There was another change in the major asset class DALI rankings today with commodities moving up to the top spot.
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There was another change in the major asset class DALI rankings today with commodities moving up to the top spot. International equities fell to second place while domestic equities now sit in third. The three asset classes are separated by a measly three signals with international equities and domestic equities tied in total signal count. This is the fourth ranking change for domestic equities in the last three months. Interestingly, domestic equities have not lost any signals in over a month which shows that the recent ranking changes are more attributable to commodities and international equities picking up signals. International equities have seen the biggest improvement over the last month, gaining 14 signals. Meanwhile, cash, currencies, and fixed income continue to bleed signals. While there is not a clear number one asset class right now, there is a clear divide between the top and bottom three groups. Given the lack of a clear leader within the DALI rankings, those following the asset allocation tool may want to wait for a clear leader to emerge before making any big changes.
The driver behind the signal increase for commodities yesterday came solely from the Invesco DB Oil Fund (DBO) which has quickly moved higher because of regional tensions escalating in the Middle East. DBO barely has an acceptable fund score of 3.15 and is now trading in heavily overbought territory with a weekly overbought/oversold reading of 90%. The primary strength within commodities over the last year has been precious metals, particularly gold which has not changed despite a strong rally from energy over the last few weeks. Furthermore, with the jump in commodities to the top spot being driven by a weak area within the asset class, it would be prudent to wait for further improvement before picking up broad commodities exposure at this time. As mentioned earlier, DBO trades in heavily overbought territory and also has hefty resistance above ranging from $15.75 to $16.25.
