SWM ETF portfolios: 80% of 2018 losses made up in January 2019

As we suggested in our turn-of-the-year market commentaries, the end of 2018 represented a classic supply exhaustion, with every single indicator moving to deeply oversold territory. The 12.6% decline in the S&P 500 in Q4 2018 was the 9th largest Q4 decline in history. In January, markets rallied strongly, with the SWM ETF portfolios tracking these gains across the board. Our ETF portfolios recovered 80%-90% of the entire 2018 losses in the month of January alone. Our equity portfolio was up 7.8% for the month. The US Fed made a significant U-turn in their signalling, having been too inflexible late in 2018 given the Chinese growth-shock, and now moving to a much more accommodative stance.

Technical indicators from Lowry Research indicate two successive 90%-up days (when 90% of all NYSE issues are up on the day) followed by an 80% up-day at the end of December, putting in place a clear market floor. During January, Supply and Demand indicators and Advance/Decline lines moved from strength to strength. Buying Power moved back above Selling Pressure in a significant way, crossing the 40-week moving average. This has only happened three times in the last 10 years: in August 2009, December 2012 and November 2016. Each time there followed a sustained market rally. We remain overweight equities and encourage clients to add to portfolios.

Please follow this link to read Secure Wealth Management’s monthly ETF portfolio review for January 2019.