OTM Update – Learning to Fly with Instruments Only

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Prior Week Market Performance

  • The S&P large caps gained 1.6% last week to 2088.48.
  • The Russell 2000 small caps gained 0.9% last week to 1216.27.
  • Long Bonds (TLT) lost 1.1% last week to 129.52.
  • Old Asset Allocation Model: 45.5% Stocks (up from 42%), 36.5% Bonds (down from 41%), 0% Cash, 18% Discretionary.

 Last Week’s Commentary:  There is still a black swan lurking in the water.  The difference between the S&P500 and the broad market in general remains.  There continues to be more decliners than advancers in the NASDAQ composite on a day in day out basis as the chart below shows.  We are keeping another week’s lookout on the S&P.  It needs to clear that 2063 resistance point and stay above it the balance of the week.  If it does, the market will run a bit.  If it does not, look for a down week for stocks, an up week for bonds, and more of the same until the swan appears. read more

Sell or Hold CVS

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I have exchanged messages with Mark about CVS and did not sell yesterday (and fortunately there was a nice gain).   Per Mark “Everything is green including sector and industry… consider trailing stop loss of $95.02.  See chart below and please vote to either proceed  with sales at market or to hold with a trailing stop loss. read more

OTM Update – Critical Point Week 2

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Prior Week Market Performance

  • The S&P large cap index gained 3.0% last week to 2055.
  • The Russell 2000 small cap index gained 3.4% last week to 1205.
  • Long Bonds (TLT) lost 3.6% last week to 130.
  • Asset Allocation Model: slightly changed at  25% (down from 26%) Stocks, 38% (down from 45%) Bonds, 26% Cash, 10% (unchanged) Real Estate.

 Last Week’s Commentary:  I think the Asset Allocation model is right.  I think that it is time to shift some of your wealth toward bonds, and cash.  I think that we are in a risky period here.  The market has not moved substantially yet, and the technical models are still optimistic in the medium and long term periods.  But I keep waiting for that divergence in the AD Line to hit, and the forming Triangle (some would call it a descending wedge, which is a negative sign) is not a good omen on the horizon. read more

OTM Market Update – We are At A Critical Point

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Prior Week Market Performance

  • The S&P large cap index lost 2.8% last week to 1994.
  • The Russell 2000 small cap index lost 2.0% last week to 1165.
  • Long Bonds (TLT) gained 0.8% last week to 135.
  • Asset Allocation Model: materially changed at  26% (down from 44%) Stocks, 45% (up from 39%) Bonds, 17% Cash, 10% Real Estate.

 Last Week’s Commentary:  The asset allocation model has predictably moved to bonds in light of the short term weakness in the large cap market.  But personally I’d give this a week to see a confirming signal in the small and medium caps.  Stay put until there is a bit more clarification in direction. read more

OTM Market Update January 18 – Keep Yer Powder Dry

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Prior Week Market Performance

  • The S&P large cap index lost 1.2% last week to 2019.42.
  • The Russell 2000 small cap index lost 0.8% last week to 1176.66.
  • Long Bonds (TLT) gained 1.6% last week to 133.19.
  • Asset Allocation Model: materially changed at  44%(down from 52%) Stocks, 39%(down from 27%) Bonds, 17% Optional.

 Last Week’s Commentary:  room for slight downward trend but technical indicators all indicate BUY in medium and long term periods

 This Week’s Commentary: actually for intermediate and long term investors the market is doing exactly what one might expect.  You’ll note below that the S&P 500 is staying inside of an ascending trend (just barely), and the Russell 2000 has, as might be expected, reverted to the mean of the year long channel marked by the two red lines.  The technical model has appropriately indicated that the S&P 500 is not a BUY in the short term.  Long term bonds are moving up at too rapid a pace, but indicative of the underlying anxiety in other world currencies. read more