Stadion Model Commentary

November 11, 2013

We’ve seen a bit of volatility in the markets, particularly over the past couple trading sessions. There were a handful of catalysts, including a surprise rate cut by the ECB, a higher than expected GDP print, and a strong employment report (and the highly anticipated IPO of Twitter). This led to some sizable up/down moves in both the equity and fixed income markets. On the flip side of any economic data that is released comes the increasingly asked question: “Will this lead the fed to [taper/not taper/increase QE] in the near future?”, which is seemingly having an opposite market reaction as one would normally expect from the news. We have started to see some weakening in the domestic model based on lackluster breadth data. We are residing in the Yellow Weight of the Evidence reading. Despite this reading having us tighten sell criteria, as of the end of the week we remain nearly fully invested with only a couple spot exposures (Europe) being affected. We will see if the late week market bounce will dampen any chance of further model deterioration or if we will follow through next week.