NAAIM Speaks is monthly newsletter containing market insights and analysis from NAAIM member firms. “Speaks” is designed to provide a plethora of market analysis, indicators, some occasional humor, as well as a summary of NAAIM’s proprietary Dynamic Asset Allocation Model and Managers Exposure Index. The report is for informational uses only and is not to be construed as investment advice.

You Knew It Was Coming, Right?

By: David Moenning, Heritage Capital Research

Published: 9.4.20

The fact that the market suddenly fell, without notice, and on no news, should not come as ANY surprise to readers of this oftentimes meandering morning market missive. As I wrote on Wednesday, “The market continues to grind higher on a daily basis here and there has been little-to-no downside action since the end of June. And while I do believe we’ve got a “good overbought” condition on our hands, we have seen this movie before. If the market follows the script, we can expect a scary decline in response to whatever fear comes out of the woodwork next.” The question, of course, is why did stocks finally start to dive?

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The Ugly Stick Out In Full Force

By: Paul Schatz, Heritage Capital LLC

Published: 9.4.20

As the calendar has turned to September, let’s not forget all of the pundits who incorrectly warned about August being such a tough month. While there is nothing wrong with being wrong (I do it every day), there is a lot wrong when you are lazy and do not do your homework. Those who painted August with a broad brush just recited some stat they saw on Twitter. Instead, they should have been reading this blog and learning about the details of August in an election year. Moving on, September got off to good start in the Dow Industrials, less so in the other indices. Then the NASDAQ 100 and the Fab Five Plus got hit with the ugly stick …

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The Message From the NAAIM Indicator Wall: Don’t Say We Didn’t Warn You

By: National Association of Active Investment Managers

Updated: 3.2.20

The NAAIM Indicator Wall provides a weekly update to a robust array of stock market indicators. The “wall” includes readings and explanations of indicators and/or models in the areas of price/trend, momentum, key price levels, overbought/sold readings, sentiment, monetary, economic, inflation, and market cycles.

This time, we’re featuring the Early Warning Indicator Board , which is designed to identify when the table is set for a countertrend move.

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Link to NAAIM Indicator Wall

Note: The Indicator Wall is a benefit provided to NAAIM Members and is password protected. To obtain a temporary password, contact NAAIM at 888-261-0787.

What Is Normal Anyway?

By: Ryan C. Redfern ShadowRidge Asset Management

Published: 8.31.20

Things feel like they are getting back to normal. At least in the stock market. But wait, don’t we still have high unemployment? A previously inverted yield curve? Small businesses failing at an alarming rate due to COVID? The answers are all still a resounding YES. The only saving factor we can possibly see is the Federal Reserve doing all it can to keep things stable. There is an old saying “don’t fight the Fed.” So, we won’t spend too much time on the “why” question and stay focused on “what” is actually happening in the stock market. In this month’s chart, let’s go back to the VIX chart we used earlier this year. The higher than normal reading has us intrigued, as a “normal” (what is normal, anyway?)

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Just a Pause, Or?

By: Rob Bernstein, RGB Capital Group

Published: 9.8.20

The short-term weakness in the equity markets is not too surprising given the consistent uptrend that started earlier this year. The stock market does not trend up in a straight line, but rather moves in a series of up legs and down legs. As long as the up legs are stronger than the down legs, the market is considered to be in an uptrend. It is too early to tell if the market has entered into a significant decline or this is just a pause in the strong, intermediate-term uptrend that started in late March…

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The NAAIM Dynamic Allocation Model

Designed to be a value-add benefit to membership, NAAIM offers a Dynamic Asset Allocation Model based on the NAAIM Indicator Wall of indicators and models. The overall objective of the model portfolio is to dynamically adapt to changing market environments and to keep equity exposure in line with conditions. The model targets a normalized allocation of 60% stocks and 40% Bonds.

Here is this week’s model allocation:

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The model has been run live on the NAAIM website for several years and has demonstrated the ability to reduce exposure to market risk during negative environments such as those seen in 2015-16 and 2018.

More on the Dynamic Allocation Model and Historical Readings

The NAAIM Dynamic Allocation Model is for illustrative and informational purposes only, and does not in any way represent an endorsement by NAAIM or an investment recommendation.

The Fall and Fall Football

By: Sam and Bo Bills Bills Asset Management

Published: 9.4.20

Market complacency was apparent over the last several weeks, so it was just a matter of time before profit taking and fear returned to the markets. That happened yesterday. The question now becomes if this is the start of a protracted down move or just a short bout of market weakness. Frankly, it could go either way. On the plus side, the markets have been fueled by Fed and congressional liquidity which is likely to continue (though Congress is dragging their feet on another stimulus package, we believe something will eventually be done). On the negative side…

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Let’s Look At The Facts

By: Craig Thompson, President Asset Solutions

Published: 9.7.20

It is easy to let emotions impact your investment decisions when market volatility rises, but this is often a mistake. Instead, we should look at the market from a technical perspective and base our market thesis and investment allocations on fact, not emotion.

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Are You Worried About the Fed’s Balance Sheet?

By: Dexter P. Lyons Issachar Fund

Published: 8.30.20

The Fed’s balance sheet declined about $20 billion last week, but I am not too concerned! The Fed chairman, Jay Powell, announced they would like to see a 2% average inflation rate in the US economy and the market seemed to agree. This 2% inflation average tells me that they may see inflation on the horizon above 2% and they did not want it to spook the market if it became a reality….

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The NAAIM Member Exposure Index: Managers Started to Shed Exposure

The NAAIM Exposure Index represents the average exposure to US Equity markets as reported by our members in the organization’s weekly survey. Note that many NAAIM members are risk managers and tend to reduce exposure to the markets during high risk environments.

The last week’s exposure reading was 94.7, which was starting to decline as stocks hit their recent peak…

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More on the NAAIM Exposure Index

NOT INVESTMENT ADVICE. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Investors should always consult an investment professional before making any investment.

Tags: NAAIM, NAAIM Speaks, Stocks market analysis, Stock Market Analysis, Stock market, stock market indicators, David Moenning, Paul Schatz, Rob Bernstein, Ryan Redfern, Sam Bills, Bo Bills, Dexter Lyons, Craig Thompson, Len Fox, NAAIM Exposure Index, NAAIM Dynamic Allocation Model