Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, January 28, the S&P 500 closed @ 1276, and that was...
  
   +10.3% ABOVE its 12-Month moving average which stood @ 1157.
   +10.6% ABOVE its 40-Week moving average which stood @ 1154.
     +1.8% ABOVE its 10-Week moving average which stood @ 1254.


Therefore, the INTERMEDIATE-Term trend IS MODERATELY BULLISH and the LONG-Term trend is BULLISH.

The Primary Reason Why The Bull Market In Gold Is NOT Over...

Interest rates remain BELOW the cost of inflation.

The current level of U.S. interest rates remains a hugely bullish factor for gold prices.

Real (inflation-adjusted) rates in the United States remain negative. Ever since the credit crunch three years ago, the Federal Reserve has been committed to fighting falling prices. That’s why the central bank has kept interest rates so low.

This means investors are not being compensated for holding cash or short-term fixed-income securities because rates are below the cost of inflation. Since the dollar pays almost nothing to its holder, it’s actually a liability to carry.

That alone is enough of a reason to continue to own gold and gold stocks.

The yellow metal yields nothing. But it has intrinsic value. The dollar has no intrinsic value and has lost its purchasing power every decade since Nixon broke the gold window in 1971.

No Relief for Yet Housing Prices...

The S&P/Case-Shiller Index of Home Values in 20 cities fell -1.6% from November 2009, the biggest 12-month decrease since December 2009, according to the median forecast of 26 economists surveyed by Bloomberg News.

Mounting foreclosures will probably throw more properties on the market this year, further depressing prices, homeowners’s equity and construction.

The lack of a sustained housing rebound and unemployment above 9% are among reasons the Federal Reserve may refrain from raising interest rates and complete a 2nd round of stimulus that could pump $600 billion into the economy by June. 

“The large overhang of unsold houses will weigh on prices,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “Housing is lagging the economic recovery. It is one factor encouraging the Fed to remain on the sidelines.”

Lagging Small-Cap Stocks A Bearish Omen...

Both the Dow Jones Industrial Average (DJIA) and small-cap Russell 2000 closed at a 52-week high two weeks ago, and then the DJIA closed at another high last week while the Russell 2000 lost more than -1%.

Going back to 1979, this has occurred only 3 other times...

1. April 1, 1998, after which the DJIA lost more than -15% during the next six months, while never gaining more than +2.5%.

2. January 7, 2000, after which the DJIA lost more than -14% during the next two months, while never gaining more than +1.8%.

3. January 19, 2007, after which the DJIA lost more than -4% during the next two months, while never gaining more than +1.8%.

Typically, when small-cap stocks fail to lead the market, stock market advances are hard to come by and downside risk is above average.

Chart of The Day: S&P Mid-Cap 400 Records New All-Time High!

Following the financial crisis trough of March 9, 2009, the stock market embarked on a relatively sharp rally. Today's chart focuses on one particular stock market index -- the S&P 400 (Mid-Cap stocks). 

The reason for the focus is that the S&P 400 achieved a significant milestone last week when it made a new, all-time record high.

Considering the magnitude of the financial crisis and resulting bear market, this is indeed a significant achievement.

Chart & Commentary Courtesy of Chart of the Day

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, January 21, the S&P 500 closed @ 1283, and that was...
  
   +10.8% ABOVE its 12-Month moving average which stood @ 1158.
   +11.3% ABOVE its 40-Week moving average which stood @ 1153.
     +3.0% ABOVE its 10-Week moving average which stood @ 1246.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

And AARP's Baby Boomer Survey Says....

Every day during this year, more than 7,000 boomers will turn 65 years old. AARP's December survey of boomers turning 65 in 2011 finds the first wave boomers are, for the most part, satisfied with their lives now and optimistic about the future.

Among the top concerns for these boomers are financial security and improving their health.

Some boomers turning 65 have age-related concerns similar to ones their parents experienced when they were 65. They have found, like their parents, they want to age in place, and chronic health conditions and financial responsibilities will influence how they will live the last third of life.

But the soon-to-be 65-year-olds differ from their parents in one important aspect: retirement. The survey shows baby boomers overall and many of those turning 65 consider work to be part of retirement, and a significant percentage say they never will consider themselves retired.

Other key findings are:

78% of those turning 65 this year say they are satisfied with how their lives are going today. Five years ago, 77% of boomers said they were satisfied.

More boomers feel they are worse off than feel they have done well in terms of their financial security and health.

Only about 40% respondents say they are about where they expected to be in these same areas.

A majority of boomers, 70%, turning 65 say they have achieved all or most of what they wanted out of life, and 26% say they have achieved some of what they wanted. Just 3% say they have achieved little or none of what they wanted out of life.

