The battle is about to begin between those who in one form or another end up following the leading indicators and those who in one fashion or another end up following the lagging indicators.
Time has proven that the ZYX Global Multi Asset Allocation Model was spot on when it declared the end of the old cycle in August 2011 and identified characteristics of the new cycle in Oct, 2011.
Now the new cycle has reached a stage where early adopters have exhausted their firepower and doubters are ready to take a stand. The battle is about to begin. The battles are always bloody in the form of high volatility.
Recent actions taken to book profits in FONE, SMH, XLK, TTF, THD and EUO have positioned both Low Risk and Lower Risk portfolios to keep powder dry to take advantage of the volatility as the battle ensues.
At this time, leading indicators from 23 countries are showing that the doubters are likely to lose the battle.
We take great encouragement in the fact that we have not seen many strategist put together all the elements of the new cycle in a unified thesis. There is no dearth of smart strategists and as the smart strategists catch up, the next stage of the cycle should begin with wider recognition of the new cycle.
We do want to caution subscribers and preach humility because the history shows that in the prediction business nobody bats 100%.
On one hand it is a source of confidence that the ZYX Global Multi Asset Allocation Model has consistently called all major turns with the exception of one (The latest data shows that this position is also likely to work out in its designated time frame) correctly in a large number of markets. On the other hand, this is also a cause to be extra vigilant and be prepared to change our thesis on a dime if new hard data shows the present framework to be wrong.
The plan is to get back into some of the positions we have recently booked profits on at better prices.
For subscribers’ convenience, the characteristics of the new cycle from the call in October 2011 is reproduced below:
- High volatility both on the up side and the down side.
- Political upheaval across the world.
- Inflation in emerging markets coming under control.
- Relatively strong U.S. dollar.
- Reversal in the strength in real estate and utilities.
- Reversal in the relative strength in precious metals.
- Strength in technology stocks.
- Strength in energy service companies.
- Weakness in healthcare companies.
- Ups and downs in financial crisis in Europe but no melt down.
- No recession in the U.S.
- Only a shallow recession in Europe.
- Slower growth in emerging markets.
We will be vigilant at rapidly updating the foregoing as new data becomes available.
ZYX Global Multi Asset Allocation Alert has produced 265.88% returns in excess of S&P 500 since inception in 2007………check out the performance.
