March 14, 2022: We recommend the following changes…

While on the surface the market seemed to stabilize last week, there was little or no improvement in key leading technical indicators.  Foremost among these is our Negative Leadership Composite which remains locked at -100 and confirms ongoing Distribution.  Our bellwether Canary Index, Gorilla Index, and Housing [Bubble] Barometer are all at, or within 1-2% pts, of a new low.

In light of this ongoing internal weakness, we are taking another incremental defensive step in our Model Fund Portfolio with the following changes:

• Reduce the 7% position in the international fund MSCI ACWI Ex-U.S. SPDR (symbol CWI) to 5%.
• Add 3% to the Direxion Daily S&P 500 Bear 1X ETF (symbol:  SPDN) – which will increase our total allocation in this inverse index fund to 10%.

As a reminder, the Direxion S&P 500 Bear ETF is an “inverse” fund that INCREASES in value as the market goes down.  So while the above changes reduce our cash allocation to 22%, it makes our portfolio MORE defensive with a net invested exposure of only 58%.

In addition, our weighting in more defensive sectors is also proving beneficial as Wall Street nervously heads toward the Federal Reserve’s first rate hike on Wednesday.