The positive momentum we mentioned last week has continued. After declining nearly 5% from 1710 to the 1630 level from August 2nd through August 30th, the S&P 500 has since gained over 3.5% (in just 8 trading days) and is now at about 1690, within 1.5% 1710 (it’s all time high set) back in early August. The uptrend has been propelled somewhat by continued positive economic data, indicating that the global economy is in a fairly healthy position currently. This is a somewhat divergent price action from earlier in the year, when investors reacted negatively to positive data, due to speculation that a healthy economy would force the Federal Reserve to begin tapering their bond purchases sooner rather than later. Trading volume has increased steadily over the last few weeks with the recent market action, as one week volume has increased about 20% to 6 billion shares per day on average since August 26th, while the 1 month volume has held steady at about 5.6 billion shares per day average over that time.
With the positive price performance in the market over the last few weeks, the Stadion Domestic Technical Model has picked up on this momentum, and begun to signal for increased equity exposure. The majority of our price trend measures are on, and are currently being confirmed by most of our market breadth indicators as well. While not all of the model’s components are on, we have received signals from enough indicators to reach the Yellow market environment. As such, we have begun to add new allocations to our tactical portfolios. We will continue to monitor the market, model, and portfolios for any changes in trend dynamics and will quickly assess and make any changes as they become necessary.
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Past performance is no guarantee of future results. Investments are subject to risk, and any of Stadion’s investment strategies may lose money. Investment return and principal value of an investment will fluctuate so that an investor’s portfolio may be worth more or less than their original investment. The investment strategy presented is not appropriate for every investor and individual clients should review with their financial advisors the terms and conditions and risk involved with specific products or services. Stadion’s actively managed portfolios may underperform during bull markets.