The Word from Main Street

Market Update for the Week of July 6, 2020

Following one of the worst quarters on record, Domestic Equities (U.S. stocks) rebounded strongly in the second quarter of this year. According to Nasdaq Dorsey Wright, this was the best quarter since the late 1990’s as the S&P 500 (SPX) gained 19.95% and the Nasdaq 100 (NDX) reached a new all-time high just last week. International Equities, Emerging Markets, and Fixed Income (bonds) also had a strong quarter.

Despite a strong Q2 performance, Domestic Equities remains behind Cash and Fixed Income in the DALI (Dynamic Asset Level Investing) indicator. As frequently discussed, the DALI helps us identify where strength (or weakness) resides across, as well as within, the broad asset classes. One of the goals of our DALI Tactical Tilt strategy is to overweight the strongest asset classes in the market and underweight the weakest. Our Tactical Tilt strategy was designed to begin with a strategic foundation in mind and then established ranges within which the portfolio can adapt. The ranges must be wide enough to allow real adaptation to take place, but narrow enough to avoid the common complaints of purely tactical portfolios.

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Source: Nasdaq Dorsey Wright

From an economic recovery perspective, below is the most recent economic data, provided by First Trust Advisors, that shows the month-over-month (MOM) and week-over-week (WOW) comparisons.

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Source: First Trust Advisors

Because the economic recovery is so closely tied to our nation’s battle against COVID-19, below is a chart of the daily new positive tests vs. the daily deaths in the U.S.

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Source: First Trust Portfolios

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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.