re paying attention to the wrong things.

It is true that trade fights may cause investors and executives to worry about building new plants or having interruptions in supply chains but apparently that level of worry is, at the moment, not very high. The proof is in the latest jobs reporting that shows there are nearly 1.3 available jobs for every unemployed person. Mathematically speaking, if every single unemployed person took one of the available jobs, there would still be a lot of jobs waiting to be filled. The current figures indicate that businesses remain hungry for workers, a sign they are confident the economy will keep growing. This one fact alone should be enough to keep the bull market in command.

Several years ago, a good friend of ours had just returned from spending time in Australia. While down under he visited some of the continent’s most noteworthy spots and was duly impressed by nearly all of them. An exception was the Great Barrier Reef. He told me that, in all honesty, it was in actuality a very good barrier reef — with a great public relations shop. I’m thinking much of the same could be said for our poor bull, except in the inverse. Paul Schatz at Heritage Capital put it this way: “This has been the single most hated and disavowed bull market of all-time and we continue to see the masses turn negative during every single decline.’

Maybe what we have isn’t a bull market after all. Maybe it’s a Rodney Dangerfield market.

Market Minute – Gold Fever!

You have undoubtedly heard the phrase ‘Even a blind squirrel finds an occasional nut’. Along those lines, you have probably seen (on TV or some financial websites) some recognized actor touting the potential benefits of owning gold. Even from 2011 through 2015 as gold lost well over half of its value the commercials continued. But AHA! At the beginning of June our relative strength charts suggested that it was time to consider owning the metal. So, we first looked at whether the markets were in a general uptrend or downtrend. It was a general uptrend, although certainly a rocky uptrend. (Historically in an up-trending market stocks of gold mining companies outperform the actual gold.) We began watching daily for confirmation that GLD was indeed in an uptrend, and during the month of June we dipped into the market – not for Gold, but for Gold Miners.

On this chart (Source: Fasttrack) you’ll note at the end of May, gold (shown in red) crossed up above the S&P Index* (shown in blue) indicating that gold might be stronger than stocks in general. Also shown is a green line which shows the growth of a basket of gold miners’ stocks. The green line shows strength moving into the miners at the beginning of June. We received an additional strength signal about mid – July and added to our clients’ positions. Even this week as markets have rebounded from the recent spat over currencies, both gold and gold miners have continued on their ascent. During the past three months, the miners have been a positive benefit to client portfolios.

And what will the future hold? We don’t know, and the crystal ball only works looking backward.  For now, the precious metal is looking pretty good vs. the general stock market. We can see the direction but have no idea as to the duration. It could be over next week, or could continue for a few months. For the moment however, the gold bugs out there who always seem to like the concept of owning gold, are owning gold. And the commercials that recommended gold three months ago appear to have been correct – this time. For now.

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[@]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.

Lincoln Financial Securities and Denk Strategic Wealth Partners and their representatives do not offer tax advice. Please see your tax professional regarding your individual needs.

*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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