Except for India, Taiwan, and Korea all of our short-term behavioral indicators have crossed their thresholds indicating more short-term downside volatility to potentially come.
Our US and China long-term indicators are getting close to their thresholds. A long-term indicator crossing its threshold indicates an an inflection point that another significant downturn is on its way. We have seen other times where markets come close to passing its threshold but do not and then continue to increase. Therefore, we have limited our exposures to the developed stock markets and have increased our exposure to high yield fixed income. Our behavioral indicators for fixed income is significantly more bullish than the for the developed country stock markets. We are currently over weighting emerging markets such as India and South Korea and investing in high yield fixed income to gain exposure to the developed markets. Once we see improvement in our behavioral indicators we will shift out of fixed income back into the stock market.
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