On August 3, we commented that recent breakdowns called for a defensive bias. Unfortunately, our concern about the market's intermediate-term outlook has become more acute in recent weeks as we noted on August 22. The research presented below highlights the significant downside risks that remain in the financial markets. Until conditions improve, we will maintain a very defensive/high cash posture.

Prior to Ben Bernanke's Jackson Hole remarks, we reviewed all 223 of the most liquid ETFs that we follow using the CCM Asset Allocation Model. The results of the screening and ranking process are not encouraging. Prior to the Jackson Hole speech, risk markets look absolutely terrible. The list below, with the exception of gold (GLD), points to deflationary outcomes. Fear of deflation could eventually induce more selling in gold and silver.

Notice the bearish tone of the top-rated positions in the table below - the VIX, shorts, bonds, and gold. Unless the tone of the market and the tape improve dramatically, all the evidence we have in hand before the open on August 26 points to significant downside risk in global equities. Note the positions listed below will be the exact wrong place to be in the event of a rally in risk assets, which is why we prefer to remain patient looking for better entry points and/or a read on the market's reaction to Jackson Hole.

Even in the top-rated ETFs above, we see little in terms of attractive risk-reward entry points. We like the short side of the market, but we would prefer to find a better entry point. Gold still looks good, but the recent volatility has a toppy characteristic to it. We will revisit the top fifty or so ETFs in our recent ranking post- Jackson Hole. We are open to better than expected outcomes, but there is very little evidence, if any, to support the bullish case. The tape needs to improve. The ETFs above could be very volatile - inexperienced investors and traders should be very careful.