The same type of weakness has developed in the S&P 500. The Bullish Percentage Index (BPI) has fallen to 62%, suggesting less and less participation by components of the heralded benchmark.
In my estimation, absent the Federal Reserve emphasizing the possibility of pushing rate hikes off into the wintertime or even into Q1 2016, cash may be king amid increasing uncertainty and volatility. Many of my clients have 15%-25% in cash equivalents at this time.
For those who have been tracking my many of my core holdings over the years, I maintain assets such as iShares US Minimum Volatility (USMV), Vanguard Mid Cap Value (VOE), iShares S&P 100 (OEF), iShares Currency Hedged EAFE (HEFA) and Vanguard Europe Pacific (VEA). The higher-than-typical cash level has come from the selling of assets that hit stop-limit loss orders and/or breached key trendlines. We no longer have an allocation to Vanguard Long-Term Bond (BLV) in actively managed portfolios; for the most part, we no longer hold iShares Currency Hedged Germany (HEWG).
