Here are the simple moving average directions and linear regression slopes for 200-days and 100-days for representative funds or indexes for twenty-seven key asset categories that we follow closely.
Overall, we find this data encouraging.
Of course, this information doesn’t say they will be no retracement, but certainly a preponderance of upward trends is more encouraging than a preponderance of downward trends.
The fear factor has clearly receded (down trend in Treasuries and the Dollar are good examples of that), and the risk appetite has clearly returned for now (strong performance of below investment grade bonds relative to investment grade bonds, and strong performance of emerging market debt, are good examples of that). The inter-market indications merely support the obvious, which is that a broad spectrum of stock indexes are no longer trending down.
We are fully invested at this time in all but our real asset and commodities allocations, having gone through a staged re-risking process after exiting the markets in July of 2008. We are partially reinvested in commodities and real assets at this time. We seek to limit catastrophic risk with persistent trailing stop loss orders on each position.