WEGENER, LLC - Adaptive Asset Management

Ideal Stock Market Exposure Lowered

Our Long Term Reversal Factors remain negative. Our Short Term Trend Factors have again turned negative.  Our Ideal Market Exposure has been lowered to 0%.

This returns us to the environment that we discussed here.

Ideal Stock Market Exposure Increased

Our Long Term Reversal Factors remain negative. Our Short Term Trend Factors have again turned positive.  Our Ideal Market Exposure has been increased to 70-80%.

This returns us to the environment that we discussed here.

Ideal Stock Market Exposure Lowered

Our Long Term Reversal Factors remain negative. Our Short Term Trend Factors have turned negative.  Our Ideal Market Exposure has been lowered to 0%.

The recent change is consistent with a bear market and the market moving below its August low by the end of next couple weeks. However, we can't rule our Short Term Trend Factors again turning positive as soon as next week. 

Overall this is a negative environment for stocks, on average it produces negative returns, and some of those instances historically are extremely negative. So it is important that market exposure be reduced here.

 

Ideal Stock Market Exposure Increased

Our Long Term Reversal Factors remain negative. Our Short Term Trend Factors turned positive at the start of the week.  Our Ideal Market Exposure has been increased to 70-80%.

This is consistent with the end of a correction within a bull or bear market and a couple months where the market recovers some of its recent losses. While we can only know whether we are in a bull or bear market in hindsight, if we are still in a bull market we typically see a full recovery. If we are in a bear market we would only expect a partial recovery of recent losses.

There is also the potential, typically in a bear market, for our Short Term Trend Factors to abruptly shift negative, which could cause us to reduce our Ideal Market Exposure at a time when the stock market is trading at a lower level than it is trading today.

 

Ideal Stock Market Exposure - No Change

Our Long Term Reversal Factors and Intermediate Trend Factors remain negative. Our Ideal Stock Market Exposure remains 0%.

Ideal Stock Market Exposure - No Change

Our Long Term Reversal Factors and Intermediate Trend Factors remain negative. Our Ideal Stock Market Exposure remains 0%.

Ideal Stock Market Exposure - No Change

Our Long Term Reversal Factors and Intermediate Trend Factors remain negative. Our Ideal Stock Market Exposure remains 0%.

Ideal Stock Market Exposure Lowered

Our Intermediate Trend Factors have turned negative.  Our Long Term Reversal Factors remain negative.  

The current combination is on average negative for the stock market and historically the stock market has produced a negative return. It also encompasses the 1929 crash, most of the 1973-74 bear market, 1987 crash, most of the 2000-2002 bear market, and most of the 2007-2009 bear market.

The Trend turning negative with this type of recent decline is going to make the normal range of short term outcomes even more extreme. The market could produce a relatively strong rally that we would expect to fail as long as the Trend remains negative. However, the market could also fall significantly further. So it is important to reduce market exposure even on this type of decline.  Our Ideal Stock Market Exposure has been lowered to 0%.

Ideal Stock Market Exposure - No Change

Our Long Term Reversal Factors remain negative. Our Intermediate Trend Factors remain positive. Our Ideal Stock Market Exposure remains 70-80%.

Ideal Stock Market Exposure - No Change

Our Long Term Reversal Factors remain negative. Our Intermediate Trend Factors remain positive. Our Ideal Stock Market Exposure remains 70-80%.