I just realized that I hadn't done one of these in about two months, but the model still just barely puts allocation at the 80% equity/20% bond split that it has since May. I will point out that the model has consistently described a positive environment from stocks and even with the summer sell-off, this has clearly been the right call in a macro sense. That being said, the signals are not as overwhelmingly bullish as they were in the summer after interest rates dropped through the floor while stocks took a 15%+ hair cut.
The aggregate composite indicator on which the allocation percentages are based was off the chart this summer in a way it had not been since March 2009 and in some respects it even exceeded those levels. Since then it has come down, though we are still in very bullish territory.
Based on this and a series of positive economic indicators, I think I very solid case can be made for a good stock market for at least the next six months barring a full-blown financial collapse in Europe, which is a possibility.
Happy New Year, and I am glad that we can end on a positive note.