Re-balance Cycle Reminder All MyPlanIQ’s newsletters are archived here.

For regular SAA and TAA portfolios, the next re-balance will be on Monday, May 7, 2017. You can also find the re-balance calendar for 2017 on ‘Dashboard‘ page once you log in.

As a reminder to expert users: advanced portfolios are still re-balanced based on their original re-balance schedules and they are not the same as those used in Strategic and Tactical Asset Allocation (SAA and TAA) portfolios of a plan.

Please note that we now list the next re-balance date on every portfolio page.

Inside Of The Stock Chaos

Here we are again: the recent stock chaos has led us to a point that’s very similar yet different from February 8, 2018. The following shows the S&P 500 index chart: 

In fact, at today’s close, S&P is just a hair above its close price 2,581 on February 8, the previous low. 

Though S&P 500 index $SPX in the above is now slightly below its 200 day (simple) moving average, its total return (i.e.  dividend reinvested) index is still slightly above its moving average. In general, we are only interested in a total return behavior as it’s more accurate to capture the return behavior, which is ultimately what investors care. 

Stocks are now behaving more volatile and erratic. Let’s look at more closely at the trends of stocks and other risk assets.

Trends among major assets

As of 04/02/2018:

Description Symbol 1 Week 13 Weeks 52 Weeks Trend Score
Emerging Market Stks VWO -1.84% 1.02% 18.51% 4.47%
Commodities DBC -1.3% 0.84% 10.56% 3.98%
Gold GLD -0.8% 2.92% 6.63% 3.16%
International REITs RWX 0.18% -1.01% 9.83% 3.1%
International Developed Stks VEA -0.75% -2.47% 14.31% 2.34%
US Stocks VTI -2.91% -2.56% 12.52% 1.19%
Treasury Bills SHV -0.05% 0.19% 0.86% 0.3%
Total US Bonds BND 0.31% -1.43% 1.11% -0.11%
US High Yield Bonds JNK -0.64% -2.15% -0.13% -1.19%
US Equity REITs VNQ 1.39% -9.42% -4.09% -3.77%

Emerging market and international stocks are now better than the US stocks. Bonds have been negative for a while. 

Interestingly, US REITs (VNQ), even though ranked at the last place, had a positive one week return. Furthermore,  unlike February 8, 2018, long term bond yields have declined since then, indicating yield pressure has tapered off and today’s stock weakness is likely caused by other factors: 

In fact, since February 8, 10 year yield (represented by $TNX in the above chart) has declined more than 4% while S&P reached the same low point. 

Similarly, REIT stocks (VNQ) has actually gained 3.92% since 2/8/2018. This is again consistent with the belief that rising rate pressure on risk assets has been off, at least for now. 

Market internals

Unfortunately, even though S&P 500 is sitting on its 200 day simple moving average, its internal has deteriorated markedly: 


In the chart above, the percentage of stocks among S&P 500 companies is now way below the low made on 2/8/2018. This is a big warning sign!

Looking at US stock sector and styles: 

US Equity Style Trend


Description Symbol 1 Week 13 Weeks 52 Weeks Trend Score
Russell Midcap Growth IWP -3.43% -0.65% 16.91% 2.88%
Russell Largecap Growth IWF -3.68% -1.4% 18.01% 2.69%
Russell Smallcap Growth IWO -4.04% -0.64% 16.71% 2.2%
Russell Midcap Indedx IWR -2.47% -3.08% 9.61% 0.53%
Russell Largecap Index IWB -2.88% -3.46% 10.95% 0.36%
Russell Smallcap Index IWM -3.39% -2.84% 10.05% -0.14%
Russell Midcap Value IWS -1.72% -5.09% 4.02% -1.32%
Russell Largecap Value IWD -2.07% -5.65% 4.08% -1.96%
Russell Smallcap Value IWN -2.44% -5.08% 3.64% -2.34%

