Weekly Commentary

July 7, 2010

Following four negative days to close out last week, the markets are trading at fresh 2010 lows. Many of the major indices are now nearing the decline levels generally accepted as a "bear market" at minus 20%. The rally that occurred in mid June had the Stadion Investment Model moving in a positive direction for the first time since the market peaked in late April. However all of that positive momentum is now gone, and the Stadion Investment Model is once again heading deep into the defensive signals. Several market breadth measures are reaching negative levels not seen since 2008, indicating that not only are market prices deteriorating, but underlying market internals are weak and confirming the severity of the current market declines. While we do not make predictions about the direction of the markets, we simply react to what's happening now and what has happened recently, the Stadion Investment Model continues to signal for defensive allocations to cash and fixed income. We will continue to comfortably watch from the sidelines protecting our clients' hard earned assets during these types of distressing portfolio declines. - SMM-072010-063

Looking for more insights?

Visit the Weekly Model Commentary archive for past comments.