There was some consternation among equity bulls when the S&P 500 violated its 200 dma as it could have been the signal of a major bearish episode. Technical analysts offered some relief when they pointed out that it’s the slope of the 200 dma that matters. The historical evidence shows violations of the 200...
Mid-week market update: I told you so. As I recently pointed out, psychology had become too stressed to the downside, which opened the door to a relief rally. The NAAIM Exposure Index, which measures the sentiment of RIAs who manage individual investors’ funds, fell sharply last week and below its 26-week Bollinger Band. Historically, theses...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Has the Fed managed to achieve a soft landing? If so, Jerome Powell will go down in Federal Reserve history as a legend, and one of the greatest Fed Chairs who occupied that position. There is some cause for optimism. The latest flash PMIs show that U.S. and China manufacturing PMI on the rebound,...
Mid-week market update: There was a lot of angst last week about how Treasury market, whose yields had been rising steadily, was the main driver of risk appetite. When I saw this cartoon circulating, I thought that it marked the top in yields as a contrarian indicator. Indeed, the bond market rallied when Bill Ackman...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Oil prices have jumped over $6 a barrel since the Hamas attack on Israel as a geopolitical risk premium became embedded in the oil price. The surprise attack brought up memories of the Yom Kippur War 50 years ago, in which the armies of Egypt and Syria launched a simultaneous surprise attack on Yom Kippur...
Mid-week market update: The S&P 500 bounce stalled at the 4380-4400 resistance zone, which is just below its 50 dma. I continue to believe that the next major move is up. Here’s why. Bond market tantrum Stock prices have been affected by the tantrum in the bond market. The price of...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The...
About a week ago, market anxiety was high over surging Treasury yields, which was attributed to concerns over a soaring fiscal deficit and a rising supply of Treasury paper. This led to upward pressure on the term premium, or compensation for holding longer duration assets, and real yields. Here’s what has happened since...
Mid-week market update: This relief rally from last week’s lows has been stunning. The stock market shrugged off a hot employment report, a Middle East war that could set off an oil price surge, and a hot PPI print this morning to rise 3.5% off last week’s lows. But it may be time for a...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The...
What’s bothering the bond market? The 10-year Treasury yield (blue line) has shot up to levels last seen just before the GFC. The surge in yields has occurred just as investors are seeing better news on inflation. At the same time, core PCE (red line) has been falling. Shouldn’t that be good news for the...
Mid-week market update: You know things are bad when 1987 parallels come out of the woodwork. The key difference is the Fed and the USD. In 1987, the Fed implemented a series of inter-meeting rate hikes to support the USD. The USD needs no support today. During these times of market stress, it’s...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Asset...
I highlighted a long-term buy signal in late July and early August when the monthly MACD of the NYSE Composite turned positive (see On the verge of a long-term buy signal and Trust (the bull), but verify (there’s no recession)). Historically, such buy signals have resolved in a bullish fashion with no bearish episodes and...
Mid-week market update: On the weekend, I stated that my base case was the S&P 500 decline would stop at August low support of 4350, but there was a 25% chance that it would test the next trend line support at roughly 4200, or the 200 dma. Now that we are nearing that level, what’s...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Last week, I pointed out that the Citi Inflation Surprise Index was turning up around the world. While one month doesn’t make a trend, what if the Fed is making a different kind of policy error? Instead of over-tightening into a recession, what if the U.S. economy achieves a soft landing or no landing and...
Mid-week market update: It was a hawkish pause. The Fed’s decided to leave rates unchanged, but in the Summary of Economic Projections (SEP), it acknowledged that the economy is strong than its June projections. More importantly, the Fed Funds target for the end of this year remains unchanged, indicating that FOMC members expect another quarter-point...
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