Over the past week, most of my core market health indicators deteriorated. The most significant are my measures of market trend. This category fell below zero this week. This changes the portfolio allocations to the following.
Long / Cash portfolio: 40% long and 60% cash
Long / Short Hedged portfolio: 70% long high beta stocks and 30% short the S&P 500 Index (can use the etf SH)
Volatility Hedged portfolio: 100% long (since 11/11/2016)
Another few things of note come from breadth and risk. Currently, most of the measures of breadth that I follow are still in the healthy range. My measures of risk are deteriorating quickly, meaning that risk is rising. What this tells me is that people are getting nervous, but they’re selectively selling. So, I’m still not too worried about a longer term top being put in place.
My core indicators are tumbling one by one, perceptions of risk are rising, but breadth is holding up fairly well. At the moment, this looks like rotation rather than investors bracing for a storm.