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The Northern Star Newsletter 6/27/19 - Stocks Touch Record Highs


Message from Jon

Market Update:

Ever since the end of May, we have seen a rebound in the markets. This is stoked by the Fed and the idea of them being accommodative to the markets and interested in a reduction of interest rates as well as an upbeat progress report on the trade tensions with China happening at the G20 Summit.1,2

At present, the opinion is that the Fed will reduce rates in the coming months while the trade war will also come to resolution. This is promoting a renewed interest and also a renewed doubt to the validity of the rally we are witnessing. The side taken depends on your disposition, I guess.

Stormguard is sitting at a 0.02 as of this writing, having declined to a -0.85% as a result of May's end, demonstrating that a bear market condition had set in. We have seen also the change to Dorsey Wright's asset class pecking order, still favoring equities but now in 3rd place, bonds.

We should, in our opinion, see the President's attitude and disposition become mild in the months to come as a result of preparations for his election campaign in 2020. Hopefully this happens and geopolitical tensions recede. Not sure that matters much at the moment, but we will have to wait and see if it does as the month's progress.

Till we speak again,




Stocks Touch Record Highs


The Week on Wall Street
The S&P 500 hit an all-time peak of 2,964.03, in intraday trading Friday, while improving 2.20% across five market days. The Dow Jones Industrial Average and Nasdaq Composite posted respective, 5-day advances of 2.41% and 3.01%. In addition, the MSCI EAFE benchmark of overseas stocks rose 2.58%.[1][2][3]

A White House tweet and the latest monetary policy outlook from the Federal Reserve sent the bulls running. These were the top two financial news items in an eventful week - a week in which the value of West Texas Intermediate crude rose 9.4%, the price of gold went above $1,400 for the first time in six years, and the 10-year Treasury yield fell below 2%. (Treasury yields fall when their prices rise, and vice versa.)[4]

The Fed's June Policy Statement
The central bank stood pat on interest rates this month, but the expectations of some of its policymakers changed. About half of the 17 Fed officials who have a say in monetary policy now project either one or two quarter-point rate cuts by the end of the year. As recently as March, no Fed official saw grounds for a 2019 cut.[5]

Markets interpreted this shift as a sign that the Fed might soon ease. While a rate cut is by no means a given, traders now believe that the Fed will make either a quarter-point or half-point cut at its July meeting.[6]

Last Tuesday's Market-Moving TweetA day earlier, stocks rose after President Trump stated that he and Chinese President Xi Jinping "will be having an extended meeting" at this week's G-20 summit in Japan.[7] Investors were encouraged by this note, sensing a chance for progress in U.S.-China trade talks. Final ThoughtWith tensions persisting between Iran and the U.S., investors are keeping a close eye on both commodity prices and stock indices. Economic or geopolitical developments could heavily influence the short-term movement of the markets. THE WEEK AHEAD: KEY ECONOMIC DATATuesday: The Census Bureau's snapshot of May new home buying and the Conference Board's monthly consumer confidence index.Thursday: The federal government's third ("final") estimate of first-quarter gross domestic product.Friday: May consumer spending data from the Department of Commerce as well as the final June consumer sentiment index from the University of Michigan, another key gauge of consumer confidence.
Source: Econoday / MarketWatch Calendar, June 21, 2019The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. THE WEEK AHEAD: COMPANIES REPORTING EARNINGSMonday: Carnival (CCL)Tuesday: FedEx (FDX), Micron Technology (MU)Wednesday: General Mills (GIS), Kraft Heinz (KHC), Paychex (PAYX)Thursday: Accenture (ACN), Nike (NKE), Walgreens Boots Alliance (WBA)Friday: Constellation Brands (STZ) Source: Zacks.com, June 21, 2019Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


Quote Of The Week

Fountain Pen

"The best way to predict your future is to create it."
-Abraham Lincoln

Recipe Of The Week

Fork and Knife

Tijuana Street Corn (Elote)

