The model score today is -79, the worst score since the correction started.  This means that the market is collapsing internally.  Nothing has changed in the spreads, despite the massive intra-day rally. It is still correct to avoid risk assets.

 

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 CAN & GRMN should examine whether it is worth holding these stocks, as the position is rapidly deteriorating in those names.

 

Our asset allocation is today still 100% TLT and 0% SPY.  The monthly model gave us the sell signal at October month end.  All 3 models are now aligned in risk off.  The fact that the model keeps on being negative into price rallies is a potent tell of what might be ahead.  I would still advise extreme caution and lightening up of individual names which are under-performing the market into rallies.

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