Investor Resources emphasizes assets in the first two asset classes as long as they do not fail the "cash bogey" check. Positions in weaker asset classes should be monitored for technical deterioration that would indicate a sale to preserve capital and reduce risk. In Investor Resources, Inc.'s opinion, any asset class that ranks lower than cash should not be retained.
As of December 23, 2014
The scoring differential between Fixed Income and International Equity has widened sufficiently to consider adding Fixed Income to portfolios. However, trends in various sub-categories remain tenuous. We are retaining 36% of the fixed income component in cash.
As of December 16, 2014
Tuesday, the International Equity asset class gave a few more sell signals. The decline in the number of buy signals for International Equity was enough to cause this asset class to drop to the number 3 spot. Fixed Income moves up to number 2. The number of buy signals for International Equity has been declining rather notably in the month of December dropping from 241 at the beginning of the month to its current reading of 206.
In addition, International Equities has failed the Bogey Check against cash since October. Currently, Fixed Income is only exceeding International Equities by a slim margin, which is insufficient for us to be buyers of bonds.
The US Equity market has been dominant for a few years now. Nothing is outperforming US Equities and only about 10% of Funds and ETFs are outperforming the S&P 500 (SPX). Within the US Equity market, there are winners (i.e. Healthcare) and losers (i.e. Energy) and this theme carries over into all asset classes. Individual stock, fund and ETF management is paramount in this type of market.
As of December10, 2014
Foreign Currency and Cash continue to be close as these two asset classes are battling it out for the 4th and 5th positions in our ranking. As a result of the action on 12/11/14 Foreign Currency picked up a couple of buy signals at the expense of Cash. Therefore, Foreign Currency has moved back above Cash. These two asset classes are ranked in the bottom half of our asset class valuation and remain a good distance behind the 3rd ranked asset class (Fixed Income). US Equity remains the clear leader with more than 100 signals above International Equity, which is ranked number two.
As of December 5, 2014
The US Dollar Index has moved to its highest levels in more than 5 years, enjoying a trend of increased purchasing power versus the Japanese Yen, Euro and most other major currencies over the last 3 years in particular. This prolonged strength for the US Dollar has pushed Foreign Currencies further to the "right" within our macro-asset class data. Cash has improved to #4, with Foreign Currencies falling to #5. The top of the asset rankings have been unchanged for nearly 2 years, with US Equities ranked #1 since October 2011, followed by International Equities (2) and Fixed Income (3).
As of October 13, 2014
The International Equities asset class failed the "better than cash" test. This change suggests that more risk adverse accounts will want to take some of these holdings off the table. Investors should realize that this asset class has not deteriorated significantly against other asset classes and remains the second strongest asset class. While the asset class rankings are based upon multi-faceted relative strength comparisons, the "better than cash" is a singular relative strength comparison between an Int'l Equity index and the Dorsey Wright Money Market Index. Aggressive investors can still find carefully selected international holdings for portfolios. However, we have opted for caution. In the prior two weeks, all international ETFs held in IRI managed portfolios have been sold.
As of September 23, 2014
Further problems for the Commodity Asset Class are present with its failure to pass the "better in cash bogey check." there are very few commodity exchange traded funds holding technical scores strong enough to justify being in a portfolio. The most commonly used commodity by investors is gold holding a technical score of 0.39 of a possible 6.
As of September 15, 2014
Residual fear from two bear markets remains in the forefront of investors and their advisors. In an attempt to "be prepared," investors have diversififed into broad asset classes that are detrimental to their portfolios. This seems especially true with commodities. After 2008, a plethora of commodity ETFs came to market. While commodities provide benefit for rather short time spans, the asset class can be very detrimental when used as a permanent allocation. With the combination of a glut in most commodities and a rising dollar, investor flight is evidenced in the Commodity Asset Class struggling to leave its position as our "least favored asset."
As of September 4, 2014
The battle between Cash and Commodity Asset Classes continues. Cash moves back into last place. Our view suggests an investor maintaining an absolute commitment to the Commodities Asset Class still hedge the position with 81% cash allocation.
As of September 3, 2014
The battle between Cash and Commodity Asset Classes continues. Commodities moves back into last place. Our view suggests an investor maintaining an absolute commitment to the asset hedge the position with 81% cash.
As of August 26, 2014
Base Metals have strengthened marginally but enough to replace the Broad Commodity segment. The Broad Commodity classificatiion does retain a score very close to Energy and Base Metals. Overall, the strengthening moves Commodities back above holding Cash. Other asset classes continue to offer better risk/reward trade off.
As of August 14, 2014
Holders of gold and silver have had their hopes for higher prices dashed by the recent decline for precious metals in China and India. Demand in China dropped 45% YOY and declined 18% in India. The SPDR Gold Trust (GLD) peaked in August 2012 and remains in a declining trend with a weak technical score of 1.67. The iShares Silver Trust (SLV) peaked at the same time. SLV has had a better quarter but retains a technically weak score of 1.80. Trends remain sufficiently negative for the Commodity asset class to have slipped back into last place. Areas of strength for the asset class remain energy and broad market exchange traded funds.
