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Michael Traxler Wealth Management, LLC

Stock Market Retests the Breakout!

Hello Everyone - I just have to acknowledge the extreme volatility in the stock market recently. Stocks were down a whopping 6% during the 2nd half of October.  Now in just the past 5 days it has recovered pretty much all of it. What a wild ride! This volatility makes investors nervous (including me).  

But, if you look closely at the chart of the S&P 500 below, and you look where the arrow is, you’ll notice that the market came down and hit my blue line! I wasn’t really expecting this, but now in hindsight I should of been. Why?  Because this is very typical market behavior. This happens frequently. That is, it breaks above the line, then it comes back and retests the line prior to continuing to move higher.  

Of course anything can happen next, but if stocks hold that line and keep moving higher from here, then the larger uptrend remains intact, and we would have reason to expect higher stock prices.  If it turns around and goes back down below that line, then something else entirely may be going on here.  I will keep you updated as this develops.

On another note we have been liquidating a mutual fund that we feel has underperformed.  We are replacing it with another fund that has similar risk feautures with much better historical performance.  In some cases we are going to CDs with part or all of the proceeds.  It just depends on the investor. If you see activity in your account, this may be the reason why.  Always feel free to ask us should you have questions.

Best regards and good hunting!



5 1/2 Yr Chart of the S&P 500 below. A widely followed stock market index that includes 500 of the biggest companies in America.