Consistency is the name of the game this week as all indexes and sectors are bearish. It was a rough ending to October as the USA is on “fire” with Covid-19. This is a pandemic out of control as the White House is waiving the white flag in what is a completely botched crisis. In addition, the FEDs have taken a scissors to their credit card and it looks like no further stimulus money will be forthcoming until there is a “new” administration.
Numerous TSLOs were struck this week and most will hit their strike price if next week is a follow-up to this week of draw-downs.
All indexes are bearish or are positioned with the defense. Checking on the left side of the table we see all indexes are now below the 50% bull-bear dividing line.
While Utilities is holding up quite well, all other sectors took a major hit. Investors rush to Utilities to generate income. Despite the percentage increase for Utilities, all sectors are bearish as the market was down for the week. Hi tech is close to a correction or a 10% retraction.
If you have been following the Dual Momentum model, you recall the move is to International Bonds (BNDX). It will be interesting to see how that pans out over the next month. If you are holding short-term treasuries (SHV for example) there is nothing wrong with staying put until after the election.