On August 15th, the pricing mechanism for silver changed. The Wall Street Journal reported the "London Silver Fix" will no longer be determined by three banks.
As of July 22, 2014
Commodities have exhibitted strength in recent months to move to fifth position from last place. However, the change has not been driven by gold or silver which remain laggards in our relative strength database. Rather, cash for defense, energy and agriculture top our commodity list. ETFs for livestock, cocoa, palladium, nickle and coffee have been the dominant leaders.
As of January 27, 2014
International Equity remains in the #2 spot. Compared to other asset classes, International Equities maintains decent relative strength. That said, sufficient absolute deterioration has occured with International Equities to "fail" the Cash bogey check. This is a single relative strength comparison of an International Equity index vs. Money Market. It acts as a stop loss of sorts for a near-term version of "brakes". At this time, it is flashing a "yellow" light, suggesting caution, but has not yet moved to a "red" light. Additional data is required to move the indicator to an out right sell seignal. The emphasis within International Equities continues to be Developed Markets. Emerging Market deterioration is much more significant with declining market conditions that have persisted for several years.
As of September 12, 2013
International Equity remains in the #2 spot, a distance behind Domestic Equities, yet still with a respectable lead over Fixed Income. This suggests vis a vis other asset classes that Int'l Equities still maintains a decent modicum of relative strength. As well, we have recently seen absolute performance, and all this has contributed to Int’l Equities having now “passed” the Cash bogey check. Additional data continues to flash a "yellow" light, suggesting a cautious, more selective posture in this space. The emphasis within Int'l Equities continues to be Developed Markets.
As of June 26, 2013
International Equity remains in the #2 relative strength spot. We have had enough deterioration in International Equities to "fail" the Cash bogey check. This is a single relative strength comparison of an International Equity index versus Money Market and is a type of stop loss for those wanting a nearer-term version of "brakes." Additional data we look at suggest this is flashing a "yellow" light rather than a "red" light. Data indicates emphasis within International Equities asset class favors Developed Markets.
As of March 27, 2013
Commodity asset class has failed the "better than being in cash" test.
As of March 1, 2013
Foreign Currency has failed the "better than being in cash" test.
As of January 30, 2013
International Equities has added strength sufficient to replace Fixed Income.
As of January 25, 2013
International Equities has gained 40 signals since the end of last year and it has now moved above Fixed Income in the dynamic rankings. However, it has only exceeded Fixed Income by 2 signals and our strategies require that the difference be at least 5 signals before a formal change is made. Within the International Equities asset class Developed Markets are exhibiting greater strength than emerging markets.
As of December 19, 2012
International Equity moved up to the number three asset class overtaking Foreign Currency. Domestic Equities continues to hold the number one ranking while Fixed Income is clinging to the number two position. All asset classes are currently passing their Cash Bogey Check. The global equity market continues to show a positive picture from a relative strength perspective.
As of September 12, 2012
Yesterday the International Equity asset class passed its cash bogey check. This is good news for the international arena but has been insufficient to raise its rank above #4.
As of September 7, 2012
Yesterday, the Domestic Equity "Passed" the cash bogey check. The cash bogey check is a short term comparison of an asset class versus cash, and confirms the long-term trend in outperformance. The negative cash bogey check has lasted 97 days – in line with historic averages. The average persistence when returning to positive is 245 days. In spite of the headlines, investors, apparently, still exist in sufficient numbers to support market prices.
As of September 4, 2012
The broad Commodity Asset Class remains weak relative to the other asset classes. The cash Bogey Check managed to reverse up. While this is a positive, shorter term change, there has not been an improvement in the Commodity relative strength relationships compared to other asset classes. Generally, this remains an asset class to underweight.
As of August 27, 2012
Over the course of the past few weeks, there have been changes in our ETF models. The Fixed Income class has been rotated due to the recent bounce in treasury yields. Specifically, the trades contributed to a shift away from treasury exposure, with specific focus on limiting exposure to funds focused on the long end of the treasury yield curve. In the image below, we have outlined the most recent trades, along with a "before and after" sub-asset class allocation pie for the fixed income portion of our Global Opportunity Portfolio.
As of June 22, 2012
Continued deterioration in general commodities has resulted in a lower ranking. Precious metals remains stronger than the general commodity area.
As of June 1, 2012
This is basically where we are now, a 10% correction in Domestic Equities. This 10% drawdown is essentially the level at which an asset class "Fails" its Bogey Check. Historically, this suggests that there is approximately a 26% chance that we will see a decline of another 10% from here. Domestic equities retain stronger technical scores than the other asset classes. However, the Cash Bogey check is a short-term indicator of risk. Technical ranks do not prevent additional drawdown as European financial problems and problematic domestic employment reports remain unresolved. Exercising caution with any remaining equity holdings seems prudent. The DJIA is -1% YTD and the S&P500 is +1% YTD as of mid-day June 4th.
As of May 31, 2012
Both International Equities and Commodities continue to struggle and as a result of Wednesday's market action both asset classes lost buy signals. Commodities lost more than International Equities did resulting in the asset classes switching places. Fixed Income picked up new buy signals on Wednesday which strengthens its number 2 position. Domestic Equities continues to hold the number one rank and actually managed to improve technically as an asset class in the midst of declining indices.
