This Core Asset Is Sending A Warning

I walk my kids to school.

Usually I have my seven year old on my back or I’m holding her hand (she still lets me do that.) By the time we leave, my eleven year old has already left, preferring to walk with his friends.

Two days this week were snow days.

Apparently when the Seattle area gets hit with snow, people stay home or venture out without their brains.

After living in the midwest for the first 22 years of my life. I know how to drive in light snow, ice and slush with only a stick-shift front wheel drive car and snow tires.

In fact at 16 I use to drive to O’hare airport (day or night, rain or shine) and pick my dad up from business trips.

Being the youngest of three and the only boy.

My mom didn’t have a problem with me driving to O’hare and Chicago.

So it came as a surprise this week to learn just how bad things can get when a little snow hits the ground and stays more than 24 hours in the Seattle area.

School was shut down for two days and the neighborhood kids took over our street and used it as a sledding hill.

My kids loved it.

AND I loved when school finally opened late Wednesday morning. This is all to say that this was a short week, as I played Mr. Mom more than usual and therefore this weeks missive will be condensed.

Two price charts investors must NOT ignore.

The first is Vanguard’s Total Bond Market ETF with dividends reinvested. This is an ETF that tracks the Bloomberg/Barclay Aggregate Bond Index (read: S&P500 of Bonds).

In other words, this index matters as it represents the following:

44% = Treasuries

27% = Corporate

22% = MBS

6% = Agency

1% = Provincial

1% = Cash

And as you can see in the price chart below. It just broke out to new LIFETIME HIGHS. Up until 2019, every time for the past two and half years, when the price hit that red zone. It got turned away.

Meaning, sellers came to the market and sold their positions. But not this time. This time when the price hit the same resistance, buyers came into the market.

And as you know. I often call those buyers and seller… voters.  And voters are continuing to vote more and more for bonds. And even though stocks have outperformed bonds since the December 24, 2018 low. Bonds did not stop going higher.

And now BND is sitting with a new lifetime high.

You want to know what a sign of strength is? An investment making new life time highs.

Investors are worried still.

Even with the stock market going straight up 28 trading days. Investors are still not convinced, which means the stock market has more to digest.

One of the most dangerous things to see in investing is a flat 200 day moving average.

A flat 200 day moving is uncommon. They are rarely seen, but when you do see one you know you have a stock, ETF, fund or index that can go either way at any time.

As you see below, the S&P500 Index has a flat 200 day moving average (blue line).

Get a plan.

And make sure the plan doesn’t care whether your money is in stocks, cash or bonds.

In Your Corner,

RCPeck-Dig Signature.JPG

RC Peck, CFP

P.S.

What are the price charts trying to tell you? If you don’t listen you are bound to repeat the mistakes of the past. But if you listen then angst, fear and confusion falls away.  And what you are left with is clarity.

There’s a better way. In a world defined by hype, overwhelm and confusion — I will work very hard to put clarity and a powerfully simple approach first. The next step is an easy and insightful conversation.

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