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Jim: Hi everyone, today is Thursday, February 1, 2018 and this is our weekly market update call with financial news and information plus a review of our market indicators.

I remember in 1999, there was little one could do wrong in the technology sector and because of that no one ever talked about a bear market—that could have been a sign the bear market was coming and quite a bear market it was. It went down in history as the longest bear market ever, just about 31 months from March 24, 2000 to October 8, 2002.

Sometimes bear markets start when there is a significant event like in 2008 when Merrill Lynch, AIG and Lehman Brothers were begging at the barnyard doors to let them in. But mostly they start without an alert or event taking place—such was the case with the Stock Market Crash in 1987, as well as the bear market that began in March 2000. What is usually the case is when everyone thinks the market will only continue to rise and no one is heading for cover, that’s usually when bear markets begin.

Our indicators are still holding steady and bullish, even though we have had a few days of indecision and decline. With those indicators positive, our intentions are to continue to harvest gains from our winners, eliminate losers from our holdings and seek new investments that have only begun to rise in value. Those investments are hardest to find in a market that is about to head downward—if there is a reasonable supply of good new choices, the bear market is not at hand yet.

Talking about something happening actually reduces the chance of that event happening. That’s because as we alerted to the possibilities, we tend to set up ways to protect ourselves.

This week's indicators…

Our indicators begin with three large groups of stocks. These groups range in size from 2200 to 3600 companies. One group is comprised of companies that trade on the New York Stock Exchange, another is comprised of companies that trade in the Over the Counter Market and the third is a combination of those two groups. What distinguishes that third group is that it is made up of companies from each of the first two groups but only with stocks that have option agreements––that trade parallel to the stock––through the Option Clearing Corporation's exchanges.

The reason why we track large groups is because the law of large numbers is a lighthouse, if you will, as the probability of investment choice can be enhanced by tracking how the large group is changing inside.

All three groups are holding in positive ground, still bullish indications in each group of stocks.

We also rank 6 different asset classes. Right now the top three are Domestic stocks, International Stocks and Commodities. There was a shift in commodities back on Jan 24; it overtook fixed income in the ranking of the top 6 asset classes. The bottom 3 classes to be avoided are fixed income, cash then currencies.

Interest rates? We follow the short term rate of the 13 week Treasury bill. That rate is holding at 1.4%. The intermediate rates of the 5-year and 10-year treasuries have moved higher in yield this week. They are now at 2.55% and 2.75%, respectively. While the 30-year treasury is at 2.98%, all three are higher than last week.

Interest rates may be rising in anticipation of the Federal Reserve indicating a need to curb inflation in the year ahead. The fed has raised rates 5 times since the last quarter of 2015 and it has indicated raising rates perhaps up to 3 times this year.

That's all for today's call.

Opinions expressed are not necessarily those of Raymond James & Associates. The author's opinions are subject to change without notice. Information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. There is no assurance these trends will continue or that forecasts mentioned will occur.

Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security.

There is an inverse relationship between interest rate moments and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices rise. One basis point is equal to 1/100^th of 1%, or 0.01% (0.0001).

Commodities are generally considered speculative because of the significant potential for investment loss. U.S. Treasury securities are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value.

International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.

Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.

The S&P 500 is an unmanaged index of 500 widely held stocks. The Dow Jones Industrial Average is an unmanaged index of 30 widely held securities. It is not possible to invest directly in an index. U.S. Treasury securities are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds and treasury bills are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of Raymond James & Associates we are not qualified to render advice on tax or legal matters.

James Schmidt, Raymond James, its affiliates, officers, directors or branch offices may in the normal course of business have a position in any securities mentioned in this report. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.

Dividends are not guaranteed, will fluctuate and must be authorized by the company's board of directors.

Investing in stocks involves risk, including the possibility of losing one's entire investment.

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