We Have Seen This Before…….

July 10, 2015 by  
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……..but the ending may be very different.

If you follow our newsletters, articles and advice you know that we think a market correction
is imminent, and for that matter, healthy for long term growth. Of course, no one can predict
exactly when and how severe a correction may be. But we can be prepared for potential volatility.

Adhering to the time tested rule that preventing losses is the best way to higher average gains
we continue to stress reallocating assets into more tactical strategies. One such manager we
utilize to address growth and capital preservation in unsure markets, Tuttle Tactical Management.
Below is a short commentary by Matthew Tuttle, founder of Tuttle Tactical Management, on the
current, tumultuous global financial state.

If we have not spoken about reallocating your investments accordingly, please contact us to do so.
As always we are here to discuss anything with you.

Richard St-Laurent

“We Have Seen This Before


Besides getting to ring the closing bell on the NASDAQ (video here if you missed it) yesterday pretty much stunk in the markets. As I write this at 5am EST the futures are up pretty big indicating a retracement of at least half of yesterday’s move and Chinese stocks finally had an up day. We have seen similar versions of this story over and over again the past couple of years—turmoil overseas creates a bunch of volatility here and scares everyone for a while and then our markets snap back and forget all about it. Right now this is what this looks like to us. If the selloff continues we will continue to scale out of the markets, if it reverses we will scale back into markets. Being tactical right now is more important than ever as we will be prepared to act accordingly no matter which direction this market goes in.

So what is going on?

Greece—We continue to believe that Greece, in and of itself, doesn’t really matter, but the Eurozone does. If Greece gets a sweetheart deal then other countries will think they can also spend beyond their means. Remember that all things being equal politicians would prefer spending vs. austerity. If Greece gets kicked out of the Euro and can actually make a go of it that might inspire other countries to leave. A breakup of the Euro would probably be a mess.

China–This is a bigger deal than Greece as the Chinese market is declining in spite of aggressive central bank easing. We have been conditioned to believe that stocks can’t fall as long as central banks are easing, China could be a canary in the coal mine.

Trading Glitch on the NYSE– Not sure how much, if at all, this impacted trading yesterday but if it turns out to have been a hacker that could shake confidence in the markets a bit. I have seen no news stories that are hinting at this but in this day and age you have to at least ask the question.

We have long said that this bull market will eventually end, and when it does it will be ugly. None of these issues as they are today are enough to end it, but if they spiral out of control then they could be the catalyst that finally does. The S&P 500 is right on its 200 day moving average so this will be a key level to watch as there could be a bunch of selling if that level is breached and a bunch of buying if it holds. For now in the US pre markets and in the overseas markets they buyers are winning out.”