As of last week, the Market Climate for stocks remained mixed, with moderately unfavorable valuations, generally strong price trends and breadth, but a strenuous overbought condition and weak sponsorship evident in trading volume. The Strategic Growth Fund remains fully hedged here, but this does not reflect forecasts of an imminent decline. Rather, the overall return/risk profile of the market, given present conditions, is not sufficient to accept a significant amount of market risk. We would be inclined to re-establish our “anti-hedge” in index calls, or establish an otherwise marginally positive exposure, if the present overbought condition is cleared without a corresponding deterioration in market internals. For now, we remain defensive.
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