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<h2>August 20, 2021:  Based on the persistence of recent technical divergences and the emergence of new warning flags...</h2>
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<p><strong>We are making the following incremental reductions in the Model Fund Portfolio:</strong></p>
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<p><strong>·&nbsp;&nbsp;Decrease the position in the Vaneck Vectors Gold Miners ETF (symbol: GDX) from 7% to 5%.</strong></p>
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<p><strong>·&nbsp;&nbsp;Decrease the position in the Industrial Select Sector SPDR ETF (symbol: XLI) from 8% to 6%.</strong></p>
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<p><strong></strong><strong>While an allocation to Gold Miners remains prudent given uncertainties surrounding the Fed’s monetary experiment and increasing inflationary pressures, technical deterioration has reached a point that a reduction in this position is warranted. Additionally, due to its inherent cyclicality, a reduction to the Industrial Sector is being made.</strong></p>
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<p>The S&amp;P 500 is on track to close the week in the red, as the market negatively reacted to the Federal Reserve’s meeting minutes which showed that they may begin reducing their bond purchases later this year.</p>
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<p>This week’s economic reports highlighted disappointing housing data. The NAHB Builder Confidence survey fell to a 13-month low this month as runaway home prices and rising inflation weighed on the sentiment of homebuilders. Likewise, housing starts fell by -7.0% in July, which was far weaker than the -2.3% expected by economists.</p>
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<p>The cautionary flags in the technical data remain in place. Market breadth has continued to deteriorate, keeping the divergences in key secondary indexes and in the Advance-Decline Line intact. And with the InvesTech Canary Index continuing to trend downward, it is becoming increasingly likely that the peak in speculation could already be in place.</p>
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<p><strong>Strategy:&nbsp;</strong>In this issue of&nbsp;<em>InvesTech Research&nbsp;</em>(available later today on our website), we dive headfirst into the housing bubble debate and explore&nbsp;<em>three</em>&nbsp;new warning flags that have appeared since our last issue. With the emergence of these risks, and with areas of continued technical weakness, we are incrementally adding to our defensive cash reserve. The Model Fund Portfolio is now 74% invested with 26% in short-term Treasurys or a money market fund.</p>
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