There’s really nothing interesting about watching the stock market gyrate week in and week out. Over the past week, stocks and bonds both turned in a positive performance. I really can’t extricate any meaning from that, especially given that they were both negative the prior week. There seems to be a bit of a psychological glass ceiling around 12,800, so it will be interesting to see if the market is able to push up through that level.
Stocks continue to outpace bonds, giving them a clear advantage. Volatility remains extremely low, which bodes well for continued strength in stocks. My fair value estimate for the market remains virtually unchanged.
In the asset rotation model, Hong Kong stocks have lost their advantage in favour of US small cap (IWM). European stocks (XIN) are a close second, which is where I will keep my money.