After an ominous sell-off on Monday of last week, markets in the US mostly recovered from two consecutive weeks of losses. S&P 500 futures made a three-week low of $2,215.75 on Monday morning, and market participants were evidently waiting to buy the dip.

After all three major benchmark indices made their respective low points on Monday, prices immediately started climbing again. The rally carried into Tuesday, where the Dow Jones Industrial Average had its best one-day rally in months. The Dow, Nasdaq, and S&P 500 all closed with more than a 1% gain. This rally gave stocks the boost they needed to snap a two-week losing streak.

Despite the very strong gains in stocks, there were also several sharp sell-offs last week that caught investors off guard. And although stocks finished largely higher for the week, the significant sell-offs that came after the sharp rallies resulted in a lack of clear direction and an overall mixed trend in the markets.

Volume on the on the New York Stock Exchange and Nasdaq fell to the lowest level of 2017 on Wednesday. Analysts attributed the lower than usual volume to the lack of economic events and the end of summer. The lower than usual volume provides a possible explanation for the gyrating market moves last week.

“Most people are away, so moves tend to be amplified for no good reason. Technical analysts may point to the 50-day moving average of the S&P 500, which the index keeps failing to break through,” said Michael Antonello, an equity sales trader at Robert W. Baird & Co.

Despite the lack of economic reports last week, the were a few speeches and key events that influenced the markets. The annual central bank symposium in Jackson Hole caused a somewhat mixed reaction. Most of the gains that came immediately after Federal Reserve Chair Janet Yellen’s speech at Jackson Hole, which was supposed to outline monetary policy.

However, Yellen refrained from talking bout fiscal policy and the economy and instead focused on the substantial progress towards full employment and improved banking regulations. With a lack of additional bullish drivers, stocks pulled back shortly after Yellen’s vague comments.

Yellen was not the only Federal Reserve member to influence the markets last week. Remarks from Dallas Fed President Robert Kaplan regarding the effect a stock market correction would have on the economy instigated a huge spike in safe haven assets.

Gold rapidly spiked to $1301.40 per ounce before declining to $1,282.30 and then recovering just below the $1,300 level. 

Although nobody truly knows if a stock market correction is looming around the corner, the mere mention of a market correction by a Fed President was enough to cause gold to surge.

Since 1975, Blanchard has successfully helped 450,000+ clients invest wisely in precious metals and rare coins. Our team of experts are always here to help you make the right investment decisions and capitalize on opportunities in the precious metals market.

Call us today at 800-880-4653

Stock market volatility screamed higher last week as the CBOE Volatility Index (popularly known as the Fear Index) soared over 30% in just one day.

Political turmoil in Washington D.C., combined with a lack of any substantial policy achievements are taking a toll on the stock market.

After all, a large part of the optimism that drove the stock market sharply higher in the months after the November 2016 U.S. presidential election were expectations that the new White House, combined with the Republican Congress would be able to push through significant economic-stimulating legislation.

Let’s look at what’s happened so far in Congress:

• Health care legislation has stalled.

• A major infrastructure spending bill is on the back-burner.

• Tax reform remains a possibility, but likely at a lower scale than previously expected.

Q: What does this mean for investors?

A: Brace for a correction

The Stock Tide Is Turning: It’s Official

The stock market took it on the chin last week. The S&P 500 closed lower on the week and fell below its early August swing low. In technical trading terms – the sell-off broke the daily uptrend pattern. A new minor downtrend is evolving on the daily chart and it is only a matter of time before investors know how deep the correction will become.

Bear Market Basics

When stocks are going up, it is all too easy to forget about the down market cycles.           

• A Pullback = 5-10% decline in the stock market

• A Correction = 10-20% decline in the stock market

• A Bear Market = 20%+ decline in the stock market

Here are some important historical points or “bear market basics” from Sam Stovall, chief investment strategist at CFRA. 

In the stock market, since WWII, there have been:

• 56 Pullbacks
• 21 Corrections
• 12 Bear Markets

Recent History

A 50% decline in the U.S. stock market occurred from 2000-2002 and again in 2007-2009.

Is Your Portfolio Prepared? 

Gold has historically performed the best, when the stock market cycle is at its worst.

The average gold return hit 14.2%, when the S&P 500 fell 20% or more – going back to 1968, according to a recent Wells Fargo Investment Institute report.

Now Is the Time to Act

Gold prices are already rising. If you are looking for a way to hedge your portfolio against a stock market correction or even worse, historically gold rises when equities fall.

Call Blanchard today at 1-800-880-4653 to speak with a portfolio manager about personalized recommendations that make sense for you and your financial future.

Marking only the fourth occurrence this year, the S&P 500 index closed negative for the second week in a row amid mounting political worries and a devastating terror attack in Barcelona.

From Japan to the United States, markets across the world sold off in unison on Thursday of last week. In addition to the S&P 500 trading broadly lower, the Dow Jones Industrial Average and Nasdaq 100 index both had their worst one-day dive in three months.

The S&P 500 was off more than 1.50% during Thursday’s trading, while the Nasdaq was down more than 1.90% and the Dow Jones was down 1.20%, respectively.

Analysts attributed Thursday’s stark losses to the combination of the Barcelona terrorist attack and unsettling rumors that, Gary Cohn, the director of the National Economic Council appointed by Trump was mulling resignation. 

“In a week where we started by worrying about nuclear war, markets have quickly moved on from this, with yesterday’s weak session more of a response to fears that Mr. Trump’s strategy for the economy and business is falling apart,” said analysts at Deutsche Bank.

