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The Word from Main Street

Market Update for the Week of October 8th, 2018

Last week, the ten-year Treasury bonds hit a seven high of 3.2%. Thirty-year Treasury bonds rose as well, hitting a four-year high. When Treasury bond yields rise to new levels after a lengthy hiatus, investors begin to fear that less capital will be invested in the stock markets because the interest rates become more attractive in the bond market. At last week’s bond auctions, Louis Navellier (Navellier & Associates, Inc.) observed there were fewer bidders participating in our Treasury bond auctions. Mr. Navellier surmised that this could be related to buyers awaiting the Federal Reserve’s decision to raise interest rates, but also surmised that it could also reflect China’s refusal to participate in our auctions due to our trade spat. While Navellier suggests that this could be an underlying reason for last week’s pullback, he further proposes that computerized, arbitrage trading connected to the strong dollar, and the shifting of monies between small cap and large cap stocks could be hurting investor confidence.

Whatever the reason, not to forget the political drama over Supreme Court nominee, Kavanaugh, and the approaching mid-term elections; all these things cause uncertainty in the markets. We are definitely looking forward to putting these things behind us. The media tends to overemphasize these internal political battles and bury the overwhelming good news in the economy. The GDP (Gross Domestic Product) is up while unemployment numbers reported last Friday hit the lowest levels since the late 1960’s. The approaching earnings season looks very positive and the holiday shopping season is just around the corner with consumer confidence at high levels. The markets are taking a breather and that’s to be expected. We need to ride through this and stick to our disciplined approach. We believe everything will be fine. When technical data indicates a shifting environment from offense to defense, we will proceed accordingly, but for now, we stand pat.

As we update each week, the current DALI (Dynamic Asset Level Investing) rankings as of October 8th, 2018 are shown below.

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Past performance is no guarantee of future results. All investing involves risk including the loss of principal.

Technical analysis is based on the study of historical price movements and past trend patterns. There is no assurance that these movements or trends can or will be duplicated in the future. Dorsey, Wright & Associates developed the indicators described above. They have been prepared without regard to any particular investor's investment objectives, financial situation and needs. Accordingly, investors should not act on any recommendation (express or implied) or information in this report without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions.

Any statements nonfactual in nature constitute only current opinions and interpretations of their indicators, which are subject to change without notice. There may be instances when fundamental, technical and quantitative opinions may not be in concert. Any opinions expressed or implied herein are not necessarily the same as those of Wells Fargo Advisors or its affiliates. Any market prices are only indications of market values and are subject to change. The material has been prepared or is distributed solely for informal purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Data and opinions are current as of 10/8/18. Additional information is available on request.

Dorsey Wright’s “DALI" employs relative strength-based analysis to rank macro asset classes based on developing leadership trends within the global capital markets. The objective guidance within DALI provides the tools necessary to properly allocate portfolio across all major asset classes in an effort to emphasize strength wherever it exists. U.S. Equities, International Equities, Commodities, Global Currencies, Fixed Income and Cash are evaluated daily to identify dynamic developments across investment genres, as well as within them. This tool provides the tactical precision that allows investors to adapt as the market leadership changes.

Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of Main Street Wealth Advisors and are not necessarily those of Dorsey, Wright & Associates, LLC, Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.

Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Main Street Wealth Advisors is a separate entity from WFAFN.

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