As of May 18, 2012
Market volatility continues pushing International Equities down to the #5 spot. Foreign currencies moved up only because it is less weak than the other asset classes. Foreign currencies remain in a negative tend. THe lreadjustment is largely due to deterioration in foreign equites. The Commodity nemerical ranking did not change. This chart represents relative strength to each other and compared to cash over the previous ten weeks of trading.
As of May 15, 2012
Commodities and International Equities remain in a tight range in total scores. Commodities lost 5 signals last night which was enough to fall below International Equities for the first time since early 2011. The positive trend for all equities relative strength indicator switched to negative. It generally represents the early part of a major drawdown.
As of May 14, 2012
Fixed Income, Commodities and International Equities continue to “churn in the mixing bowl” as they maintain very close Relative Strength levels. Commodities lost three signals and Fixed Income gained one causing it to hit the five 5 signal threshold, thereby moving Fixed Income into the second slot.That is sufficient spread to justify reallocating. As well, the International Equity asset class (rank 4) dropped a signal and failed its cash bogey. As well, the Commodity proxy RS chart versus the Cash bogey was being watched for a sell signal which it gave. Currency improved slightly but remains in a negative trend.
As of May 11, 201
Recent market volatility has caused some jockeying around in asset classes two through four. The actual numerical point change is not sufficient to readjust portfolios but is evidence of the shifting attitudes of investors.
As of May 8, 2012
Fixed Income and Intl. Equitues continue to jockey for the number 3 rank. They are essentially tied in the number of Buy signals so just a signal or two can change the rank. The change is not significant enough to justify reallocation. It is indicative of a changing market that my suggest reallocation soon.
As of May 2, 2012
The Commodities Asset Class which has been in the #2 slot since February has now failed its bogey check. This asset class like the others has had a tough time in the shadow of Domestic Equities in that it has not seen much carry through in buy signals. However, the strength in commodities has primarily been in energy. With many models heavy in the energy space we would consider using the bogey check to exit this asset class.
As of February 23, 2012
At the end last week Commodities had moved into the #2 slot, and as of Friday passed its Cash Bogey check. The rally in the commodities market over the course of the past few months has been relatively wide spread in that the vast majority of commodities have been lifted higher since the October 2011 market low.
As of February 8, 2012
Investors have become more tolerant of risk evidenced by the strengthening of international equities above cash. Other factors for the asset class have shifted from Avoid to Caution. Commodities and Fixed Income are essentially equally ranked with only a slight edge for Commodities in the "risk-on" rally.
As of January 25, 2012
Whipsaw or Flip-Flop, the technical ranking remain close and unstable. Positions 3 and 4 have switched again. Domestic equities are viewed by many analysts as over-bought - highly priced relative to the recent trading range. Waiting for a pull-back may provide a better price to add positions.
As of January 22, 2012
The "cash bogey check" turned positive for International Equities but remains in 6th position as an asset class.
As of January 10, 2012
The "cash bogey check" turned positive for Domestic Equities as the Bullish Percent of the NYSE continued to improve. Sector exposure should be supported by positive relative strength.
As of December 27, 2011
Commodities continued weakening as investors anticipate reduced demand in Europe and Asia.
As of November 25, 2011
Selling has been sufficient for US Equities to fail our "cash bogey" requirement. Broad market deterioration appears much like the conditions that preceded the October 2008 decline. Rumors from Europe continue to roil global markets.
“Better to have stop and go, than no go at all.” - George Soros
As of November 21, 2011
Foreign Currencies added Money Market or US Dollar to the allocation. However, the trends remained negative.
As of November 16, 2011
Commodities shifted into #2 position with additional weakening in international equities. Commodities still fail the "cash bogey" requirement; therefore, trends are not sufficient to justify adding commodities to a portfolio.
As of October 24, 2011
Short term signals for the leading three assets are very tightly grouped resulting in a new ranking.
As of October 20, 2011
Optimism for a European Banking System solution and the Fed restarting a stimulus program combined with some positive earnings reports have pushed Domestic Equities up notch to favored status. Commodities continue declining connected to lower growth estimates for China.
As of October 14, 2011
Trendless markets may cause quick rotation among asset classes. The differentials between the first three classes is very narrow. Currencies and Commodities remain in negative trends.
As of October 13, 2011
Domestic equity strengthened enough yesterday to pass the cash bogey check. If the trend continues, it will move back into 2nd place.
As of October 3, 2011
Foreign Currencies moved to #2 but remain in a negative trend on 10/3/2011.
This suggests that even long-term inestors not hold international exposure as of 9/22/2011.
Domestic equities failed to outperform Cash on August 2nd.
Commodities failed to outperform Cash on May 5th.
As of September 22, 2011
This suggests that even long-term inestors not hold internation exposure as of 9/22/2011.
Domestic eqities failed to poutpermorm Cash on August 2nd.
Commodities failed to outpermorm Cash on May 5th.
As of August 8, 2011