Serves 8

  • 8 ears corn, shucked
  • 2 Tbsp. vegetable oil
  • Pink Himalayan salt and freshly ground black pepper, to taste
  • 1 cup crumbled cotija cheese, divided
  • ½ cup mayonnaise
  • ½ cup sour cream
  • ½ cup cilantro leaves, minced, plus more for garnish
  • 2 tsp. lime zest
  • 1 tsp. chile ancho powder
  • Lime wedges, for serving
  1. Start the coals on your grill. Using a sheet pan, coat the corn with the oil, then sprinkle with salt and pepper.
  2. Mix together ⅔ cup of the cotija cheese with the mayonnaise, sour cream, cilantro, lime zest, and chile powder until it comes together.
  3. Place the corn on the hottest section of your grill and cook for 8 to 10 minutes, turning to evenly char.
  4. Once the corn is grilled, and while it's still hot, brush each cob liberally with the elote mixture.
  5. Sprinkle on the remaining cheese, cilantro, and chili powder, to taste.
  6. Platter up the corn and serve with lime wedges.
Recipe adapted from Tasting Table[8]


Tax Tips


Taxes and Selling Your Home

The IRS provides an exclusion, if you're a homeowner who qualifies, to exclude all or part of any gain from their income, as a result of the sale of your main home. The ownership and use tests require that during the five-year period ending on the date of the sale, you must have owned and lived in the home for at least two years. 
  • If there is a gain from the sale of the main home, you may be able to exclude up to $250,000 of the gain from income or $500,000 on a joint return, in most cases. If you can exclude all of the gain, you do not need to report the sale on your tax return.
  • A main home that sells for lower than purchased is not deductible.
  • There are exceptions for those with a disability, some military, and others. 
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[9]


Golf Tip


Fix Your Flat Takeaway

Many golfers begin their backswing with a poor turn. This can lead to a flat takeaway causing the shoulders to rotate level with the ground. 

Remember, your lead shoulder should always move away from the target, but also downward, as the hands stay close to the body. Your body alignment should be in sync, which helps keep the club more vertical on the backswing. 

A flat turn, however, usually causes the opposite. Keeping your backswing shallow will cause you to swing down more steeply and cut across the ball, which results in a slice.

Tip adapted from Golf Digest[10]

Healthy Lifestyle

Medical Cross

Mind What You Eat

Mindful eating allows you to enjoy every bite. Practice it, and you'll get the nutrition that you need as well as an appreciation for the sight, smell, taste, texture, and the satiety that food can bring. Here are five tips to becoming a mindful eater:
  1. Breathe before you eat. Breathing slows you down and provides a great transition to being fully aware and present for your meal. Try taking eight to ten deep breaths before you start your meal.
  2. Check in. After breathing, ask yourself "How hungry am I?" Give it a scale of 1 to 10. What physical sensations are you feeling that indicate your hunger level?
  3. Get mindful. Based on your hunger choose what to eat, when to eat, and how much to eat.
  4. Peace out. Practice being calm as you dine. Try setting a place at your table, forgoing a tray in front of the television, and pay attention to your dining experience. Savor your food and slow down.
  5. Eat what you love. Pay close attention to the attributes of your food - the taste, flavors, textures, and how much enjoyment you get from your favorite foods. If you don't love it, don't eat it.
Tip adapted from Mindful[11]

Green Living


Recycling Tip: Reduce and Reuse

Properly recycling takes some effort. In general, recyclables need to be separated, cleaned, and sometimes, even deconstructed to be properly recycled (think multi-material juice boxes). 

Depending on where you live, your recycling efforts may be all for naught, since much of it can end up in the landfill, anyway. This is because we can no longer rely on about 40% of recyclables being sent to China for processing due to recent policy changes to reduce environmental pollution.[12]

So, what can we do to help? The first step is to reduce and reuse; it prevents pollution and greenhouse gases. Here are a few ideas on how to reduce and reuse:

  • Buy (or trade) used items; thrift stores, swap meets, Craigslist, or consignment shops
  • Use products with less packaging or look for recycled packaging
  • Repair and reuse; clothing and household items can often be repaired before opting to throw them out
  • Borrow or share items instead of buying them; tools, household items, decorations, and kitchen gadgets

Finally, if you have extra, donate. There are folks who may just be looking to reuse what you are reducing. 

Tip adapted from EPA.gov[13]

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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies. 

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia. 

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Dorsey, Wright & Associates, LLC is a subsidiary of Nasdaq, Inc. Nasdaq, Inc. is a publicly-traded corporation (NDAQ). Its subsidiaries include The Nasdaq Stock Market LLC, Nasdaq PHLX LLC and Nasdaq BX, Inc., all of which are SEC-registered national securities exchanges, Nasdaq Execution Services, LLC, a registered broker-dealer that routes orders in equities and options to the appropriate market center for execution, Chi-X Canada ATS Ltd., a Canadian alternative trading system for the trading of TSX and TSXV-listed securities, and Nasdaq Futures, Inc., a CFTC Designated Contract Market for the trading of energy futures in oil, gas, and U.S. power. Nasdaq, Inc. also has subsidiaries that are foreign securities exchanges that receive listing and trading fees.

