Weekly Market Review Notes

After hitting a record close last week the market is showing some warning signs, which is to be expected. You don't typically break through an important resistance point without testing it and re-testing it so some volatility around a record high is normal. We are also slightly concerned that small and mid cap stocks have drastically underperformed the S&P 500 over the past two days. In the larger scheme of things two days is pretty insignificant, and as I write this the pre markets are showing some strength in small caps, but this is something to be monitored as it could be the warning sign of investors shifting to a more "risk off" stance.

On a broader basis traditional asset allocators have had a tough year. While the S&P 500 has had a great year, other asset classes have not. Below is a chart of some of the usual components of a traditional asset allocation portfolio and how they have done this year:

Asset Class


YTD Return as of 4/2/13


iShares Barclays Aggregate Bond ETF (AGG)


International Developed Stocks



Emerging Market Stocks

iShares MSCI Emg Mkts (EEM)



SPDR Gold Shares (GLD)



iShares S&P GSCI (GSG)


Equity Markets

Our momentum indicators are still extremely bullish on the stock market. Our positive reading on stocks does not mean that the market is guaranteed to rise from here. There are still many risks on the horizon (Poor corporate earnings, problems in Europe, slowing economy, partisan bickering in Washington, etc) that could cause a selloff. However, our research suggests that when our momentum indicators are bullish the rewards of being invested outweigh the risks.

In the US we have shifted from small cap stocks into mid cap stocks as they are showing the strongest momentum.. Globally, we continue to favor the US over international stocks. Shorter term the market is looking slightly overbought.

Equity Matrix

Time Frame

Market Condition

TTM Positioning

Short Term

Slightly Overbought

50% Cash

50% Small Cap & US Dividend Stocks

Intermediate Term


Fully Invested- S&P 500 & Mid Cap

Fixed Income Markets

Our momentum indicators still show that most areas of the bond market are weakening. We still see momentum in high yield bonds and we have added positions in preferred shares, local currency denominated emerging market debt, and international TIPs

We continue to hold our counter trend position in long term Treasuries. We understand that over the intermediate and long term Treasuries are probably the worst bet you can make, but over the short term they are looking oversold and have provided protection during selloffs.

Fixed Income Matrix

Time Frame

Market Condition

TTM Positioning

Short Term


100% Invested in Treasury Bonds

Intermediate Term

Most markets in a downtrend

High Yield, Preferred Shares, Local EM, Intl TIPs

Top Holdings

1. Cash

2. Mid Cap Stocks

3. S&P 500

4. Dividend Paying Stocks

401k Advice

Below is our recommended allocation for 401k plans held outside of TWM:

Risk Tolerance*

Asset Type

Asset Class





S&P 500




Mid Cap Stock**




Small Cap Stock**



Fixed Income

High Yield Bond***










* This should be based on the amount of risk/return you are looking for on this

block of money.

**If you do not have Mid Cap and/or Small Cap funds available that part of the

allocation can go into the S&P 500.

***If you do not have multiple bond funds then fixed income allocation can go into an

investment grade bond fund and/or multi-sector bond fund.

Tuttle Tactical Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. You should not assume that any discussion or information contained in this letter serves as the receipt of, or as a substitute for, personalized investment advice from Tuttle Tactical Management, LLC. It is published solely for informational purposes and is not to be construed as a solicitation nor does it constitute advice, investment or otherwise. To the extent that a reader has questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. A copy of our written disclosure statement regarding our advisory services and fees is available upon request. Our comments are an expression of opinion. While we believe our statements to be true, they always depend on the reliability of our own credible sources. Past performance is no guarantee of future returns.

Certified Financial Planner® Board of Standards, Inc. owns the certification marks CFP®, Certified Financial Planner® and federally registered CFP® in the U.S., which it awards to individuals who successfully complete the CFP® Board's initial and ongoing certification requirements.

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