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Market Health Improves – Adding Exposure

All of our market health indicators except for perception of risk improved over the past week. Our measures of market trend and strength continue to show high readings. Our measures of market quality are almost positive and I suspect that baring a large sell off we’ll see them move to positive territory by next week.  Our measures of the economy finally moved into positive territory. As a result, we’re adding exposure to our portfolios.  Both of our long / cash portfolios are now 80% long and 20% cash. Our hedged portfolio is 90% long stocks we believe will outperform the market and 10% the S&P 500 Index (or the ETF SH).

Below are charts of our portfolio changes over the past year.  The green lines represent adding exposure. The yellow lines represent raising cash or adding hedges. The red lines represent the hedged portfolio in an aggressively hedged position with instruments that benefit from increasing volatility.

Current market health indicator status.

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