Weekly Economic & Market Update 8/24/2015

Week in Review

Global stocks suffered steeps losses this past week on the back of slumping global macroeconomic data, and weaker-than-expected corporate outlooks. At the close this past Friday, US stock indexes rested well off their recent all-time highs. The Dow Jones Industrial Average is -10.11% off its recent all-time high, the NASDAQ is -9.82% off, and the S&P 500 is -7.5% off.

The return of volatility in the equity markets has surely caught many investors’ attentions. Some analysts are viewing the current sell-off and associated volatility as an overdue correction in equities. Time will tell if that is the case. It is true that we have not seen a 10% or more correction in the market in years. However, what is giving some analysts and investors pause is the deteriorating macroeconomic fundamentals. Typically, with a temporary correction (or pause) in a bull market, there is economic support that is in place to allow for further market expansion. The slowdown in China, the all-time lows in broad commodity indexes, global shipping weakness, and the prospect of rising interest rates in the midst of a weak economic recovery, have all stopped investors in their tracks to question correction or downdraft.

We continue to monitor global markets, macroeconomic data, and technical indicators to help guide our decisions rather than emotion. In the last few weeks we have lightened up on equity positions for most clients as many of our technical indicators have shown ‘sell’ signals.

As always, please feel free to contact us with any questions or concerns.

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

SPX 8.24.15

Chart 2 – Aggregate Bonds

AKG 8.24.15

Securities are offered through First Allied Securities, Inc. (FASI), a registered Broker Dealer, Member FINRA/SIPC. Advisory Services offered through Lighthouse Financial Advisors, Inc., a Registered Investment Advisor dba Lighthouse Wealth Management (LWM). Lighthouse Financial Advisors, Inc. is not a subsidiary or control affiliate of FASI.

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.