February 10, 2022: We recommend the following changes…

In our view, today’s hot inflation report has significantly increased the upside risk to interest rates AND the downside risk to the housing market ahead.  Meanwhile, our Housing [Bubble] Bellwether Barometer is close to breaking an important support level, as is our InvesTech Gorilla Index.  Additionally, our Canary Index has broken all major support levels, and the Distribution component of our Negative Leadership Composite remains locked at -100.

Consequently, we are moving to the next level of defensiveness in our portfolio with the following trades on tomorrow’s open:

• Exit the 3% position in the Communication Services Select Sector SPDR ETF (symbol: XLC).
• Reduce the allocation to the Invesco S&P 500 Equal-Weight Consumer Discretionary ETF (symbol: RCD) from 5% to 4%.
• Add 2% to the Direxion Daily S&P 500 Bear 1X ETF (symbol: SPDN) – which will increase our total position in this inverse index fund to 7%.

Together, these changes will reduce our portfolio to a net invested allocation of 63%, and will also retain our weighting in more defensive market sectors.