Bulls and Bears continue to fight it out around the S&P 500 record high. There is a lot to worry about at this point----earnings and economic numbers have been somewhat disappointing, terrorism fears are back (Boston Marathon, Canada, fake Twitter posts, etc), and we continue to see a divergence between riskier areas of the market and less risky areas. On the plus side there is still nowhere else to go except for stocks. As we have said before, volatility around an all time high is normal and to be expected.
Equity Markets
Our momentum indicators are still extremely bullish on the stock market. Our positive reading on stocks does not mean that the market is guaranteed to rise from here. There are still many risks on the horizon (Poor corporate earnings, problems in Europe, slowing economy, partisan bickering in Washington, etc) that could cause a selloff. However, our research suggests that when our momentum indicators are bullish the rewards of being invested outweigh the risks.
Short term the market is starting to look a little overbought and we have sold some of our positions (S&P 500 and Dividend Paying Stocks) into strength.
Equity Matrix
|
Time Frame |
Market Condition |
TTM Positioning |
|
Short Term |
Slightly Overbought |
100% Cash |
|
Intermediate Term |
Uptrend |
Fully Invested- S&P 500 & Mid Cap |
Fixed Income Markets
Our momentum indicators still show that most areas of the bond market are weakening. We still see momentum in high yield bonds, preferred shares, local currency denominated emerging market debt, and international TIPs
We continue to hold our counter trend position in long term Treasuries. We understand that over the intermediate and long term Treasuries are probably the worst bet you can make, but over the short term they are looking oversold and have provided protection during selloffs.
Fixed Income Matrix
|
Time Frame |
Market Condition |
TTM Positioning |
|
Short Term |
Oversold |
100% Invested in Treasury Bonds |
|
Intermediate Term |
Most markets in a downtrend |
High Yield, Preferred Shares, Local EM, Intl TIPs |
Top Holdings
1. Cash
2. Mid Cap Stocks
3. Small Cap Stocks
4. S&P 500
401k Advice
Below is our recommended allocation for 401k plans held outside of TWM:
|
Risk Tolerance* |
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|
Asset Type |
Asset Class |
Conservative |
Moderate |
Aggressive |
|
Stock |
S&P 500 |
20% |
33.3% |
|
|
Stock |
Mid Cap Stock** |
20% |
33.3% |
|
|
Stock |
Small Cap Stock** |
20% |
33.3% |
|
|
Fixed Income |
High Yield Bond*** |
33% |
13% |
|
|
Cash |
Cash |
67% |
27% |
|
|
100% |
100% |
100% |
||
|
* This should be based on the amount of risk/return you are looking for on this |
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|
block of money. |
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|
**If you do not have Mid Cap and/or Small Cap funds available that part of the |
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|
allocation can go into the S&P 500. |
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|
***If you do not have multiple bond funds then fixed income allocation can go into an |
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|
investment grade bond fund and/or multi-sector bond fund. |
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Tuttle Tactical Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. You should not assume that any discussion or information contained in this letter serves as the receipt of, or as a substitute for, personalized investment advice from Tuttle Tactical Management, LLC. It is published solely for informational purposes and is not to be construed as a solicitation nor does it constitute advice, investment or otherwise. To the extent that a reader has questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. A copy of our written disclosure statement regarding our advisory services and fees is available upon request. Our comments are an expression of opinion. While we believe our statements to be true, they always depend on the reliability of our own credible sources. Past performance is no guarantee of future returns.
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