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More of the same this week, one day the market is up, the next day it is down. The real action is going on in the bond market as global bonds are selling off in a big way. Our Trend Aggregation Income Strategy moved into inverse Treasuries to start the month so we have been able to profit from the decline. At some point the bull market in bonds will end, and when it does it will look like this. However, this looks more like bonds being overbought and correcting than the end of the bull market. Either way it turns out we will be prepared.
What is going on in the bond market is concerning for stocks. Stocks don’t like volatility in other asset classes, as we saw when oil sold off. Today is a perfect example, bonds started off up big and the S&P looked set to rally. Then bonds turned, causing stocks to turn.
Most of our indicators for stocks are still positive, however a number of our counter trend models are now indicating the market is overbought in the short term.
|S&P 500 Counter Trend||Bearish|
|Small Cap Counter Trend||Bearish|
|NASDAQ Counter Trend||Mixed|
|Intermediate Term Momentum||Mostly Bullish|
|Short Term Momentum||Mostly Bullish|
|Global Model||Dollar Hedged EM|
|Dollar Hedged Japan|