Author: TG Asset Management LLC
Covestor portfolios: Tactical All Asset and Tactical Growth
Bottom Line: European Central Bank President Mario Draghi’s pledge to do “whatever it takes” to save the Euro Zone has lifted the optimism of global investors. While the details of a grand plan are anxiously anticipated, investor sentiment has kept the volatility or “fear” index low and the trend in stocks bullish.
While the longer-term outlook is bearish for stocks, the short and intermediate strategy factors remain bullish. A 100% allocation to domestic stocks is maintained at this time.
Ø Long-Term Stock Pattern (3-5 yrs) – Bearish, Stock prices will eventually move lower
Ø Intermediate-Term Stock Trend (1 year) - Bullish, Stock prices are pointing higher
Ø Short-Term Stock Volatility (30 days) - Bullish, Stock prices have room to head higher
Ø CURRENT ASSET ALLOCATION OBJECTIVE – GROWTH
Technical, Trend & Volatility Indicators
TECHNICAL PATTERN: BEARISH; Stock prices have retraced a majority of the decline from their May 1 high. While stocks have the potential to complete a 100% retracement, the overall technical pattern calls for lower stock prices in the next 3-5 years.
TREND: BEARISH; The trend in stocks has been bullish since June 6. The trajectory of stocks places the S&P 500 near 1400 before a turn downward can be expected.
VOLATILITY: BEARISH; The S&P 500 VIX hit a low of 17.08 on June 30 and closed at 18.93 on July 31st. While volatility has increased over the past month, it remains muted and is still at level which appears bullish for stocks.
A 100% allocation to the US stocks will be maintained at this time.