The UK and US Market Charts remained positive and momentum stayed up for both charts indicating that in the longer timeframe the trend is up. Our shorter term indicators suggest that the market is currently in a correction to that trend. Going forward either the short-term indicators will deteriorate further which may eventually cause the major trend to start breaking down, or, the short-term indicators will pick up again in line with the major trend in which case we would add more risk.
Last week the Bonds Theme came back quite strongly. Our indicators show that Strategic, Corporate and High Yield Bonds are strong on both the short-term and longer-term timeframes with Gilts and Global Bonds being weaker in the longer-term with shorter term indicators turning back up.
In the Managed Theme the Cautious and Total Return groups have recently performed better than the Balanced and Active groups which is another risk-off indication in the short-term, as is the relative deterioration in the higher risk groups amongst the Regional and Sector Specific Themes.
However, Commodities are looking stronger as the US Dollar has been moving weaker which supports the idea that, in the longer timeframe, riskier assets are experiencing a correction rather than anything more serious.
The British Pound is looking strong against the U.S. dollar and against the Australian dollar, the Austrailian dollar looking particularly weak at the moment and again when this currency is weak, it is usually a general market risk-off indication.
Eugene Lawlor