Welcome to the coming global recession. We can debate all day about the global growth outlook, but consider this: Global Manufacturing PMI has fallen to 48.5, indicating contraction. It's the first negative reading since the COVID Crash of 2020. The signs of deceleration have been confirmed by the G10 Economic Surprise Index, which...
Mid-week market update: Happy Price Stability Day to you! Ahead of the FOMC meeting, I had been pounding the table that market expectations were unrealistically hawkish. The market was discounting strong rate hikes well beyond the Fed's stated median neutral rate of 2.4%, according to the March Summary of Economic Projections. Combine...
Since the publication of my weekend trading update (see Will the Fed rally or tank markets?), a number of additional sentiment readings have come to light that may be relevant to traders and investors. The historic almost off-the-chart levels of bearishness of the AAII weekly sentiment survey has been known for several days, but there'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...
The Economist is becoming known as a source of the contrarian magazine cover indicator. As the world holds its collective breath for the FOMC decision next week, the recent cover of the magazine begs a number of important questions for investors. How far beyond the inflation-fighting curve is the Fed? What are the likely policy...
Mid-week market update: As the S&P 500 tests the lows for 2022, the question for investors and traders is whether support will hold. The analysis of the large-cap S&P 500, the mid-cap S&P 400, and the small-cap Russell 2000 presents a mixed picture. While large and mid-caps appear to be holding support, small-caps look wobbly....
I recently suggested a number of long/short pair trades as a way of achieving performance in an uncertain and choppy market. Inflation hedge vehicles have begun to underperform, and the subsequent performance of the pairs is revealing of the factors driving the current market environment. The four regional pairs were based on a theme...
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...
Recession fears have arrived on Main Street. From a statistical perspective, Google searches for "recession" have spiked. From an anecdotal perspective, recession talk has emerged as the talk of the party. These conditions beg three crucial questions for investors: Will there be a recession? If so, how much of the slowdown...
Mid-week market update: Cyclical industries have caught a bid in the last week. That's not a big surprise as they have been badly clobbered relative to the market. Transportation stocks exhibited impressive strength as they regained relative support turned resistance level. However, the relative performance of all of the other industries was either below relative...
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...
In bull markets, valuation generally doesn`t matter very much unless it reaches a nosebleed extreme, such as the NASDAQ Bubble. In bear markets, valuation defines the downside risk in equity prices. As the Powell Fed has signaled it is dead set on a hawkish policy that does not preclude inducing a recession, valuation will...
Mid-week market update: In case you missed it, the market recently flashed a Hindenburg Omen last week. The criteria for the Omen was succinctly explained by David Keller as: The market is in an established uptrend; A sharp expansion in both new highs and new lows, indicating indecision; and A momentum break. To...
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...
Take a look at this mystery chart. Is that a bullish or bearish pattern? This chart is just the start of my nine reasons to be bearish on risk assets. My analysis is mainly based on real-time pricing signals from the market and relies less on fundamental or macro analysis. This is a...
Mid-week market update: There had been some recent buzz around the positive effects of price momentum on stock prices (see The breadth thrust controversy). In particular, Ed Clissold at NDR highlighted several breadth thrust buy signals, which are based on the positive effects of price momentum. Since then, the equity rally has fizzled and the...
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...
An unusual divergence has appeared between the VIX Index and MOVE, which measures the implied volatility of the bond market. While MOVE has spiked, VIX has fallen. The difference in the two indicators can be explained by two forces that affect markets today, namely geopolitical risk and macro risk as defined by the...
Mid-week market update: Before the war began, I wrote that investors should Buy to the sound of cannons. Historically, investors have been rewarded by buying sudden geopolitically related downdrafts. The corollary is "sell to the sound of trumpets", or news of peace. US equity indices across all market cap bands staged upside breakouts through...
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...
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