The model score today is -85, same as yesterday and the worst score since the correction started. This means that the market is not improving internally.  Nothing has changed in the spreads. 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 MMC & ROP should examine whether it is worth holding these stocks, as the position is rapidly deteriorating in those names.

 

Our asset allocation is today still 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 underperforming the market into rallies.

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