Weekly Commentary

July 13, 2010

The last week has brought us a pleasant short term reversal of the negative market trend that began the last week of April, with the S&P 500 increasing over 6% during the last 5 trading sessions. However, this run has been supported by very low volume. Last Friday was the lowest volume day of the year only to be outdone by Monday's new record low based on number of shares traded. In addition, the S&P is still below its 200 day moving average, an often used technical barometer. With the increasing price movement, we have witnessed a leveling off in our model. Many of the market breadth indicators have begun to increase, albeit from a decidedly negative level. This has started to move us closer to adding some small equity allocations. In order to move from our current defensive positions in cash and fixed income ETFs, we will need to see continued strength building in the price trend, as well as market breadth measures like Advance Decline and Up Volume Down Volume. We will continue to monitor the markets and the model, and will make changes to our allocations when that change is warranted. - SMM-072010-090

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