The Confident Chronicles: August 5, 2024
Cool Charts Explained: S&P 500 Chart:
As predicted in the 8/1/2024 Confident Chronicles, the stock market has suffered from continued volatility.
Today at 9am EST clients using the Plan Confidence Semi-Tactical models received an email / “push” notification on their phone letting them know new advice is ready.
We have moved the Semi-Tactical models into a very “defensive” posture due to the breach of 3 of our technical indicators.
As you can see from the S&P 500 chart above, the 50 day moving average has been breached (red arrow). There will be tremendous pressure from the market “bulls” to try to get the S&P above this crucial line in the next few days.
So, I fully expect to see a mini-rally as the “bulls” fight to get above the 50 day.
The Relative Strength Indicator (RSI) is sitting at 30 (green arrow), which is a sign of an “oversold” market. So, from a technical perspective, this should help with a mini-rally as bargain hunters and computerized trading should be looking for some good “buys” right now.
However, the momentum of the market (yellow arrow) is not in the “bulls” favor right now, as the MACD is trending sharply down, with the red line above the black line (negative indicator).
So, the “buy the dip” mentality does not look like it is in favor now.
And finally, fear has crept into the market as measured by the “volatility index” or VIX for short (not pictured). Anything above a 20 is a sign of high levels of fear in the market.
The VIX has been above 20 since last Thursday (8/1/24) and reached an intra-day high of 65 yesterday before closing at 31.
Combine the MACD, VIX and 50 Day moving average breach and we have a market with a negative sentiment.
So, the Tactical models have recommended a 75% reduction in any equity exposure.
Below is the chart for the four Semi-Tactical models. The exact percentages your clients should have in Cash, Bonds and Stocks are displayed on their Participant Dashboards as of 9am EST today.
Your clients would have received a notification to change their Future Contributions on Thursday 8/1/24, see Confident Chronicles 8/1/24 https://www.planconfidence.com/newsletters-blogs/cc08012024
Today they would have received a notification having them change their Current Allocations (Rebalance).
They DO NOT need to change their Future Contribution allocations as well if they did that last Thursday.
PLAN CONFIDENCE MODEL UPDATES:
FUTURE CONTRIBUTIONS:
Future contributions are money that is added to your plan with every paycheck.
We monitor the future contributions monthly and are looking to direct these monies into investments that we hope to be “on sale”.
This would allow you to buy more shares in your portfolio.
This month we are advising that you use the following:
· High Yield Bond
· Mid Cap Value
· Small Cap Value
This is an optional feature in Plan Confidence and you may or may not receive Future Contribution advice. Please discuss this with your advisor if you have any questions.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class. You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
CURRENT ALLOCATIONS - TACTICAL MODELS:
Current Allocations are the monies currently in your plan.
Making changes to this money is known as a “rebalance”.
Some plans have trading restrictions on how often you can rebalance the money in your plan. Be sure to know your plan’s restrictions before implementing any strategies.
Last update was on August 6, 2024
Our “Tactical Models” combine the benefits of asset allocation and “momentum investing” strategies.
These models rebalance periodically back to their risk “targets” and the targets can be changed at any time given the current market conditions.
These models may go through periods of time while holding larger amounts of cash than the Strategic Models.
Our Tactical Models may rebalance on any given day.
Please be sure to look for an email from support@planconfidence.com letting you know when to make changes.
Also, be sure to keep our “push” notifications “on” if using our app.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan.
Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
Model Portfolio Rationale:
Plan Confidence relies on the research and model construction from BlackRock, Inc. (one of the largest asset managers in the world).
We use their “Target Allocation ETF Multi-Manager” model and “deconstruct” their allocations back to their asset categories so we can program the Plan Confidence™ Software.
We then map those categories as closely as we can to the available investment options that you have in your plan. Below is an excerpt* of their most recent Market Review. Please let us know if you would like the full report.
This update has been written by Kevin T Clark, RF™.
All opinions expressed are those of the author and not that of Plan Confidence Corporation nor any other firm or individual.
Kevin T Clark, RF™ is the CEO and Co-founder of Plan Confidence Corporation.
Kevin is an “ERISA Nerd” and one of only a hundred(ish) Dalbar certified Registered Fiduciaries (RF™) in the United States.
He has been helping hard working Americans invest their money since 1997!
Plan Confidence Corporation is an SEC registered “internet only” investment firm specializing in providing advice to hard-working Americans investing in their employer’s retirement plans (401k, 403b, TSP, etc). They have created proprietary software so hard-working Americans can receive professional, ongoing advice on their employer’s retirement plan from an adviser of their choosing!
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