Volatility, which was notable by its absence in 2017, came back with a vengeance in Q1 of 2018.
After climbing straight-up in January, the markets cratered in February and March as daily triple-digit Dow swings became the rule rather than the exception. All of January’s gains, and more, were given up in February and March in all the major indices, except for the NASDAQ Composite which managed to hang onto a portion of its January gains.
For the first quarter, the Dow Jones Industrial Average fell 616 points or -2.5%, while the NASDAQ Composite gained 2.3%. The S&P 500 and S&P 400 each declined -1.2%, while the small cap Russell 2000 fell just 0.4%. Gold gained 1.1%, Silver added 9.8%, and Oil rallied 7.7%.
Our short-term indicator changed twice during the quarter in the midst of all the volatility. Two changes in one quarter is very unusual, and a testament to just how much volatility the markets experienced in the quarter. Our intermediate-term indicator, which is updated quarterly, changed to negative as Q1 ended and Q2 started. This is an indication that it could be a rough time for equities in Q2. That being said, our longer-term indicator remained in positive territory throughout the quarter, even though it’s retreated fairly significantly from its January levels.
With a neutral market indication, signaled by only 2 of our 3 indicators being positive, we remain cautiously optimistic that economic fundamentals will be able to carry the markets higher later this year. However, for the remainder of Q2, we’re more cautious than optimistic, and we’re maintaining a wait and see attitude.
As always, we’re doing our best to make sure you’re able to live your one best financial life, by managing the one thing that an investment manager can actually manage. Risk.
A wise man once said:
“Good risk managers are unapologetic about taking actions to avoid or mitigate risk – even if the actions don’t always pay off – because they know that in the long run, their investors will survive the trip when other investors are left in smoking ruins at the side of the road to retirement.”
Here’s to finishing that trip safely!
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Investment advisory services offered through Barber Financial Group, Inc., an SEC Registered Investment Adviser.
The views expressed represent the opinion of Barber Financial Group an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Barber Financial Group does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.