The markets had a very volatile week.  Between now and the end of summer, we are likely to see many more weeks like this.  This past week had some pretty troubling news that could be initial evidence of the economy slowing.  For example, Japan’s economy has taken a nosedive and is likely back in a recession.  In the US, we are starting to see signs of weakness in the manufacturing sector as evidenced by the collapse in the Philadelphia Fed Index which is a regional measure of economic activity that many call a “canary in the coal mine.”  We also continue to have weekly unemployment claims in the 400,000 range, which is not good for the employment picture.  All this news comes with the backdrop of the Fed ending QE2 at the end of June.  So, needless to say, investors are getting worried.  

Total Returns %

1 Week

YTD

Dow Jones Industrial Average

-0.66%

+8.07%

NASDAQ Composite

-0.89%

+5.67%

S&P 500 Index

-0.34%

+6.01%

Russell 2000

-0.79%

+5.79%

U.S. Aggregate Bond Index

+0.19%

+1.17%

MSCI All Country World

+0.04%

+3.95%

Source: Yahoo! Finance.  Data through 5-20-11

This past Thursday saw the lowest volume on the NYSE that we have seen all year; also, new   money into stock mutual funds, which makes up about 25% of all stock trading, is very weak.  Lastly, executives at S&P 500 companies sales of company stock versus executive buys of their company stocks is at a ratio of about 353 to 1.  In more direct terms, for the week ending 5/13, there were a total of $2.75 million in purchases compared to over $1 billion in sales.

I continue to monitor the different sectors of the market as the summer months approach.  Since it’s likely we will continue to hear more negative news, I will not hesitate to hold cash in my clients’ portfolios if there are no better alternatives.  However, I continue to remain confident in my investment strategy as a trend indicator (both positive and negative) for investments, and will be looking for excellent buying opportunities during the down market as well.

Do you have an investment strategy that will keep emotion out of your decisions of when to buy or sell?  Call me to schedule a free review of your current investment portfolio – 913.693.7918.

John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals.  For more information, visit http://www.chladekwealth.com.

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