The Word from Main Street

Market Update for the Week of January 6th, 2020


As we begin 2020, the Domestic Equity (U.S. stocks) asset class remains the top-ranked asset class in the Dynamic Asset Level Investing (DALI) tool, which ranks asset classes based on relative strength. DALI helps us to identify where strength (or weakness) resides across, as well as within, the broad asset classes. When we look at the rankings today, Domestic Equity is ranked number one, as it has been, consistently, for over three years. According to Nasdaq Dorsey Wright and as shown below, Domestic Equity has been number one for almost 90% of the days in the last decade. The last decade has been the strongest one yet for Domestic Equities relative to the other asset classes, as no other asset class maintained the number one position in the DALI rankings for more than 4% of the last ten years. (source: Nasdaq Dorsey Wright) 

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Source: Nasdaq Dorsey Wright

We use the DALI ranking tool to help us determine which asset classes to be in, how much to allocate towards those asset classes, and when to make changes. This is a disciplined, repeatable approach that helps us remove human emotion and bias. Our Tactical Tilt process was designed to begin with a strategic target in mind and then establish ranges within which the portfolio can adapt. As Nasdaq Dorsey Wright research has shown over the years, those ranges must be wide enough to allow real adaptation to take place, but narrow enough to avoid the common issues of purely tactical portfolios. As the world and markets change, we too will make changes based not on opinion, not on emotion, not on any bias, but based on data. That is our commitment to you as we work diligently to manage your hard-earned money.

Below is the most recent DALI indicator with the buy signal changes since the prior reading: #1 Domestic Equities (+/-0), #2 International Equities (+3), #3 Fixed Income (-3), #4 Commodities (+2), #5 Cash (-3), #6 Currency (+/-0).


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Source: Nasdaq Dorsey Wright

 
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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 the author(s) and are not necessarily those of 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.

Past performance is no guarantee of future results. All investing involves risk including the loss of principal. Asset allocation and diversification are investment methods used to help manage risk. They do not guarantee investment returns or eliminate risk of loss including in a declining market.

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. Nasdaq Dorsey Wright 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 12/16/19. Additional information is available on request.

Nasdaq 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. Domestic Equities, International Equities, Commodities, 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 Nasdaq Dorsey Wright, 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.