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Weekly Economic and Stock Market Commentary – January 11, 2021



Note: The US financial markets, and my office, will be closed Monday, January 18th in honor of the Martin Luther King, Jr. holiday. Normal operations will resume Tuesday, January 19th.

 As for the stock market specifically: The markets started off the year badly Monday, but spent the rest of the week running with the bulls.  To put it mildly, it is good to start the week at record highs.  International markets performed best. The general consensus is that the new administration will keep the fiscal stimulus coming, and the Federal Reserve will continue the monetary stimulus. Here is something that I do believe is consequential since my last weekly commentary.

Treasury bond yields rose above 1% for the first time since March.
We know that bond prices and interest rates are opposite sides of the see-saw. Depending upon several factors, you may now see some decline in your bond/bond fund prices.
I had a couple of phone calls regarding my stance on investing in certain companies given the events in the news over the past week.
In the vast majority of the business I conduct on behalf of clients, I am a fiduciary who is charged with seeking the highest returns commensurate with risk.
I use price action to determine this, and not political views.

The bullish percent indicators moved nicely higher as the major market averages hit new highs. We are in the red zone, but we still have the football on first down.  The nature of the evidence tells me that we should concentrate on WEALTH ACCUMULATION.

Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of January 8, 2021 (Courtesy Dorsey, Wright, and Associates).
On a general note: The Department of Labor provided the only economic report for the first week of the year. Employers let go a net 140,000 jobs in December. The losses came largely from hospitality industries as states imposed more stringent lock downs during the month. In fact, restaurant employment dropped by about 342,000 during the month. The report noted that 2020 was the worst year on record for job creation – that is probably not a surprise.