Market Update 8.15.10

Last week was a pretty bad week for the global stock markets. What does the behavioral model indicate about what do for the coming week and beyond?

First, our US behavioral indicator has crossed it's short-term threshold indicating that this week will be a down week. Therefore, we are hedging our position for the week.

Second, our agent-based indicator indicates that the US is 18% under valued. The dynamics appear the US market will hover around 20% under valued for sometime. Therefore, we do not anticipate too much more downside. The worse possible scenario is 5% downside in the next month.

Our long-term perspective is still overweight emerging market equity and US high yield corporate bonds. Our indicators are also bullish on emerging market fixed income. We purchased some several weeks ago.