News & Updates                                                            From the desk of Ted Black, CFP^®

Market Watch

Since reaching their most recent peak in early July, the major domestic stock market indices have suffered a setback. It seems to me that this setback can be broken down into two stages: the initial decline that lasted about four weeks and did all of the damage; and the subsequent sideways movement within a fairly well defined trading range that’s been unfolding over the past seven or eight weeks.

What do I mean by “sideways”? The market is at about the same level today that is was in early August. Yet, since then we’ve seen quite a bit of volatility. Each time a rally starts, and before it can get going in earnest, it runs into strong headwinds and retreats back down. Each of these little rallies and retreats (there’s been three in the past seven weeks) stalls at about the same place, establishing points of support (a floor) and resistance (a ceiling), defining a trading range and earning the “sideways” badge.

Many market participants watch closely for any breaches of this range. The idea is that if the market finally breaks free of the indecision that’s caused this sideways movement and does break the high or low end of the range, that it very well may continue to move in that direction ... perhaps aggressively so. By the way, the longer they last and more well defined these trading ranges are, the stronger the belief is that the eventual “breakout” could be significant.

The markets are information driven. In the relatively near-term, say the next thirty days or so, I believe that two factors in particular, news about the European debt crisis and the third quarter earnings season here at home, have the potential to move the market out of its range. Whether they will or not, remains to be seen, but these two topics are heavyweights as far as the market is concerned, and can significantly impact investor sentiment and behavior.

Although I’m watching this very closely, I don’t want over-exaggerate the predictive power of this type of analysis of market movements. I do believe that it can be useful and offer clues, and that in combination with additional analysis can help in the decision making process. But I also know that the market is notorious for breaking the rules and doing the unexpected.

For the time being, remaining cautious and patient appears to be the best course of action. However, there is a  potential upside for investors in the not-too-distant future. The recent declines, uncertainty, and generally pessimistic mood of investors has created a situation in which prices for some investments are looking attractively valued on a long-term basis.

The coming weeks and months are likely to be quite important for the market. This is no time to be asleep at the wheel! In addition to being cautious and patient, it’s also a time to be watching very closely for opportunities to protect and/or strengthen our portfolios.

Other Stuff

Better Health, Longer Life - The National Center for Health Statistics tells us that the life expectancy of a new born American male in 1900 was 46.3 years. The life expectancy of a new born American male today id 75.3 years.

Those Darn Baby Boomers - Medicare enrollment is projected to rise from 49 million today to 81 million in the year 2030.

Good Advice from Dr. Seuss - “Be who you are and say what you mean because those who mind don’t matter and those who matter don’t mind.”

This report was prepared by LongView, Inc. and reflects the opinions of the authors. It is based on sources and data believed to be accurate. Opinions and forward looking statements are subject to change without notification.