Our measures of trend finally made it to positive territory yesterday. If they can hold into the close on Friday we’ll be changing our core portfolio allocations by reducing cash or short positions and adding longs. The change won’t have an effect on the volatility hedged portfolio since it’s still 100% long (since 10/24/14). I’ll do an update Friday before the close with the new allocations.
One thing to keep an eye on if the market continues to push higher is the NYSE Advance / Decline line (NYAD). It continues to show healthy readings even though other measures of breadth like the percent of stocks below their 200 day moving average are starting to print tepid readings (65% area). This tells us that even though many stocks are below their 200 day moving average they’re being bought (advancing issues). As I have stated over and over again, I don’t think the long term trend will change until we see a serious decline in all of our measures of breadth. At the moment we want to see NYAD make a higher high with any continued rally.