A stellar jobless claims number is supposedly the driver for the pop but, in reality, this is, as usual, a convenient backstory from the media talking heads to explain market dynamics.
Looking at the markets in the rear view mirror is always easy...forward looking is always a bit more difficult.
The X sectors are all doing well today...with the exception of XLU...which, although it moved back into #1 rank of the X Sector model today, is now long, long overdue for a pullback.
It is because of this rotational risk that several T2 models are profiled offering a more delta neutral perspective (T2 default), a non-correlated equity/bond model (T2 COM...Commodities), and a bond centric model (T2 Bonds & FI).
Our ongoing thesis is that allocating portions of investment capital to each model mutes the inherent risk associated with focusing on just one income modality.
In that vein here's an update to the COM model, which has once again cast UNG as the momentum leader. This position was abdicated last week for a few days as XLU took the lead, but the XLU/UNG slots have switched again. Of our 10 commodities (not counting benchmark SPY) only UNG, XLU, XLE and IYR have upslope RSQ on a four month lookback and XLE is very jumpy on the line.