US Sectors Trend


Description Symbol 1 Week 13 Weeks 52 Weeks Trend Score
Technology XLK -4.29% 0.49% 22.02% 4.24%
Consumer Discretionary XLY -4.57% 0.33% 14.16% 2.99%
Financial XLF -2.64% -2.7% 16.13% 1.91%
Industries XLI -2.34% -3.07% 14.64% 1.77%
Utilities XLU 1.15% -3.35% 1.75% -0.36%
Healthcare XLV -2.18% -3.11% 8.9% -0.81%
Materials XLB -2.57% -7.27% 9.11% -1.71%
Energy XLE -2.81% -7.29% -1.42% -2.8%
Consumer Staples XLP -0.48% -8.74% -2.67% -3.81%
Telecom IYZ -2.61% -9.86% -16.21% -9.83%

Small cap growth stocks is now ranked at one of the top places. This is consistent with the belief that the current trade war/policy has made the most impact on large multi national companies. On the other hand, small companies whose markets are mostly domestic have not been as much affected. We also note that 5 of the 9 styles are still in the positive trend territory. 

Similarly, the cyclical or more risk on sectors such as technology, consumer discretionary and financials are still in the top places. This again reveals that currently, trends are still in a transitory state, nothing is broad base or concrete yet. 


In general, one can see that US stocks are at a juncture. Not only major index like S&P 500 is now around its 200 day moving average, its market internal health has declined. However, we want to remind our readers that it takes time for trends of major asset classes to unfold and consolidate. For example, the popular strategy/portfolio P SMA 200d VFINX Total Return Bond As Cash Monthly, listed on MyPlanIQ Advanced Strategies page only rebalances once per month at the end of a month. The reason is to avoid knee-jerk reaction in order to minimize whipsaw or noises as much as possible. 

In addition, many other risk asset classes are still showing positive trend scores (though they are now rapidly approaching zero/negative) at this moment. 

It’s a common tendency to wish to react to market changes and hopefully catch a trend change early. However, investors should be aware of the cost of doing so: i.e. one has to understand the consequence of a wrong decision. Though the nature of financial markets is quite random and a ‘wrong’ move is guaranteed to happen no matter how good a strategy is, it’s still important to minimize the whipsaw impact that can seriously degrade returns (and even increase risk). 

Regardless, as we warned before, investors using a tactical strategy such as Tactical Asset Allocation(TAA) or others such as moving average based strategies should be prepared for whipsaws. This is especially true for the current environment where fake/true trend turning points will be more likely. Our belief is that an investors should be well aware of the drawbacks of a strategy. For that, we refer to recent newsletter February 26, 2018: Pros And Cons of Strategic And Tactical Portfolios In 2018

Market Overview

Stocks somewhat stabilized at the end of last week, only stumbled most after the Easter long weekend. Prices of many high fliers have dropped materially because of company specific news: President Trump’s rant on, Facebook’s data leak, Tesla’s long delay of its Model 3 car production, to just name a few. However, the systemic breakdown should not be only attributed to these individual events. More importantly, the much overvalued stock prices and the over extended bull market create an extremely hostile and unstable environment that can be easily tipped off to the downside. We suspect these are the main factors behind the current volatility. 

From the above discussion, we call for investors to review their risk exposure and manage it to a comfortable level as soon as possible, before it’s too late. As always, stay the course.  

For more detailed asset trend scores, please refer to 360° Market Overview

Now that the Trump administration has been in the office for more than a year, the economy and financial markets are in general still in a good shape. Whether the economy will continue to benefit from the supposedly trickle down of the tax cut, the deregulation and the promised infrastructure spending remains to be seen.  On the other hand, stocks continued to ascend, regardless of the progress. Looking ahead, however, we remain convinced that markets will experience more volatilities at some point when reality finally sets in. 

In terms of investments, U.S. stock valuation is at a historically high level. It is thus not a good time to take excessive risk. However, we remain optimistic on U.S. economy in the long term and believe much better investment opportunities will arise in the future. 

We again would like to stress for any new investor and new money, the best way to step into this kind of markets is through dollar cost average (DCA), i.e. invest and/or follow a model portfolio in several phases (such as 2 or 3 months) instead of the whole sum at one shot. 

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