Time to take a serious look at US large-cap stock plays

Covestor portfolios: Tactical All Asset and Tactical Growth

The environment for domestic large cap stocks is bullish. With both intermediate and short-term bullish strategy indicators, an allocation to the Vanguard S&P 500 Index ETF (VOO) will be utilized. With a long-term bearish technical indicator backdrop, a turn in trend and volatility toward bearishness will be watched for closely.

Below is the latest update from TG Asset Management– Tactical All Asset Strategy for Wealth Protection & Growth May, 2012.

Bottom Line: Optimism surrounding the U.S. economy may push stock prices higher. With a bullish trend backdrop and lower volatility, an allocation to domestic large cap stocks is optimal at this time.

Ø Long-Term Stock Pattern (3-5 yrs) – Bearish, Stock prices are approaching a potential top

Ø Intermediate-Term Stock Trend (1 year) - Bullish, Stock prices are headed higher

Ø Short-Term Stock Volatility (30 days) - Bullish, Stock prices are headed higher

Ø CURRENT ASSET ALLOCATION OBJECTIVE – GROWTH

Technical, Trend, & Volatility Indicators

Strategy Indicators:

TECHNICAL PATTERN: BEARISH; Stock prices are near their all time 2007 highs. The technical wave count suggests that these highs will not be exceeded yet the overall wave count and direction are open to interpretation.

TREND: BULLISH; The trend in stocks is bullish despite a pullback from their recent end of March highs. The overall trend has been bullish since late December 2011. A definitive pull back below 1275 in the S&P 500 would turn the trend from bullish to bearish.

VOLATILITY: BULLISH; The S&P 500 VIX hit a recent high of 20.39 on April 10 and since then has been trending lower, closing at 17.15 on April 30th. Lower VIX levels with a downward direction are undoubtedly bullish for stocks.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.