The model score today is –34, which is much worse than yesterday’s, despite the strong rally. This means that the market is still deteriorating internally and is merely working off extreme oversold conditions.
Unless price stabilizes at much higher levels, the asset spreads utilized in the model suggest this will be a temporary reprieve, with much worse to come eventually.
Owners of K, FL, REG, AVB, BAX & GIS should examine whether it is worth holding these stocks, as the position is rapidly deteriorating in those names.
Our asset allocation is today 100% TLT and 0% SPY. The monthly model has given us the sell signal at month end. All 3 models are now aligned in risk off.
I know the model is based on TLT, but you’ve recently said that shorter on the yield curve might be safer given the recent weakness in bonds. Would something in the 5-10 year space serve the same purpose?
As you say, the model is the model…and it uses TLT. But to me, at this stage, 5yr is probably where I would want to be on the curve.