Week of 11-9-2008

Timing Model = +1.5
80% long, 20% cash

Global allocation of long positions
MSCI EAFE Index 20%
MCCI Emerging Markets Index 10%
Russell 3000 Index - U.S. 70%

Top U.S. Sectors
U.S. Health Care 5.0
U.S. Pharmaceuticals 5.0
U.S. Consumer Goods 4.5
U.S. Biotechnology 4.5
Small Cap Value 4.5
U.S. Telecommunications 2.0
U.S. Banks 2.0

Top Intl. ETFs
MSCI Switzerland Index Fund 2
MSCI Japan Index Fund 2

Strategy 3
Money Market 50%
U.S. Long Bonds 50%

Strategy 4
U.S. Long Bonds 25%
Energy 25%
U.S. Small Cap 25%
U.S. Large Cap 25%

My timing model didn't budge last week but we got the backfilling I expected. Now lets see if the market can begin to climb the wall of worry and make a successful push higher. There is significant resistance around 1000 - it would be nice to see a breakout above that level.

Sentiment will begin to cycle back to a more neutral posture by next week, so I expect my model to begin losing points by then. We are still a very long way from breaching the 75 day moving average on either the S&P 500 or Value Line Composite, so I'm not very optimistic about capturing significant gains if the market does continue to move higher. This is an inherit weakness in my timing model - periods where there is a gulf between the market and long/intermediate term moving averages are difficult to address. Sentiment can only juice the model for so long before they lack meaningful guidance - my model always defers to trend indicators when the juice is gone.

It also looks like the international markets may be ready to challenge the U.S. market on a relative strength basis, at least over the short term. It won't be enough to change my global allocation of long positions, but I won't be surprised to see the international markets out performing near term.