The last two weeks have been volatile. We noted in the last several weeks that we would see a pullback. The model suggested last week there was not going to be too much more downside, 1%. However, the model did not forecast a tsunami in Japan, therefore we witnessed more downside than predicted.
Either way the model is suggesting that the US market is okay. Even with the exogenous events occurring in the world, the model suggests there is not much more downside for the US market. This means do not worry about a 15% correction as some pundits are predicting. The model is suggesting that emerging markets should be stayed away from still. However, there is one emerging market that the model is picking up at the start of its cycle, Brazil. In addition, Eastern Europe is also breaking out. The model also suggests to keep invested in REITs, high yield corporate, and commodities such as energy and natural resources.
Other than those areas and markets that are commodity rich markets such as Canada and Russia, stay away from other markets.
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