The model score today is -88, same as Friday and the worst score since the correction started, which is appropriate as the market has made a new low for the move.  This means that the market is not improving internally.  Nothing has changed in the spreads, despite the decent intra-day rally off the lows. It is still correct to avoid risk assets, even if the next 2-3 days could easily be mildly positive.

 

Unless the market now stabilizes at higher levels, the asset spreads utilized in the model suggest this will be a temporary reprieve, with much worse to come eventually.

 

Owners of FAST & ALK should examine whether it is worth holding these stocks, as the position is rapidly deteriorating in those names.

 

Our asset allocation is today long SPY as the Counter-trend model has given a buy signal. This signal has a risk tolerance of -3% to +5% and will be out of the market by day 15 if neither is achieved.

I would still advise extreme caution and lightening up of individual names which are under-performing the market into rallies.

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