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Alexandria Ikomoni: It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of Nelson Corp Wealth Management. Welcome back, David.
David Nelson: Thank you, I appreciate it.
Alexandria Ikomoni: Awesome. So getting started here, stocks have rallied significantly since Christmas, with very little intervening declines and we just want to know: does this mean the markets are in the clear now?
David Nelson: We wish we knew for sure (laughs)
Alexandria Ikomoni: (Laughs) yeah.
David Nelson: Obviously we don’t, but the reality of the situation is that, uh, we’ve gone over 40 days without at least a 3% or greater, uh, draw down in terms of market. Very unusual. Uh, very unusual to see. Slide one here will visually show us as far as what-what’s taken place here recently, and that was we had a nice run up. So we’re looking at 18 and early 19. We had this nice run up and then we had this, what’s called a waterfall decline leading into Christmas. And now, what’s shaping up here is we have this v-recovery, they call it a v-recovery, and the v-recovery is this sharp move as far as upward, again with no draw downs. Very unusual.
David Nelson: Now slide two will point out as far as what typically takes place. And, uh, what typically takes place is a w-bottom. So in other words, you go down and you retest. So this was 15 and 16, 2015 and 16. We had a similar drawdown as far as the-the markets are concerned. We had this nice rally, we got back to almost all-time highs and then we retested as far as the low. All this jargon as far as in our industry, but what-what is important to note is historically, not every situation, but historically what takes place is you’re going to retest at a lower level. That’s the concern that we have right now, is have we touched the bottom and is the recovery going to hold or are we going to go through a w-bottom like we historically do. 80 plus percent of the time you have a w-bottom. So it’s a- it retests before it takes off from there. So that’s kind of what we’re thinking is gonna to take place this time as well.
Alexandria Ikomoni: Awesome, thank you for that. And is there any way to know if we’re going to retest in the December 2018 lows?
David Nelson: So, uh, again, if we, it-it’d be nice to know. Momentum looks very good, participation as far as the market looks outstanding. The big variable right now is that we’ve had a uh, there’s two different, uh, moving averages that come into play when we talk about markets. One is the 50-day moving average, which looks good as far as right now. We’ve had the numbers have, uh, cooperated and we’re moving in the right direction there. The 200-day moving average, which is clearly the more important one, hasn’t confirmed yet translation. Until it does, I don’t think I would be very aggressive if I was an average person out there investing. I think I would be patient at this point in time and let things settle down a little bit more. It’s not going to continue to go to the moon, so uh, be patient, don’t you know, don’t take your chance at this point in time would be our advice.
Alexandria Ikomoni: All right, perfect, and thanks for that advice. And if-if you miss any of our discussion you can head to OurQuadCities.com.
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