Broker Check

Weekly Market Update May 12, 2023

May 12, 2023

Dow Jones Industrial 33,300.62 -1.11%, S&P 500 4,124.12

-0.29% %, Nasdaq Composite 12,284.74 -0.35%, US Ten Year 3.519%, Crude Oil $70.14

Below is an 18-month price chart of the Standard & Poor’s 500 stock index, represented by the S&P 500 SPDR Exchange Traded Fund, SPY. From the year-end 2021 record high to its low on Octpber11, 2022 the index fell 25.2%.  Over the past seven months it recovered about 42% of that decline.

The technical action of stocks has been generally positive since the October lows, as shown in the blue triangle in the chart below. Notice that after every rally there is a pullback, but that pullback ends at a higher low than the previous low. That is often a sign that stocks want to move higher. We also see that there is resistance at the 4,100 level (top of the triangle).  The index is trying to break out above that, and did so twice, in February, and last week, before retreating below the resistance line. Oftentimes it will try three times to break above resistance, and if it succeeds and holds the breakout on the third attempt, stocks may be headed higher.  If it fails to hold the breakout on the third try, we can probably expect more sideways movement.

Market technicians call this an Ascending Right-Angle Triangle pattern. The target of the break-out is to climb higher by an amount equal to that from the lower corner of the triangle, here 3550, to the top boundary of the triangle, 4,150, or a total movement of 600 points, above the boundary, bringing the index to 4,750, close to its all-time high. These are denoted by the dotted lines in purple.  Of course, whether this occurs will very much depend on, among other things, Federal Reserve action regarding interest rates.

On a less esoteric subject, with retirement approaching many investors, when to begin receiving social security benefits is always a timely subject.  Most people still working today have a full retirement age of 67.  They can retire early at 62 with reduced benefits or wait until 70 years of age for the maximum amount. The chart below illustrates the advantage of waiting as long as possible before receiving benefits. It is based on a 62-year-old worker in 2023 earning $100,000 and shows what the annual payout will be in today’s dollars taking benefits at the earliest, the full, and the maximum ages.


Chart courtesy T. Rowe Price

For each year from age 62 to 70, the remittance effectively increases 8%. If one’s health and financial situation allow it, it is beneficial to wait for as long as possible before applying for benefits. Of course, Social Security is only one aspect of your financial planning.  Savings, pensions, other retirement accounts, and assets will also affect one’s retirement decisions. If you wish to explore this further M&R Capital Management will be pleased to provide clients with full financial planning services.

Have a Wonderful Week