Happy New Year! May 2026 bring you new opportunities, growth, and joy. Thank you for being a loyal subscriber – we appreciate you!
The S&P 500 is on track to close lower in a shortened holiday trading week that was otherwise quiet on the macroeconomic front.
MACROECONOMIC UPDATE
- Pending Home Sales for existing homes rose 3.3% in November. Despite this monthly increase, pending contract volume remains near 25-year lows, and Existing Home Sales are on pace for their slowest year since 1995.
- The latest Case-Shiller Home Price Index was released for October and showed home prices rising modestly, supported by limited inventory. However, high prices and elevated mortgage rates continue to depress sales activity.
TECHNICAL UPDATE
- InvesTech’s Housing [Bubble] Bellwether Barometer continued its downward trend falling another -1.5% this week. This will be a key indicator to watch in 2026 as a further decline would warn of increasing stress in the housing market.
- InvesTech’s Artificial Intelligence Index also moved lower this week falling -3.5%. AI-related stocks continue to struggle since our Index peaked nearly two months ago, indicating that investors may be growing wary of this highly speculative segment of the market. If weakness continues in the new year, it could mark an important turning point with wide-reaching consequences.
InvesTech Model Fund Portfolio
There are no changes in the Model Fund Portfolio this week which has a net invested equity allocation of 53%. This is comprised of 58% long positions, 5% in an inverse index ETF, 5% in an intermediate Treasury ETF, and 32% cash held in short-term Treasurys or a money market fund.