CCM Clients: We still have a few things to look at today, but the odds are very good we will raise some cash before the market closes. The CCM 80-20 Correction Index did hit the low-end of an unfavorable zone in terms of the market’s risk-reward profile over the next month. The 80-20 Index also indicates a mixed outlook in terms of risk-reward over the next three months. Any decision to raise some cash today would be based on elevated risks of a correction. If a correction takes hold for a few weeks, we may get an opportunity to redeploy cash at lower levels. Raising some cash would also allow us to reduce volatility in our portfolios.
The up/down volume stats for today (as of 11:50 a.m. ET) are very weak, which is an indication of a high-degree of risk aversion. Trading volume is elevated relative to yesterday’s level, which is also a short-term bearish sign. We will see how the rest of the day plays out, but an intraday reversal does not seem likely at this point.
In order to determine the best sell candidates, we are using our models to compare all our holdings head-to-head. A good rule of thumb is to sell your weakest positions first. The models take into account relative performance over numerous intervals looking back one year. We also use a scoring system to compare the daily, weekly, and monthly charts of all our holdings, allowing us to perform relative rankings.