May 2022
401(k) Allocation

There are trades.

We waited to publish this earlier due to the concerns over a critical technical indicator, also called a “key resistance point”.  Believe it or not, markets had sold off as much (if not more) by the first week of March before then bouncing off those lows and recovering fairly quickly going into the end of the first quarter.  We are once again at that point but as of this writing, that key technical indicator is about to be broached, signalling further deterioration in the markets.  Whether declines will be substantial or not remains to be seen, but there are several headwinds that could mean some trouble ahead in the near term. 

The Federal Reserve has accelerated their program for raising rates, moving up to .5% for this latest round and signalling another two half point rate hikes at subsequent meetings.  Markets rallied briefly following their announcement as there was some fear of a .75% increase, but Powell assured markets that they had no appetite for being that aggressive.  Yet the pressure will be real as inflation continues to run “hot” and both housing and employment numbers show no signs of cooling off.  Yet.  With mortgage rates hitting 6% for the 30 year this week, that may change quickly.  Such uncertainty is the driver of sentiment and volatility in our markets this year. 

It should be noted that our 401K models are currently at max risk-off now, so if you are still not sleeping at night, bump your allocation to the level below what you had typically used.

As always, if you need assistance in rebalancing, please call us at the office and we will be happy to help!

If you have questions, please contact us.

MARKET UPDATE
FINANCIAL PLANNING
TAX PLANNING
GRAPHIC OF THE MONTH

To download the May 2022 Newsletter: CLICK HERE

(Click on the Image to enlarge it.)