March 25, 2015
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Wealth Watch Weekly E-Newsletter

The market hit short term resistance at about 2,115 on the S&P 500. I suspect we will test this resistance area a couple of times before breaking through to the upside. The market is making higher highs and higher lows, a very good sign it is healthy and trading as it should.
The S&P 500 has gone 815 trading days (since October 2011) without a 10% correction, the fourth longest run on record. What everyone is thinking is that we are way overdue for a correction and they are right, but remember bull markets, just like bear markets, can go on for a lot longer than investors think. In all probability, we will have a 10% correction this year and again, in all probability, it will be a very nice buying opportunity. The correction risks should be viewed in the context of the economic cycle.Here is a bit of a history lesson on the economic cycle from our friends at Ned Davis Research that we thought worthy of sharing:

“Over the past 50 years, the economic and stock market cycles have followed a consistent pattern of two cyclical bear markets for every recession. The 2007-to the present has been a classic cycle of a Recession Bear (October 2007-March 2009), Post-Recession Bull (March 2009-April 2011), Non-Recession Bear (April 2011-October 2011), and Post-Recession Bull (October 2011-present). The cyclical bull market can end in one of two ways. First, another Non-Recession Bear could ensue. There has been only one instance of back-to-back Non-Recession Bears since 1968, with the second being the 1987 crash. Second, the market could enter a Recession Bear, which requires that the bear market overlap with an NBER-defined recession. As long as the recession risks remain low, then the odds of another cyclical bear market remain low as well. Even if a second Non-Recession Bear occurs, they have tended to be short (median of seven months) and shallow (median of -19.3%). The sharp decline in earnings estimates does not appear to be a recession warning at this time. Historically, the biggest market declines have been associated with recessions.

Any corrections should be viewed in the context of a long-term uptrend as the HCM-BuyLine® is still positive and investors should be fully invested.

The HCM Optimized Trend Indicator (OTI) stock of the week is Kraft Foods Group Inc. (KRFT). Coming off the news of a big merger with Heinz, valued by investors around $48 billion, Kraft is up 35% today. Even better news, the OTI had previously placed a buy signal on this company, which would have allowed investors to take advantage of this large gain. As you can see from the graph below, the OTI has done a relatively good job with this stock, with the first buy signal coming roughly 2 years ago when it was trading around $35/month. With KRFT currently trading around $85/per share, we would just like to say: Way to go OTI!

Vance Howard

Would you like advice on how to invest your company-sponsored retirement plan? Ask your advisor how the HCM 401(k) Optimizer® can help. This subscription service is now offered with a free basic subscription to LifeLock!
Howard Capital Management’s investment strategies are designed to protect capital in market downturns and to outperform the major indexes during market upswings. To help accomplish this goal, we developed the HCM-BuyLine®, a proprietary indicator used to identify the trend of the market.
This newsletter is a publication of Howard Capital Management, Inc. It should not be regarded as a complete analysis of the subjects discussed nor should the newsletter be construed as personalized investment advice. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. It should not be viewed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. 

Disclaimer. This communication is issued by Howard Capital Management, Inc. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice. Howard Capital Management, Inc. may maintain long or short positions in the financial instruments referred to and may transact in them as principal or agent. Unless stated specifically otherwise, this is not a recommendation, offer or solicitation to buy or sell and any prices or quotations contained herein are indicative only. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s portfolio. Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be equal to past performance level or that it will match or outperform any particular benchmark. To the extent permitted by law, Howard Capital Management, Inc. does not accept any liability arising from the use of this communication. 

Past performance is no guarantee of future returns.


Please Note: The HCM Optimized Trend Indicator (“OTI”) is a tool developed by Howard Capital Management, Inc. (“Howard”) to help assist a subscriber to determine what portion, if any, of the subscriber’s company stock should be bought, sold or held in the subscriber’s retirement portfolio as of a particular date. Subscriber maintains absolute discretion as to whether or not to follow the OTI. It remains the subscriber’s exclusive responsibility to review and evaluate the OTI and his/her company stock and to determine whether to accept or reject any recommendation and to correspondingly determine whether any OTI recommendation is appropriate for his/her financial situation, or investment objective (for which Howard has and expresses no knowledge or opinion).

Howard does not offer or provide investment implementation services, nor does it offer or provide initial or ongoing individual personalized OTI advice (neither in person nor via the Internet) to Optimizer subscribers.. Howard will nothave and will not accept any trading authority for the subscriber’s retirement account. Thus, it shall always remain the subscriber’s exclusive responsibility to review and evaluate the OTI and to determine whether to accept or reject any OTI recommendation, and if accepted, to then subsequently implement such recommendation on his/her own without assistance from Howard.

The subscriber acknowledges and understands that the OTI is an opinion only, based upon Howard’s judgment as of a particular date. The OTI opinion could be wrong. No current or prospective subscriber should assume that investment in, or purchase and sale of, his/her company stock based upon the OTI will be profitable for his/her retirement portfolio. Unlike the mutual funds that are available for investment in the subscriber’s retirement portfolio, individual equities such as the subscriber’s company stock are not diversified positions, and may be subject to greater volatility and principal risk. Subscribers should be guided accordingly.

Subscribers do not receive investment supervisory or investment management services from Howard. The OTI is not tailored to any particular subscriber’s individual’s risk parameters, financial situation, or investment objective(s). It is the subscriber’s exclusive responsibility to determine what portion of company stock, if any, is suitable for his/her financial situation and/or investment objectives, both initially and on an ongoing basis. No subscriber should assume that his/her subscription serves as a substitute for individual personalized investment supervisory and/or management services from an investment professional of the subscriber’s choosing regarding the ownership of the subscriber’s company stock in the subscriber’s retirement portfolio.

Please Remember: Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a subscriber or prospective subscriber’s investment portfolio. Therefore, no current or prospective subscriber should assume that investment in his company stock is appropriate for his/her financial situation or investment objective, or that the future performance of his/her company stock will be profitable or equal any specific performance level(s).

RELEASE: Each subscriber or prospective subscriber acknowledges and accepts the limitations of the OTI and agrees, as a condition precedent to his/her access to the OTI, to release and hold harmless Howard, its members, officers, directors, owners, employees, affiliates, and agents from any and all adverse consequences resulting from his/her/its use of OTI, including, but not limited to, investment losses resulting from the subscriber’s implementation of any of OTI recommendations.

© 2015 Howard Capital Management, Inc. All rights reserved. Intended for receipt only and not for further distribution without the consent of Howard Capital Management, Inc.

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Taty (126 Posts)