If you didn’t watch the markets every day, you might think the 1st quarter of 2015 was pretty calm and uneventful; the Dow closed March 31st down a mere 47 points (-0.26%) from where it started on January 1st, and the S&P 500 had a very small gain of 9 points (+0.44%) for the 1st quarter.
However, that doesn’t paint a very accurate picture of what happened day-to-day. In reality, volatility was all over the place as investors try to figure out if the market is peaking or if this historic bull market has more room to run. For example, the Dow moved 8,234 points in the 1st quarter based on closing prices. That’s a lot of movement up and down with not a lot to show for!
So what are we focusing our attention on as we move into the 2nd quarter? The ‘Initial Claims for Unemployment’ report released last week showed a post-recession low, making it the lowest level since June 2000. One of the leading indicators for the jobs market is the initial unemployment claims report. Historically speaking, a recession doesn’t typically occur until 6-12 months after a post-recession low has been established and levels start moving higher again.
Another key economic factor we keep an eye on are the various ISM (Institute for Supply Management) reports. The most recently released ISM survey for the service sector, which accounts for roughly 2/3rds of GDP, remains on solid ground. Even though the Business Activity Index moved slightly lower, it remains at healthy levels. In addition, the New Orders Index saw an increase from its already positive level.
In light of these positive economic reports, combined with strong technical evidence in the markets, we are not making anychanges to our clients’ portfolio allocations as we head into the 2nd quarter. We continue to believe that this bull market still has more room to run.
If you aren’t sure whether your portfolio is positioned properly for the current market environment based on the amount of risk that you’re comfortable with, please give us a call at 913.402.6099 to schedule your FREE “2nd Opinion Portfolio Review.”
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 https://www.chladekwealth.com.