Key Takeaway: In light of the recent breadth deterioration and with continuing evidence that sentiment has reversed after reaching an extreme, we have reduced equity exposure and raised cash in our Tactical Opportunity portfolio.
More Context: Our “Fear or Strength” model has turned negative as new lows have eclipsed new highs but complacency still abounds. Optimism is in retreat, but the recent pattern suggests risks intensify further after the II bull-bear spread drops below 20%.
