The stock market has been on quite a roller coaster ride the last 3 months.
In August and September, our research showed widespread sell signals across the board.
Continue Reading Below
All the charts and indicators flashed the typical characteristics of the early stages of a new major bear market.
Because of that, for most of the month of October, we were positioned defensively to protect against a market decline.
But, instead, the market rallied with some serious velocity and magnitude.
Unfortunately, because of our position, we didn’t participate in the rally as many of our systems don’t get a new buy or sell signal until the end of each month.
So, with October finished, many of our strategies got signals to buy back into the market.
We’re still a little skeptical of this rally.
Economic data haven’t been great and the rally could just be enough to squeeze out the sellers before making another move down.
Regardless of our opinions, we follow the rules of our strategies because that’s how we seek to get an edge on the market over time.
So for the time being, we have an all clear to move back into stocks.
However, if the S&P 500 Index falls below 2030, that’s where we would start to reduce our market exposure again.
In our Multi-Strategy Sector Rotation portfolio, we recently purchased the following ETFs: the iShares North American Tech-Software fund (IGV), the Powershares Dynamic Leisure & Entertainment Portfolio ((PEJ)), and the iShares US Real Estate fund (IYR).
We think that low fuel costs will continue to boost the airline and travel industry and help this sector perform well.
The real estate sector struggled from February through August, but now has put in a nice base of support and is showing better relative strength than most other sectors of the economy.
Software stocks look a bit expensive on the fundamental side, but the sector setting new highs and many of the larger holdings are breaking out.
So, there is some risk here but hopefully the momentum will continue to carry this sector higher in the near term.
The investments discussed are held in client accounts as of October 31, 2015. These investments may or may not be currently held in client accounts.The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or that investment decisions we make in the future will be profitable.
Subscribe to our once-weekly email newsletter and get the best posts delivered to you in one convenient place, to browse at your leisure://
The post Keeping centered in a topsy-turvy market appeared first on Smarter InvestingCovestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures.