Back to School...

The recent market rise to new highs has been unexpected, unprecedented, exhilarating, and, to some extent, frustrating. Now, that last word might seem out of place: why would I not be thrilled at every single point of (recovery) gain from the DOW and S&P 500? Let me tell you why.

U.S. equity indexes are testing/challenging their seven-week uptrends. However, despite the new intra-day highs this past Thursday for most major U.S. indexes, a correction has been underway over the past two weeks for an expanding list of stocks and a number of noteworthy negative divergences are in place. The more important question is whether the current pause/pullback developing is merely short-term (2-3 weeks) or whether a more extended, intermediate-term, multi-month correction has started. This would likely occur following a strong rally into first-quarter-end in advance of second quarter's earnings season.

Our outlook remains unchanged at this point: a short-term correction is underway, but our intermediate- term indicators (measuring multi-month moves from last March) are not yet suitably overbought to indicate a bigger correction developing at this time. In addition, there is a healthy number of stocks, notably Financials and Industrials, that appear to be relatively early in their upside accelerations from broad six-plus-month consolidations. The S&P Financial index (XLF) is a good example of this point. This is why XLF has been in our World Centric program since last July, with stellar performances.

If you have observed that our returns in some programs have been less than the pure S&P 500, there are two reasons for that: 1) We "stood aside" for several months after the crash of 2008 in an effort to protect our client's account values and 2) We have traded in and out of various sectors that we felt at the time were either getting overvalued (we sold) and bought assets we felts were undervalued (we bought). See the above commentary on XLF. We did not time each of these trades perfectly. So, the "frustration" has been that we would like to have the same or better gains as the S&P 500 has had in this period. The reality is that this is quite difficult to achieve - literally and psychologically -- coming off the worst downturn in seventy years. Going forward into the second quarter of 2010, we have adapted our managed account trading models accordingly.

So, you see, even when the markets appear to travel in only one direction, there is still some "back-to-school" time for this old trader.

Speaking of back to school, we have an outstanding Not Your Father's Retirement™ workshop scheduled for April and May. Choose either the six-hour workshop held on three consecutive Thursday evenings (in 2-hr sessions) or the all-day Saturday workshop. Now could be a great time for a "refresher" for you to add to your knowledge of the whole retirement process. I say the "whole retirement process" because this workshop will be dramatically different than any you have attended - even if you met us at CB3 through one of our previous workshops.

In addition to all the financial materials in our "normal" retirement class, you'll see videos, and a drama, and a personal interview with DeAnn Roland from our book, Not Your Father's Retirement. If you are reading this - and you are not a person who has an interest in a pure financial class - this workshop is definitely for you because of the wide range of relationship and money matters that will be covered.

Our Spring Fireside Chats are set for May 18th, 19th and 20th. Diana Denton from Coldwell Banker Honig-Bell will again be our guest speaker for the real estate section. Be sure to reserve your spot soon! The Winter Session in St. Charles was almost closed out because of the fire code limitation on room occupancy! We'll discuss the economy, the markets, and how the new Health Care law (no longer a bill!) could affect us here in western Chicagoland.

I assure you Chris, I, and our team are watching your accounts daily, as we evaluate how to best serve each of our client's investment objectives. Please feel free to call or write (cbrown [at] weg1 [dot] com or cbreitenbach [at] weg1 [dot] com) with either questions or concerns. We will be here with you all the way.

Until next time,