April 1, 2016

Dear Investors,

After a brief sell-off last week, investors used the decline as a short-term buying opportunity and pushed the markets to significant over-bought levels. The reversal occurred on March 24th, one day after the projected Fibonacci phi mate date. The rally was sparked by more dovish comments from Federal Reserve Chairwoman Janet Yellen that lowered expectations for future interest rate hikes from two to one. This is Federal Reserve-speak for “the economy is not doing well.” Thursday marked the end of one of the best months for the markets in more than five years. Savvy investors know that there was nothing to warrant this type of market move. In fact, as we begin April and first quarter corporate earnings season, most economists have lowered expectations of corporate earnings.

The Dow Jones Industrial Average gained 277.02 points, or 1.6%, this week to close at 17,792.75, and is up 2.1% this year. The S&P 500 Index gained 36.84 points, or 1.8%, this week to close at 2,072.78, and is up 1.4% this year. The NASDAQ Composite jumped 141.04 points, or 2.95%, this week to close at 4,914.54, and is down 1.85% this year. The Russell 2000 jumped 3.5%, or 38.14 points, this week to close at 1,117.68, and is down 1.7% this year.

Remarkably, eight and a half hours after the end of March, the Department of Labor was able to tell us that 215,000 new jobs were added to the economy last month and that the unemployment rate ticked up to 5% because more Americans were looking for work. In my opinion it is just a bogus report to justify the Federal Reserve’s policy because you cannot possibly determine the number of new jobs created eight hours later. I have been saying for years that these reports are antiquated and inaccurate. If all of these jobs have been created over the last few years, then the economy would have to be growing at a much stronger pace.

This weekend, the Dow, S&P and NASDAQ all have Relative Strength Index ratings of more than 70. An RSI of 70 or more is a strong indicator of an over-bought market and an eventual trend change. Conversely, an RSI less than 30 is an indication of an over-sold market, or market bottom that should kick off a multi-week rally. The markets had an RSI lower than 30 in January and mid-February, which is why I was saying that the markets were indicating that a multi-week rally was on the horizon.

Despite Friday’s gains, the number of declining stocks outnumbered advancing stocks. In fact there is a growing bearish divergence developing between stock prices and the 10-day average advance/decline line. The RSI is in sell sign territory. The volatility index (VIX) is on the verge of a new sell signal. It is likely that other market indicators will generate sell signs as we begin a new month. These signals are not definite, but they help assess the probability of future moves. This is why I have been saying that the downside risk is greater than the upside potential.

This may be a great time to rebalance or reallocate your portfolio. If you want to discuss your financial plan, risk analysis, and/or tax strategies or would like to refer a friend or family member, please call our office or email . It is time to put our B.E.L.I.E.V.E. Wealth Management process to work for you.

Regards,

Vincent Pallitto,CPA, CFP®

Certified College Planning Specialist

Summit Asset Management, Inc.

www.summitasset.com

973-301-2360

973-301-2370 Fax

A branch office of, and securities offered through LPL Financial

MemberFINRA SIPC

You cannot invest directly in a market index, market indices are for benchmark purposes. The information in this market commentary is obtained from various news sources, Stockcharts.com and technicalindicatorindex.com.

Fibonacci Phi Date (also known as Fibonacci Time Extensions) is a technical indicator used to seek to identify the timing of significant price movement in the market, and is based on the Fibonacci Number Sequence.

The Hindenburg Omen is a combination of technical factors that attempt to measure the health of the NYSE, and by extension, the stock market as a whole. The goal of the indicator is to signal increased probability of a stock market crash.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you consult your financial advisor prior to investing.

The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

The Blue Chip Index is a stock index that tracks the shares of the top-performing publicly traded companies. These indices are unmanaged, which cannot be invested into directly.

Past performance is no guarantee of future result.