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The Virtus View is a weekly to bi-weekly e-mail publication that Brian authors in order to keep you updated on the current market situation.
VIRTUS VIEW 11.21.08
11/21/2008
Please feel free to forward these e-mails to any friends you have who you believe will benefit from learning more about finances and investments.
In the November 4th Virtus View I mentioned if the rally that week didn’t hold we should see the 780-800 mark for the S&P 500. What we wanted to see was a double bottom at the 850 mark like we hit in late October. On Wednesday, November 12th we had a double bottom at the 850 mark and bounced back up 5% the following day; unfortunately, we could not sustain the rally and started dropping back down Friday. On Wednesday November 19 we crashed through the 850 mark and ended the day at 806. For a couple days before the market dropped below 850, as shown in the following chart, it appeared we had entered into a trading range between 850 and 1,000, but it unfortunately that did not hold.
I can’t stress how important it is for the 760-780 mark on the S&P 500 to hold. Some people, and maybe correctly so, believe using technical analysis (charts) is a self fulfilling prophecy. Most every top money manager, mutual fund manager and investment firm uses technical analysis in some form or another. Thus, if many investors expect the market to bounce off of a certain mark they will invest at that mark in order to be in front of the movement, however, like we saw this week, sometimes it is just a temporary move. When they don’t hold you get program selling which may put further pressure on the market.
Below is a chart of the S&P 500 going back to 2000. As you can see we are touching the 2003 lows for the S&P 500. If this doesn’t hold there is no significant support below that level. Which means we will be entering dangerous territory.
Which brings me to one of my current worries; I am not sure the market can rally significantly with the GM and Ford bankruptcies hanging over our head. The government needs to make a decision one way or another and fairly quickly so the market can digest the news. The market appears to be pricing in for both GM and Ford to go into bankruptcy; however, if it happens the actual impact might be larger than what is priced in at this point. I am not sure we fall much more if the news is released, but rather we will not be able to put a good rally together until the news is finalized. From a personal perspective, I don’t believe we have been operating under a free market economic system for many decades. I hope the government doesn’t pick the wrong time to start being a free market system again.
Future Virtus View’s will discuss the current yield curve and what it means for the future, additional alternative investments, and what we can expect in 2009. Have a great week.
Best Regards,
Brian Tillotson
Wealth Manager
Virtus Wealth Management
2435 E. Southlake Blvd
Suite 120
Southlake, TX 76092
817-717-3812
866-407-4320
Fax: 817-416-6585
www.virtuswealth.com
Securities and Advisory Services offered through VSR Financial Services, Inc. Member FINRA / SIPC
To opt out of this weekly e-mail, please just reply to this e-mail with “Opt Out” in the subject line.
Please feel free to forward this to any friends you believe will benefit from this information.
To learn more about Virtus Wealth Management and how we may be able to help you, please visit our website or give us a call. http://virtuswealth.com
THE VIRTUS VIEW
Good afternoon to all.
This communication is intended to add value to your life by helping you separate the real news from the white noise, understand the critical economic events that you read about every day and outlining alternative investments which might be advantageous to you in these times. We send this weekly e-mail to both clients as well as individuals we hope become future clients. Thus, to my valued clients, since we use many alternative investments in your portfolio currently, some of the e-mails might discuss assets that you already understand. It never hurts to review your knowledge of those investments.Please feel free to forward these e-mails to any friends you have who you believe will benefit from learning more about finances and investments.
In the November 4th Virtus View I mentioned if the rally that week didn’t hold we should see the 780-800 mark for the S&P 500. What we wanted to see was a double bottom at the 850 mark like we hit in late October. On Wednesday, November 12th we had a double bottom at the 850 mark and bounced back up 5% the following day; unfortunately, we could not sustain the rally and started dropping back down Friday. On Wednesday November 19 we crashed through the 850 mark and ended the day at 806. For a couple days before the market dropped below 850, as shown in the following chart, it appeared we had entered into a trading range between 850 and 1,000, but it unfortunately that did not hold.
I can’t stress how important it is for the 760-780 mark on the S&P 500 to hold. Some people, and maybe correctly so, believe using technical analysis (charts) is a self fulfilling prophecy. Most every top money manager, mutual fund manager and investment firm uses technical analysis in some form or another. Thus, if many investors expect the market to bounce off of a certain mark they will invest at that mark in order to be in front of the movement, however, like we saw this week, sometimes it is just a temporary move. When they don’t hold you get program selling which may put further pressure on the market.
Below is a chart of the S&P 500 going back to 2000. As you can see we are touching the 2003 lows for the S&P 500. If this doesn’t hold there is no significant support below that level. Which means we will be entering dangerous territory.
Which brings me to one of my current worries; I am not sure the market can rally significantly with the GM and Ford bankruptcies hanging over our head. The government needs to make a decision one way or another and fairly quickly so the market can digest the news. The market appears to be pricing in for both GM and Ford to go into bankruptcy; however, if it happens the actual impact might be larger than what is priced in at this point. I am not sure we fall much more if the news is released, but rather we will not be able to put a good rally together until the news is finalized. From a personal perspective, I don’t believe we have been operating under a free market economic system for many decades. I hope the government doesn’t pick the wrong time to start being a free market system again.
Future Virtus View’s will discuss the current yield curve and what it means for the future, additional alternative investments, and what we can expect in 2009. Have a great week.
Best Regards,
Brian Tillotson
Wealth Manager
Virtus Wealth Management
2435 E. Southlake Blvd
Suite 120
Southlake, TX 76092
817-717-3812
866-407-4320
Fax: 817-416-6585
www.virtuswealth.com
Securities and Advisory Services offered through VSR Financial Services, Inc. Member FINRA / SIPC
To opt out of this weekly e-mail, please just reply to this e-mail with “Opt Out” in the subject line.
Please feel free to forward this to any friends you believe will benefit from this information.
To learn more about Virtus Wealth Management and how we may be able to help you, please visit our website or give us a call. http://virtuswealth.com
CONTACT US: 2435 E. Southlake Blvd • Suite 120, Southlake, TX 76092 • (817) 717-3812
Toll Free (866) 407-4320 • Fax (817) 416-6585 • BTillotson@VirtusWealth.com
Toll Free (866) 407-4320 • Fax (817) 416-6585 • BTillotson@VirtusWealth.com
Securities & Advisory services offered through VSR Financial Services, Inc., a Registered Investment
Adviser and Member FINRA & SIPC. Virtus Wealth Management is independent of VSR.
Adviser and Member FINRA & SIPC. Virtus Wealth Management is independent of VSR.
