OTM Market Update – No change to the 75/25 mix

For some time now the technical model has advocated being 75% in cash/bonds and a max of 25% in market-correlated equities.  Just a review:

August 27:  S&P at 1987.  Allocation recommended at 75% bond / 25% equity.

September 9: S&P at 1942.  Recommend 75/25 bonds.

November 1:  S&P at 2079.   Still recommending 75/25 bonds.

December 13:  S&P at 2012.  Still recommending 75/25 bonds.

You can see that things have become more volatile, but for the intermediate term investor (not the short term trades) there has been no compelling reason to re-enter this market long.   Even when the technical indicators have improved since August they have been spotty.  And all the while the Microcap and Smallcap indexes have not improved, indicating a leading weakness.

I continue to run the technical model daily and while there have been few updates it is only because there has been no change to the intermediate term mix.


12132015 GSPC 12132015 TLT

Leave a Comment