Well, that stunk. All it took was a higher inflation print than forecast to put the brakes on and create a strong short term top in the last week of February. Bowley (@Stockcharts) wrote that February is historically the worst month of the stronger winter period, and this year (again) followed the pattern.
GTAA indicators are below. The summary:
- US LC Momentum, Emerging, Total bonds and 7-10 year treasuries flipped back below their moving averages to an ‘out’ state. (As yields increased in a changed anticipation of longer interest rate increases or pushed rate decreases.)
- Cash is now the top ranked asset based on straight average rank of 1,3,6, and 12 month returns. This condition is likely very short lived.
- Foreign Developed, US Small Cap and global high yield remain the top 3 non-cash in this ranking system (out if following Dual Momentum).
Timing signals
- The 3 active short term trend signals have flipped to a ‘bearish/top’ state.
- $NAHL (BC1) is back to bearish with a reading of -35 on the 9D EMA. SMA slope has gone back to Neutral.
- Midterm breadth has deteriorated.
- The Dow corporate bond index has flipped to bearish with the bond selloff/yield increases.
My overall dashboard has dropped back to ‘Neutral’ (-1) from solidly bullish 2 weeks ago.
| Asset Class | Signal | Last | Since | # wks | Top6 | Symbol | Price | MA | Slope/Risk | To MA | Rank |
|---|---|---|---|---|---|---|---|---|---|---|---|
| US LC | CHG | IN | 2/1/23 | 3 | SPY | 396.38 | 393.57 | Up | 1.007 | 8 | |
| US LC Momentum | OUT | OUT | 2/24/23 | 0 | MTUM | 140.62 | 143.20 | Up | 0.98 | 11 | |
| US SC | IN | IN | 1/13/23 | 6 | IWM | 187.51 | 182.08 | Up | 1.03 | 2 | |
| US SC Mom./Growth | IN | IN | 1/13/23 | 6 | IJT | 114.86 | 112.05 | Up | 1.03 | 5 | |
| For. Developed | IN | IN | 11/11/22 | 14 | EFA | 69.04 | 64.06 | Down | 1.078 | 3 | |
| For. Dev. SmallCap | IN | IN | 11/25/22 | 12 | SCZ | 58.64 | 55.78 | Up | 1.051 | 7 | |
| Emerging | OUT | OUT | 2/24/23 | 0 | EMXC | 48.15 | 48.66 | Up | 0.990 | 13 | |
| Real Estate | IN | IN | 1/13/23 | 6 | VNQ | 85.71 | 83.86 | 4 | 1.022 | 12 | |
| Foreign Real Estate | CHG | IN | 1/6/23 | 7 | RWX | 26.9 | 25.87 | Down | 1.040 | 9 | |
| Total Bond | OUT | OUT | 2/24/23 | 0 | BND | 71.93 | 73.18 | Down | 0.98 | 9 | |
| 10Y US Gov | OUT | OUT | 1/7/22 | 58 | IEF | 95.32 | 97.99 | Down | 0.97 | 14 | |
| Global High Yield | IN | IN | 1/6/23 | 7 | JNK | 90.98 | 89.77 | Down | 1.01 | 4 | |
| Preferred | IN | IN | 1/13/23 | 6 | PGX | 12.16 | 11.93 | Up | 1.02 | 6 | |
| Cash/ST | X | BIL | 91.69 | 91.52 | 1.002 | 1 |
FC