Last week, MyPlanIQ initiated tracking major asset classes trend movement. These asset trends provide insights into underlying economic and market segments and are critical to tactical asset allocation strategies. We use ETFs that represent the asset class indices. For more information, please visit MyPlanIQ 360 Degree Market View.
Now that the QE2 initiative is "old news", some of the bullishness has also evaporated. Without further policy initiatives or data showing strength in the economy, there will be concern that Wall Street's rally may be running out of fuel.
However, a week of positive data could give investors enough hard evidence to justify a rally that lifted the S&P 500 ~ 17% from the August 31 close to the 2010 closing high hit November 5.
There are some concerning signs on the horizon and last week the major US indices all lost over 2%. This is reflected in the major asset class trend indicators, which are all down even if the relative rankings are largely unchanged.
Description | Symbol | 15-Nov Trend Score | Direction | 8-Nov Trend Score |
Frontier Market Stks | 13% | v | 20% | |
US Equity REITs | 9% | v | 18% | |
Emerging Market Stks | 9% | v | 16% | |
Gold | 9% | v | 13% | |
International REITs | 8% | v | 15% | |
US Stocks | 7% | v | 10% | |
International Developed Stks | 6% | v | 9% | |
US High Yield Bonds | 5% | v | 8% | |
Commodities | 5% | v | 7% | |
Emerging Mkt Bonds | 5% | v | 9% | |
Intermediate Treasuries | 3% | v | 5% | |
International Treasury Bonds | 3% | v | 6% | |
US Credit Bonds | 2% | v | 4% | |
Mortgage Back Bonds | 1% | v | 2% | |
Total US Bonds | 1% | v | 2% | |
Treasury Bills | 0% | v | 0% | |
Municipal Bonds | -1% | v | 2% |
click to enlarge images
Top Five Indicators
Emerging markets are going to react to the US market fluctuations and real estate is still edgy as it was a major cause of the current crisis. Gold is also down but will continue to have strength based on inherent value and currencies being under pressure.
Bottom Five Indicators
The bonds see some depression but are less volatile than the top asset classes.
In conclusion, the excitement from QE2 is over. We will see whether this downtrend continues and whether there will be a reversal towards more fixed income asset classes being desirable.
Disclosure: No positions
