Markets experienced wild price swings this week as investors grappled with rapidly changing news regarding the conflict in the Middle East and the potential for continued disruptions to the energy market. Meanwhile, Treasury yields are sending an important warning… read our Market Insight on this critical development.
MACROECONOMIC UPDATE
- Consumer Sentiment dropped sharply from 56.6 to 53.3 as the economic outlook worsened and 1-year inflation expectations climbed to 3.8% in response to the conflict in Iran. Both current conditions and expectations declined, with higher-income households showing the largest drop due to rising gas prices and stock market volatility.
TECHNICAL UPDATE
- Both the InvesTech Gorilla Index and Artificial Intelligence Index fell sharply to new post-peak lows this week, confirming the market top is likely in place.
- Bearish Distribution in the InvesTech Negative Leadership Composite (NLC) dropped to -25 this week. A continued decline to -100 would also confirm a bear market is in control.
INVESTECH MODEL FUND PORTFOLIO
Our proactive defensiveness continues to pay off as the Model Fund Portfolio remains resilient and saw positive performance this week while the broader market continued to come under selling pressure.
There are no changes to the Model Fund Portfolio this week, which is comprised of 58% long positions, 7% in an inverse index ETF, 5% in an intermediate Treasury ETF, and 30% cash held in short-term Treasurys or a money market fund. This results in 51% net equity exposure.