Weekly Newsletter 8/4/2014

Global stocks moved significantly lower last week in the midst of mixed economic and geopolitical news. As the market sagged through the week, many commentators began to question if the weakness in markets was the beginning of what is assumed to be an overdue correction (move lower) in stocks. The US market as represented by the S&P 500 stock index has not seen a 10% move lower in more than two years. This has led many investors to now wonder at any significant move lower if we are on the cusp of a correction.

In the course of the week there were a number of factors that aided the move lower in stocks. A primary driver was actually good news for the US economy in the form of a 4% move higher in US GDP for the second quarter of 2014. While rising GDP is a positive for the economy, we have returned to a good news is bad news environment. A good GDP report reinforces the US Federal Reserve’s (FED) efforts to unwind the economic support it has been providing. To investors, the removal of the economic support is viewed as negative to the investing markets. Concurrently, the FED also released the minutes of its last FOMC meeting which showed a continuation of tapering bond purchases and some more support among Fed officials for increasing interest rates sooner rather than later.

The varying issues overseas from Ebola in Africa, Ukraine/Russia, European banks, and tensions in the Middle East supported investors concerns as the week moved along. We continue to monitor global market fundamentals and technicals closely for critical market trend inflection points.

Global Market Index Performance

Global Market Perf 8-4-14

Getting Technical with Market Charts

In this section we present charts of the S&P 500 Stock Index and the US Bond Market Index relative to their 50 day (blue line) and 200 day (red line) moving averages.  In addition, we have added the blue shaded area which represents the recent trading channel. The 50 and 200 day moving averages are widely followed market trend indicators that provide a general picture of the health of the broad indexes.

Chart 1 – S&P 500 Index

$SPX 8-4-14

Chart 2 – US Aggregate Bond Index

$AKG 8-4-14

Global Data Points

Econ data points 8-4-14

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Disclaimer – Information contained herein is taken from sources believed to be reliable, but cannot be guaranteed as to its accuracy. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. The Standard and Poors 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. The Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. Contact your investment professional to discuss suitability for your particular circumstances. This article does not constitute an offer of sales of any securities. Securities trading is speculative and involves the potential loss of investment. Past results are not necessarily indicative of future results. Lighthouse Financial Advisors, Inc., dba Lighthouse Wealth Management, is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.

About Katy Chase

Katy Chase, MBA, contributes her own perspective to the team. With previous training in Marketing and French, her perspective offers a mixture of macroeconomic, cultural, and client-focused experiences. In addition, Katy is a baker (with a specialty in chocolate), athlete, perpetual student/learner, volunteer, blogger, Nittany Lion, daughter, grand-daughter, sister, and wife.