Market Opinion

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

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

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

Prior Week Market Performance

• The S&P large cap index lost 0.7% last week to 2044.81.
• The Russell 2000 small cap index lost 1.1% last week to 1185.68.
• Long Bonds (TLT) gained 2.9% last week to 131.07.
• Asset Allocation Model: materially unchanged at  52% Stocks, 27% Bonds, 19% Optional.

 Last Week’s Commentary:  we could have a 4% market drop in next 45 days but it would not alter upward intermediate trend

 This Week’s Commentary: the market is still inside of an ascending channel in the S&P500 as well as within a sideways range in the Russell 2000 (see charts immediately below).  All to the point that it is behaving as might be expected.  Although the long term trend is bullish there is room for a continued slight downward turn in the market over the next month or so and it should not worry longer term investors. read more

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• The S&P large cap index lost 1.5% last week to 2058.20.
• The Russell 2000 small cap index lost 1.4% last week to 1198.80.
• Long Bonds (TLT) gained 2.3% last week to 127.32.
• Asset Allocation Model: unchanged at  49% Stocks, 32% Bonds, 19% Optional.

The technical models continue to consider the broad market as a BUY, as has been the case for some weeks now.  The alert reader may notice that there is some deterioration along the edges, but not enough to change the overall recommendation. read more

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I have enhanced the OTM Technical Model to provide a current view of the overall market and an individual security’s correlation to that market.  This can be useful in forecasting turning points in the market. read more