January 29, 2021: We are rebalancing two positions in the Model Fund Portfolio.

• First, we are adjusting the allocation to the VanEck Vectors Gold Miners ETF (symbol: GDX) down to 7% from 9% on recent technical weakness. In the long-term, we continue to believe that gold will provide an effective hedge against the current dangerous monetary policy and runaway fiscal spending.

• Second, due to the recent runup in technology stocks, we advise reviewing your 15% position allocation in the Invesco S&P 500 Equal Weight Technology ETF (symbol: RYT), and adjusting or reducing back to that 15% level if necessary.

Equity markets are on track to close lower for the week as all eyes have been fixed on the historic battle between hedge fund short sellers and organized individual speculators in the video game retailer GameStop and other thinly traded issues, including AMC Entertainment and even Dogecoin.

Technically speaking, the bullish +76 Selling Vacuum component of our InvesTech Negative Leadership Composite is supportive of the market outlook. However, today’s extremes in speculation and investor sentiment –highlighted by margin debt hitting another record high this week– significantly raise the risk of a market correction.

This week’s economic reports suggest that the ongoing recovery remains intact, as the Conference Board’s Leading Economic Index inched up 0.3% in its latest reading. Similarly, both Consumer Confidence and Consumer Sentiment were essentially unchanged this month.

Strategy: While the siege on short sellers by “Reddit” traders has been fascinating, we remain focused on the factors that will impact the long-term outlook of the equity market. With the ongoing speculative excesses and overbought levels in the market, we have decided to incrementally reduce our equity exposure. As a result, the Model Fund Portfolio now has an invested allocation of 74%, with the remainder in Treasurys or a money-market fund.