Many market participants believe Gary Cohn plays an integral role in much of Trump’s economic plan and view him as a direct boon to the stock market. Having been the president of Goldman Sachs, one of the largest and most prominent investment banks in the world, investors see Cohn as someone who understands the markets and is willing and able to set favorable policies for investors.

Although the White House refuted claims Cohn is planning to resign, pundits on Wall Street were already speculating how devastating it would be if he left his position.

“I don’t want to be an alarmist, but there is a lot of faith that he is going to help carry through the tax reform that people are looking for,” said Jeffrey Sonnenfeld, the Senior Associate Dean of Yale.

“I think if he steps away, it would crash the markets,” Sonnenfeld said. Regardless if Cohn plans on terminating his employment, just a vague rumor was enough to send markets into a free-fall last week. 

Evidently, markets are thinly-traded and notably weak in the summer months, especially in August. Moreover, one stock market indicator is sending a flashing warning sign that an ominous sell-off might be lurking around the corner.

Something known as the Hindenburg Omen, which got its name from the infamous fiery blimp crash some 80 years ago, has just surfaced in the markets with a pattern not seen since 2007.

Even though the S&P 500 gained on Wednesday of last week, there were more stocks hitting 52-week lows than 52-week highs. On it’s own, this is not of major concern. However, as of Friday of last week, the Hindenburg Omen occurred during five of the last six trading sessions.

The last time there were more stocks touching 52-week lows than 52-week highs for five days in a row, even with a rising broader market, was in November of 2007. Stocks went on to fall 1.60% the following week and ultimately ended up about 40% lower a year later as one of the worst global financial crises in history ensued.

Out of all of the technical analysis patterns and signals, analysts seem to take the Hindenburg Omen rather seriously because it has a demonstrable history of portending stock market crashes.

Having said that, the only thing that is certain in the markets is uncertainty. And as uncertainty unequivocally rose last week amid the Gary Cohn resignation rumors and the horrific Barcelona attack, investors once again flocked to the safety of gold.

Gold reached a new year-to-date high on Thursday as it finally traded above the critical point of $1,300 per ounce. Gold futures for September delivery traded as high as $1,306.90 per troy ounce during Friday’s trading before the rally slightly fizzled and prices hovered in the $1,295 range.

Gold is always appealing in times of grave uncertainty, and with the possibility of Trump’s Senior Economic Advisor outright quitting, it’s safe to say markets are not at ease.

Since 1975, Blanchard has successfully helped 450,000+ clients invest wisely in precious metals and rare coins. Our team of experts are always here to help you make the right investment decisions and capitalize on opportunities in the precious metals market.

Call us today at 800-880-4653

Last week was home to one of the worst days for stocks of the entire year as tensions between the United States and North Korea escalated to new levels. Although the tensions resulted from only a verbal conflict, it was enough to send markets into a tailspin.

However, earlier in the week, both the S&P 500 and Dow Jones Industrial Average made new all-time highs on Tuesday.

S&P 500 futures traded as high as $2,488.5 while Dow Jones futures rallied to $22,132 during Tuesday’s session. But the rally didn’t hold. Gains were rapidly reversed when President Trump explicitly stated that the United States would respond with “fire and fury” to any additional missile threats from North Korea.

North Korea has been testing and threatening missile strikes for months, and it seems to have finally reached a boiling point.

Markets around the world immediately declined after the “fire and fury” comments but managed to rebound slightly on Wednesday as the fear of a North Korean missile strike seemed to lessen.

However, everything changed when North Korea surprised the world when it released a plan on Thursday to send several missiles targeted directly at the small US territory of Guam by mid August.

As the reality of a possible nuclear war between North Korea and the United States sunk in, investors dumped stocks and flocked to the usual safe haven assets of gold and bonds.

Gold futures for September delivery soared more than $14 per ounce to trade around $1,292 on Thursday with additional gains on Friday. The yellow metal traded just shy of the key psychological level of $1,300 during Friday’s trading session and flirted with making a new yearly high.

The CBOE VIX Index, also known as Wall Street’s “fear gauge” soared to it’s highest level since election day after the North Korean news. At it’s peak on Thursday, the VIX was up 44% and printed as high as 17.28. Nevertheless, volatility declined on Friday as investors had more time to digest the news.

“From a geopolitical perspective, we understand why the escalation in tensions will have shaken some of the complacency out of investors,” said Eric Wiegand, senior portfolio manager at U.S. Bank Private Client Wealth Management.

However, the possibility of a global conflict doesn’t necessarily change the valuations of companies. “While the risks remain elevated from a geopolitical perspective, valuations are not necessarily excessive, though full. But we’re in a low inflationary environment, which can help valuations remain elevated for longer than they would otherwise,” Mr. Wiegand went on to say.

The low inflationary environment and strong fundamentals likely prevented further panic selling on Friday. Nevertheless, an all-out nuclear war between the US and North Korea, if it were to occur, would likely make Thursday’s trading action look like a warm-up.

Despite Friday’s rebound, stocks still closed largely in the red for the week while gold closed with an impressive weekly gain of over 2%. Last week is a quintessential example of why it pays to own precious metals as a form of diversification in an investment portfolio as well a hedge against extreme times of uncertainty and potential global conflict.

Since 1975, Blanchard has successfully helped 450,000+ clients invest prudently in precious metals and rare coins. Our team of experts are always here to help you make the right investment decisions and capitalize on opportunities in the precious metals market.

Call us today at 800-880-4653