Our Negative Leadership Composite (NLC) is one of the most important tools to watch today, and it just triggered a critical warning with bearish Distribution falling to its maximum negative reading of -100. While Distribution reaching -100 does not guarantee a bear market, it is strong confirmation that we are in a very high-risk market and bearish conditions lie ahead.
Our NLC clearly indicates the stock market is in a vulnerable position today, and with a 45% equity allocation in the Model Fund Portfolio, we are positioned defensively. We are now watching how persistent this move becomes, as Distribution remaining at -100 for many weeks would be a major concern. Furthermore, our Gorilla Index breaking below its technical support level would confirm that additional portfolio adjustments are warranted.