Dorsey Wright will not publish research or make recommendations concerning NDAQ, nor trade the security for its Investment Management clients. Dorsey Wright may, however, publish research on, recommend or trade other securities listed on the Nasdaq exchanges, which receive fees from the listed companies and futures. Dorsey Wright will not take into account where a security is listed or traded in exercising its independent judgment for clients. In addition, Dorsey Wright does not manage or control where clients' broker/dealers route orders for execution. Accordingly, client orders may be routed to the subsidiaries of Nasdaq, Inc. for execution. These markets receive trading fees.

Nasdaq, Inc. and its subsidiaries receive index licensing fees from investment product sponsors, as well as index calculation fees from index providers. These fees may be asset based. With respect to ETFs and other investment products for which Nasdaq, Inc. or its subsidiaries may receive licensing or asset-based fees, Dorsey Wright may, from time to time, (i) recommend such an ETF or other investment product in research for which Dorsey Wright receives fees; (ii) include such an ETF or other investment product in models or indexes for which Dorsey Wright receives an asset based fee; and/or (iii) recommend or include such an ETF or other investment product in the investment management accounts. While Dorsey Wright does not receive any portion of Nasdaq's fees directly, the firm may indirectly benefit as a subsidiary that is part of a Nasdaq business unit. To manage this potential conflict of interest, in the case of Dorsey Wright research or index and model licensing, Dorsey Wright would only include the Nasdaq investment product if the product helps to meet the stated objectives of the strategy and it otherwise meets the rules-based methodology associated with the strategy. In the case of the investment management accounts, Dorsey Wright will only recommend or include the Nasdaq investment product when the recommendation is suitable and meets the client's stated investment objectives. Dorsey Wright will not take into account the fees received by Nasdaq, Inc. and its affiliates in exercising Dorsey Wright's independent judgment for clients.

Some performance information presented on this website is the result of back-tested performance. Back-tested performance is hypothetical and is provided for informational purposes to illustrate the effects of the strategy during a specific period. The hypothetical returns have been developed and tested by DWA, but have not been verified by any third party and are unaudited. Back-testing performance differs from actual performance because it is achieved through retroactive application of a model investment methodology designed with the benefit of hindsight. Model performance data (both back-tested and live) does not represent the impact of material economic and market factors might have on an investment advisor's decision making process if the advisor were actually managing client money. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.

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Options trading involves risk and is not suitable for all investors. When participating in a covered call strategy, the investor is at risk of having to sell the stock if the stock's price rises above the strike price. Remember, in exchange for receiving the premium of having sold the calls, the investor is obligated to sell the stock if the option is exercised. The relative strength strategy is NOT a guarantee. There may be times where all investments and strategies are unfavorable and depreciate in value. There may be instances when fundamental, technical, and quantitative opinions may not be in concert.


[1] www.cnbc.com/2019/06/21/it-was-a-monumental-week-for-markets-with-major-milestones-in-stocks-bonds-gold-and-oil.html 

[2] www.wsj.com/market-data

[3] quotes.wsj.com/index/XX/990300/historical-prices

[4] www.cnbc.com/2019/06/21/it-was-a-monumental-week-for-markets-with-major-milestones-in-stocks-bonds-gold-and-oil.html

[5] www.latimes.com/politics/la-na-pol-trump-fed-interest-rate-policy-20190619-story.html

[6] www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

[7] www.cnbc.com/2019/06/18/trump-says-he-and-chinas-xi-spoke-will-have-extended-meeting-next-week-at-g-20.html

[8] www.tastingtable.com/cook/recipes/grilled-mexican-street-corn-recipe-elotes

[9] www.irs.gov/newsroom/tips-to-keep-in-mind-on-income-taxes-and-selling-a-home

[10] www.golfdigest.com/story/tips-from-one-of-the-tours-best-ball-strikers

[11] www.mindful.org/take-a-mindful-moment-5-simple-practices-for-daily-life/

[12] www.nbcwashington.com/news/business/US-Struggles-With-What-to-Do-With-Tons-of-Recycled-Material-489971551.html

[13] www.epa.gov/recycle/reducing-and-reusing-basics

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