Boomers turning 65 also expect to live about the same number of years as they wish to live. On average, boomers turning 65 wish to live to about 88.7 years, and they expect to live until they are 85.2 years old.


Source: AARP

Quote of The Day: Markets & Politicians

"Markets don't lie. Politicians do."

Why Do We Put So Much Blind Faith In The Federal Reserve?

The Federal Reserve released a 3-year forecast for our nation's unemployment rate on 11/20/2007.  

The Fed believed that unemployment would be no higher than 4.9% during calendar year 2010.

As of 12/31/2010, the national unemployment rate was 9.4%.

(source: Federal Reserve, Department of Labor)

High Unemployment Is Good for the Stock Market!?

Since 1948, the stock market has returned, on average, 6.6 times more per year when unemployment has been considered historically high than when it has been low!


According Ned Davis Research, when the rate of unemployment has been above 6%, the S&P 500 has gained ground at a rate of +13.9% per year.


However, when the unemployment rate was considered “low” (4.3% or below) the S&P has gained at an annualized rate of just +2.1% per year!

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, January 14, the S&P 500 closed @ 1293, and that was...
  
   +11.5% ABOVE its 12-Month moving average which stood @ 1160.
   +12.4% ABOVE its 40-Week moving average which stood @ 1151.
     +4.5% ABOVE its 10-Week moving average which stood @ 1238.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

Working for the Government

1 out of every 6 American workers (17%) is employed by the government, either at the federal, state or local level .


Source: Department of Labor

Is Everyone Paying Their Fair Share?

Americans filed 140 million tax returns for calendar year 2008 income. 

Through the use of deductions, exemptions and credits, 52 million tax returns of the 140 million total returns (or 37% of all returns filed) paid zero federal income tax.

Source: Internal Revenue Service


 

5 Stats That Retirees Should Be Aware of...

1. Less than 1 in 5 working Americans (19%) is contributing enough money on a pre-tax basis to his/her retirement accounts to realistically project that he/she will be able to retire by age 65 (source: Nyhart, Tom Totten, Craig Harrell). 


2. 52% of retirees are still making monthly payments on home mortgage debt (source: Society of Actuaries).  


3. Life expectancy at birth of Americans has increased by 10 years in the last 60 years, reaching 78.3 years today.  Thus since 1950, life expectancy at birth has increased by 2 months every year (source: Center for Disease Control).  


4. 34% of American workers age 60-69 believe that their greatest financial risk during their retirement years is a catastrophic out-of-pocket expense associated with a major health event.


5. An additional 26% of American workers feel their greatest financial risk is outliving the retirement assets they have accumulated (source: Hartford Financial Services Group).

A Half A Million Dollar College Education?...

A child born in 2010 that begins kindergarten in the fall of 2015 would attend college between the years of 2028 and 2032. 

If that child attended an average private 4-year college and if the annual price increases for private colleges experienced over the last 30 years continued into the future, the aggregate 4-year cost of the child's college education (including tuition, fees, room & board) will total $506,423, or nearly $127,000 per year.

Source: College Board


   

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, January 7, the S&P 500 closed @ 1272, and that was...
  
   +10.5% ABOVE its 12-Month moving average which stood @ 1156.
   +10.8% ABOVE its 40-Week moving average which stood @ 1148.
     +3.3% ABOVE its 10-Week moving average which stood @ 1231.

Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

Baby Boomers Biggest Worries...

The Case for An Up Stock Market in 2011...

This year (2011) will be the 3rd year of Barack Obama's 4-year presidential term that began in January 2009. 

The S&P 500 stock index has posted a positive total return during the last 17 "presidential 3rd years." 

The last time the S&P 500 was negative during a "presidential 3rd year" was 1939! 

The average annual return of the S&P 500 during a "presidential 3rd year" since 1950 is a gain of +22.0%!


Source: BTN Research


   

Chart of The Day - Average Pre-Election Year - Historical Performance

Today's chart illustrates how the stock market has performed during the average pre-election year. Since 1900, the stock market has tended to outperform during the first 6 to 7 months of the average pre-election year.

For the remainder of the year, pre-election performance has tended to be choppy and slightly subpar. In the end, however, the stock market has tended to outperform during the entirety of the pre-election year.

One theory to support this behavior is that the party in power will make difficult economic decisions in the early years of a presidential cycle and then do everything within its power to stimulate the economy during the latter years in order to increase the odds of re-election.

Chart & Commentary Courtesy of Chart of the Day

Leave An Infinite Legacy for Future Generations! - Become Your Own Banker and Bank On Yourself!

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, December 31, the S&P 500 closed @ 1258, and that was...
  
   +10.8% ABOVE its 12-Month moving average which stood @ 1133.
     +9.7% ABOVE its 40-Week moving average which stood @ 1139.
     +2.9% ABOVE its 10-Week moving average which stood @ 1199.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.