Today, Old_Skeet's market barometer closed the day (April 13th) with a reading of 150 which is dead center of fair value. For the past rolling four weeks the average reading of 145 puts the 500 Index just barely into fair value territory. Remember a lower reading on the barometer indicates there is less investment value in the Index while a higher reading indicates more investment value. Currently, with falling stock prices the barometer's reading has been rising. Please note, the barometer is comprised of more than just the price action which is part of the technical strength feed input. The other two feeds center around earnings plus a breath feed.
Over the past couple of weeks I have watched the US 10 Year move form a yield of about 2.6% downward to a yield of about 2.2%. In addition, over the past week the winning sectors in the Index were consumer stapes +0.99%, real estate +0.91%, energy +0.76%, utilities +0.19% and health care +0.03%. All this indicates, to me, a good number of investors are moving towards risk off positions of government bonds and the traditional defensive sectors of the 500 Index.
I have been up until a couple of weeks ago dialing my equity allocation downward along with starting to rebuild my CD ladder and open a couple of new positions within my hybrid income sleeve. However, with the current yield move in the US 10 Year I am now just raising cash as I reduce my equity allocation towards its lower range within my asset allocation. Remember, I have for a good number years played a seasonal investment strategy where I raise my equity allocation in the fall and on and through the winter months and come spring I'll start to dial equities back on and through most of the summer months where I generally hold a reduced allocation to equities. Although this strategy does not work every year it works more times than not, for me, and so far this year it has worked like a champ.
Although, I am looking for a good 1Q2017 earnings reporting season the geopolitical risk has me concerned and is a major reason I am continuing to trim my equity allocation and raise cash beyond what I usually do.
I will most likely continue to average down my equity allocation towards its lower range and when the barometer reaches a reading indicating that stock have become oversold I most likely will again become a buyer of equities and start another investment cycle based on barometer readings. Perhaps "fall" will arrive early for my investment strategy.
And, so it goes with another week now in the books.
Also, I have provided a link to the market forecast I made back in January of 2017 in a thread started by MJG titled "Blind Forecast."
http://www.mutualfundobserver.com/discuss/discussion/30998/blind-forecasters#latestPlease note: I am a retail investor and not a highly paid Wall Street analyst.
Have a Great Easter Holiday Weekend.
Old_Skeet
