Friday, August 23, 2013

Top 2 View of T6 Hybrid Model..8.23.13

Despite, or perhaps because of the NASDAQ blackout on Thursday, the equity markets managed to make some modest gains yesterday.  Fears of another possible flash crash kept a lot of money on the sidelines and volume was trickling most of the day, with a gradual fade down into the close.

This is not a market characterized by a lot of enthusiasm, either up or down and the next earnings season will most likely be the catalyst for the next big move although the typical end of month buying may provide some lift.

In the meantime the commodities continue to book solid gains, as evidenced by the leadership of XLB (basic materials) in the T6 Hybrid model.  If the overall market was participating in this otherwise sector rally the positions of VIX and SPY would take top slots.  This is currently not the case although the relative weakness of XLU (utilities) in the momentum rankings indicate that risk hedging is not a big once again we are left with a market malaise looking for a reason to move.

The top 2 sort of the Hybrid model posted earlier this week continues to display a downslope P6, thus arguing for the safety of cash.  This sort, although still producing twice the volatility of the benchmark SPY, is probably the better (safer) choice than the top 1 sort posted earlier.... although strict adherence to the money management stops is crucial in both models.