Jeff Saut of Raymond James thinks it might be time to take some risk off the table:
“I revisit asset allocation today because I think we are approaching a point where rebalancing portfolios may be in order. To wit, the June “closing highs” for the DJIA (INDU/10424.62) and the DJTA (TRAN/4369.71) were 10450.64 and 4467.25, respectively. Currently, both averages are approaching those levels. Either both averages will break out above their June highs (a Dow Theory buy-signal), one will break out and the other won’t (an upside non-confirmation), or both will fail to close above their June highs (trouble). Meanwhile, my proprietary intermediate-term trading indicator is still flashing caution, as are the stochastic and 12-month moving average indicators. That said, I have been constructive on the stock market since the beginning of July despite the parade of negative indicator events registered since the April peak. My bullishness was driven by the most oversold reading since the “capitulation alert” of October 10, 2008 when 93% of stocks traded on the New York Stock Exchange made new annual lows. Regrettably, the extreme oversold condition that existed three weeks ago has now been largely erased. Accordingly, this week shapes up as a pivotal week and I will be watching the action closely.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.