The MSCI World Index (AWII) continues to outperform the broad based Commodities Index, with prices rising in a steepening trend. Warning signals continue to appear on the very overbought RSI, suggesting caution into following this sharp rally. Risk remains for a ‘bubble’, which, when corrected, will likely be swift and deep. With this in mind, we remain cautious about this rally, and advise risk-averse investors to use equity strength to reduce equity exposure, and move towards a more neutral equity/commodity allocation.
