Today’s selling pressure has the S&P 500 Index set to close lower in what was a very quiet week for macroeconomic data. There was significant action BEHIND the scenes, however, as gold skyrocketed above $4,000 per ounce (taking our Gold ETF position GDX to a 122% year-to-date gain) <see Market Insight> …and our Housing Bubble Bellwether Barometer once again broke through a critical warning level…
MACROECONOMIC UPDATE
- The preliminary reading for Consumer Sentiment in October ticked down slightly from 55.1 to 55.0 as the perceived improvement in current economic conditions was offset by worsening expectations for future personal finances. This important sentiment gauge has fallen by 15.5pts from a year ago and is at one of the ten worst readings of the past 50 years! The current level is ALSO below the index’s value at the start of ALL six recessions since its inception.
TECHNICAL UPDATE
- Our Housing [Bubble] Bellwether Barometer plunged more than -10% this week as it once again breached its first support level, signaling a serious warning flag for the housing market. Monitor this indicator closely as weakness earlier in the year preceded a broader market sell-off.
- Our speculation-driven Artificial Intelligence Index spiked up to a new high this week as investor sentiment stretched to new extremes in seeming anticipation of infinite exponential growth in the AI industry. This “bubble” index will prove to be critical moving forward as any sharp reversal in these speculative stocks could quickly snowball into the rest of the market.
- Meanwhile, our Negative Leadership Composite is still not confirming a healthy bull market leg ahead. The definitive lack of a bullish Selling Vacuum in this time-tested indicator warns us that the current rally is NOT supported by broad market leadership and could be on fragile footing.
InvesTech Model Fund Portfolio
The Model Fund Portfolio is defensively invested 57% in quality equity ETFs, 5% in an intermediate Treasury ETF, and 38% cash. The cash portion of the Portfolio (38%) is held in short-term Treasurys or a money market fund to provide an attractive yield and defensive buffer.