For the past several months BFIA has been a bull on India. Since that time India has gone up considerably. We currently see dynamics in India to start scaling back the over weighting. BFIA likes Indonesia, South Africa, Malaysia, and Mexico.
BFIA has also been a bull on US high yield fixed income. BFIA believe that trade does not have much more room to grow. Based on our measures we have not seen our bond measures this high in our history of data, indicating that it is over valued. Therefore, BFIA has decided to sell off that position. BFIA earned about 20% in a one year period investing fixed income.
What is our prediction of this week. Last week, we predicted a major downside dynamics which we saw last Tuesday. BFIA believed it was seeing dynamics similar to May. Based on our current measures we are now receiving mixed signals. One measure is predicting that this week will be similar to the second week in May which declined about 2.0%. About 80% of that week which means a 1.6% decline for the week. However, our sentiment measures are moving away from the May numbers which suggests the dynamics will not be similar. This may mean that the market will sway back and forth for the week.
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