OTM Market Update – December 20

  • The S&P large cap index gained 3.4% last week, rising to 2070.65.
  • The Russell 2000 small cap index gained 3.8% last week to 1195.96.
  • Long Bonds (TLT) lost 0.3% last week to 125.87.
  • Asset Allocation Model: slight downward adjustment in equities.  49% Stocks, 32% Bonds, 19% Optional.

As noted last week, the prior week’s adjustment was due, and the market continued to rise in line with the broader technical models.

The very small change in the Asset Allocation model does not warrant action.

As you can see in the attached graphs on advance-decliners, and percent hitting highs minus percents hitting new lows, there is an underlying weakness in the broader market.  The large caps continue to increase, but smaller issues are having trouble.  That is a leading indicator of problems ahead at some point.  But technicals look good, and problems are unlikely over the holidays unless there are black swan events.

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