Here is my May ending market barometer report which follows the S&P 500 Index.
Old_Skeet being a retail investor provides this information for information purposes only. It simply reflects what I am seeing in the markets, my thinking, along with what has worked best within the Index and within my portfolio for the past month.
Old_Skeet's market barometer closed the month with a undervalue reading of 158 which is up from April's month ending reporting of 138 which indicated that the Index was overbought. Generally, a higher barometer reading indicates there is more investment value in the Index over a lower reading. Short interest in the Index has moved from 1.8 days to 2.9 days to cover so some investors have continued to increased their short positions during the month. The yield on the US10YrT has moved from 2.50% down to 2.13%. From last reporting the 500 Index has moved from 2940 to 2752 for a 6.4% loss. For the month of May, according to SPDR's Sector Tracker, the three best performing sectors were real estate XLRE +1.22% ... utilities XLU -0.78% ... and, health care XLV -2.22%. Trading volumes remain light and below their averages as investors leave stocks and move to the safety of bonds. Even though the barometer has moved into undervalue range, on it's scale, there are still some major troubling spots for the markets that investors should be concerned about. A few of these concerns that come to mind are trade issues with China, Brexit and now proposed tariffs on Mexico.
Generally, a higher barometer reading indicates there is more investment value to be had in the Index over a lower reading. With this, I have now begun to add to one of my equity mutual funds that pays a monthly distribution. Before doing any major buying, though, I'll continue to add to my cash allocation as my money market mutual funds (GBAXX & PCOXX) are both currently paying a yield of about 2.50%. For the month, my three best performing funds were FRINX +0.58% ... PONAX +0.43% ... and, TSIAX +0.39%. In comparison, both my money market mutual funds, each, produced a return of about +0.21% for the month.
My thinking, my positioning, along with my comments, should not to be taken as investment advice.
Thanks for stopping by and reading.
I wish all ... "Good Investing."
Old_Skeet
Comments
Have a good weekend, Derf
For me, I'm fully invested within my asset allocation of 20% cash, 40% income and 40% equity. Following my rebalance policy I can hold up to plus (or minus) two percent form the threshold weighting. With this, I can hold up to a 42% weighting in either my equity allocation or income allocation, or both, while letting cash float before having to do a forced rebalance. This means cash could fall to the 16% range, or below. For equities, I can tactically overweight by up to 5% from the 40% threshold, if felt warranted. So, cash could get as low as 13% and I still would be within my allocation guardrails.
Just this past week, I bought a little in one of my global equity funds that has a monthly distribution with a yield of 3.4%.
Remember, stocks usually go soft during the summer months. For me, being a long term investor and (if) wanting to add to my equity allocation I'd average in through the summer months. But, I'd also govern with caution and spread my buys out in a position cost average step buy approach based upon the price movement of the S&P 500 Index.
An example of my step buy approach would having me buying, from the recent high, at 2850, 2770, 2680, 2590, 2500, and so on and so forth. The deeper the Index falls, in retreat, I'd increase the amount of each step buy. The way I'd, most likely, step out of these positions would be to sell the 2500 step when the Index had moved upward reaching the 2680 mark. This would afford me about a 7% return for this step. Likewise, I'd step out of the 2590 position somewhere around the 2770 mark with a gain of just short of 7%. Through the years this is how I have managed my spiffs (special investment positions). Sometime I buy the equally weighted S&P 500 Index fund (VADAX) and sometimes I buy an equity mutual fund that has a good dividend yield such as EADIX or INUTX. Going the good dividend route pays me while I await the upward turn along with any capital appreciation that I would also make.
Remember, most A share funds can be exchanged into other A share funds through most mutual fund companies through a nav (net asset value) exchange program commission free. I'd did this many times moving between a bond mutual fund like (ABNDX) to an equity mutual fund like (AGTHX) and then back into a bond fund in the American Funds family for years without paying any commission for these exchanges whatsoever. This is one of the advantages of A share mutual funds that often times get overlooked by investors.
For me keep investing w 80/20 distribution until 62 yo then change to ~60/40 and slowly to 50/50 (adjust as needed) there after