Stock Market Advantage Sell Signal

By on February 21, 2012

The Tactical Timing System has generated a sell signal. To comply with the system the following positions were sold today. The proceeds were allocated equally between the Vanguard Short-Term Corporate Bond ETF (VCSH) and the Vanguard Intermediate-Term Corporate Bond ETF (VCIT).

Position    (Symbol)

Vanguard European ETF (VGK)

Vanguard High Dividend Yield ETF (VYM)

Walmart (WMT)

Target Allocation:

30% equities; 70% fixed income

Below is an image of the trade confirmations (click to enlarge):

Stock Market Advantage Sell Signal





SMA Comment: Investors have been forced into a high risk game of chasing equities by a Fed bent on subsidizing debt while punishing savers in its seemingly endless attempts to jump start anemic economic growth.

Benign economic statistics along with a market that continues to exhibit an upward bias has improved investor sentiment to a significant degree. The percentage of bullish investors in all sentiment polls are at high readings.

Although high bullish sentiment as a contrarian indicator certainly doesn’t guarantee market weakness, it makes the risk of a steep correction an increasing likelihood.

The Fed’s extreme monetary stimulus efforts could ignite inflation in energy, specifically gasoline, which could send prices at the pump above $4.00 in the coming months. This will curb consumer spending on a downwardly mobile society resulting in a severe dampening effect on economic growth in the second half of the year. Caution seems warranted at this juncture.

Information on the Tactical Timing System (TTS): TTS is a proprietary timing system based on research conducted over 20 years.  TTS adjusts allocation between equities and bonds by 15 percentage points when timing signals are given.  Signals are based on a combination of fundamental valuation measures and real-time sentiment gauges.  To receive e-mail notification of timing signals send an e-mail to and type “Subscribe” in the subject block.

Disclaimer: It is challenging to outperform a buy and hold strategy. Many investors have found themselves well served over long time horizons by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Information presented is based on analysis of past data and assessments by the Tactical Timing System model. Future performance may not reflect past performance. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented.

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