June 18, 2021: We are recommending the following changes:
- Increase the allocation to the MSCI ACWI ex-U.S. SPDR ETF (symbol: CWI) from 6% to 7%.
- Increase the allocation to the Energy Select Sector SPDR ETF (symbol: XLE) from 3% to 4%.
- Decrease the allocation to the Industrial Select Sector SPDR ETF (symbol: XLI) from 10% to 9%.
- Decrease the allocation to the Invesco S&P 500 Equal Weight Consumer Discretionary ETF (symbol: RCD) from 6% to 5%.
Equities traded lower this week after the Federal Reserve acknowledged that inflation might not be as transitory as they’ve previously stated (accompanied by a litany of qualifications, of course 
).
On the economic front, the Leading Economic Index rose 1.3% to an all-time high last month, further confirming the strong economic recovery. Yet, strong demand continues to worsen inflation pressures as the Producer Price Index rose to the highest level in its 10-year history.
The technical situation remains supportive as a whole – yet emerging weakness in market breadth has caught our attention in recent days. Also, our short-term Pressure Factor is now in oversold territory, which means that selling pressures could subside in the days ahead.
Strategy
In this issue of InvesTech Research (available later today on our website), we delve into the greatest sources of risk: inflation and speculation. Increasing the allocation to our international and energy positions are opportunistic ways to benefit from the economic recovery while more directly protecting against the threats of higher inflation. We are also trimming our allocations in the Consumer Discretionary and Industrial sectors following strong performance over the past year. The Model Fund Portfolio remains 80% invested with 20% held in short-term Treasurys or a money-market fund.