Slowing Growth Calls For More Balanced Portfolio Mix
Since the markets are concerned about both deflation and possible money printing exercises by the Fed (inflation), we have been and will continue to move toward a more balanced portfolio. We will keep some of our inflation/cyclical/recovery assets (like silver, copper, Malaysia, Australia, emerging markets) and will continue to mix some deflation/slow economic growth assets (like consumer staples, utilities, fixed income, and various other dividend-payers).
In order to be prepared for possible stabilization/rally in the markets, we ran numerous CCM proprietary asset allocation models and ranking systems last night. The process begins by screening all ETFs which trade with high liquidity. It incorporates returns over various timeframes, as well as both an overall and timeliness ranking of daily, weekly, and monthly charts/data for each sector/ETF. The final composite rankings for the most attractive options are shown below. These results and the results from our Rydex/Schwab ETF research will serve as our shopping list should conditions warrant moving some additional cash off the sidelines.
As we mentioned yesterday, the markets appear ripe for a sustainable bullish turn. However, we remain in a “prove it to me market”. Friday brings the always-important-to-the-the markets monthly employment report. The government is expected to have released Census workers in August, so the headline number will look worse than what is already a weak environment for job creation. Reports this week give us some hope that Friday’s job number can come in slightly above expectations, which call for job losses in August totaling 80,000.
The CCM Bull Market Sustainability Index (BMSI) closed Wednesday at 676, which moves us a little further away from the very unfavorable risk-reward zone when the index falls between -165 and -351.
