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In his latest weekly note, fund manager John Hussman<\/a> introduces readers to what he calls “Aunt Minnies” of the market.<\/p>\n Over the years, I’ve noted that certain subsets of market conditions – occurring together – are associated with very specific outcomes, such as oncoming recessions<\/a>, abrupt market weakness<\/a>, strength in precious metals<\/a>, and so forth. Such indicator subsets, or Aunt Minnies, are essentially “signatures” that often have very specific implications. In medicine, an Aunt Minnie is a particular set of symptoms that is “pathognomonic” (distinctly characteristic) of a specific disease, even if each of the individual symptoms might be fairly common. Last week, we observed an Aunt Minnie featuring a collapse in market internals that has historically been associated with sharply negative market implications. <\/span><\/p>\n Of the 3257 issues traded on the NYSE last week, 2955 declined and just 275 advanced. The S&P 500 has now abruptly erased nearly 8 months of progress. Moreover, we observed a “leadership reversal” with new 52-week lows flipping above the number of new 52-week highs. Our broader measures of market action deteriorated to a negative position as well. Historically, we can identify 19 instances in the past 50 years where the weekly data featured broadly negative internals, coupled with at least 3-to-1 negative breadth, and a leadership reversal. On average, the S&P 500 lost another 7% within the next 12 weeks (based on weekly closing data), widening to an average loss of nearly 20% within the next 12 months – often substantially more when the Aunt Minnie occurred with rich valuations and elevated bullish sentiment.<\/p>\n So, not surprisingly, he remains quite negative…<\/p>\n On last week’s selloff, we did shift about 2% more of the Strategic Total Return Fund’s assets toward precious metals (now at a still very small 4% exposure)<\/strong><\/span>, with about 4% of assets in utility shares, and about another 3% in foreign currencies. The bulk of the Fund’s assets, of course, are in Treasuries, with a duration of just under 4 years – primarily in straight, intermediate-term Treasury bonds. Most likely, we will have numerous opportunities to shift our investment positions to reflect a longer-term outcome of inflation and generally rising interest rates in the second half of this decade. For now, credit fears are likely to boost demand for default-free government liabilities, holding down inflation pressures and prompting (ultimately incorrectly) less eager demand for commodity-related securities.<\/p>\n Contra Hussman’s view, here’s Deutsche Bank on why a groundwell of bullish data will send stocks higher ><\/a><\/strong><\/p>\n