The last time I published a post in a series of "things you don't see at market bottoms" based on US based investor enthusiasm was in January. That's because market exuberance had significantly moderated since the January top. Guess, what, the giddiness is baack! As a reminder, it is said that while bottoms are events,...
Mid-week market update: Since early May, it has been evident that the bulls have regained control of the tape (see The bulls are back in town). Not much can faze this market. Even today's hawkish Fed rate hike left the market down only -0.4% on the day. The question for investors then becomes how far...
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...
Mid-week market update: Sell in May? June swoon? Not so far! As the SPX convincingly staged an upside breakout above the 2740 resistance level, the bull case is easy to make. We have seen fresh all-time highs this week from the following: NASDAQ Composite Russell 2000 small caps NYSE Advance-Decline Line NASDAQ Advance-Decline Line I...
Do you really want to be a contrarian investor? Most of the time, being contrarian means that your investment views are far from the crowd, and you will feel very isolated and uncomfortable. With that preface in mind, I offer two uncomfortable contrarian trades, based purely on technical analysis. Fading a NAFTA breakdown Let’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...
Mid-week market update: Callum Thomas conducts a regular weekly (unscientific) Twitter poll of equity market sentiment, and the latest results show that both fundamental and technical bullishness are falling. These readings suggest that bullish momentum is waning. Indeed, daily MACD has been decelerating and turned negative this week, indicating that the bears are taking...
Brett Steenberger recently warned that traders about trading on noise, which is advice to which I wholeheartedly agree: In other words, before we can determine whether or not we have an edge (in systematic or discretionary trading), we need to establish knowledge. A theory explains how and why something occurs. Testing of historical data can...
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...
Was the recent big tax cut not enough? CNBC reported that President Trump is proposing further tax cuts before November. He went on to pressure Congress to enact funding for his budget priorities on Twitter. These actions prompted Steve Collender (aka @thebudgetguy) to declare in a Forbes article that Trump May Be The...
Mid-week market update: There remains a fair amount of stock market skittishness among my readers and on my social media feed. Let me assure everyone that bear markets simply don`t start this way. SentimenTrader has an intermediate to long-term sentiment model called AIM "which averages the momentum of the four major sentiment surveys". This model...
Back in March, I wrote about the new Fragile Five, which were five highly leveraged developed market economies that were undergoing property booms. The five countries are Australia, Canada, New Zealand, Norway, and Sweden. As a reminder of how insane property prices are in Vancouver, which is one of the epicenters of the real estate boom,...
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...
Mid-week market update: Charles Dow once characterized the stock market`s price movement as being composed of tides, waves, and ripples. We can see a mini version of this thesis by the market's action in the past week. The major indices had staged an upside breakout through a downtrend and sentiment had turned bullish. This...
The Treasury market rallied last week when the 10-year Treasury yield tested the 3% level and pulled back. The decline in yields (and bond prices rally) was not a big surprise for a number of reasons: 10-year yields (TNX) was exhibiting a negative RSI divergence A tamer than expected Consumer Price Index Hedge...
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...
Mid-week market update: In my last mid-week market update (see Still choppy, still consolidating), I highlighted the weekly (unscientific) sentiment survey conducted by Callum Thomas. The poll showed fundamentally oriented investors to be very bullish, while technical survey was bearish. I suggested at the time that one of the signs that the sideways consolidation may...
Over the years, I have had a number of discussions with traders who have religiously embraced specific trading systems and investment disciplines. This is a cautionary tale of how systems fail. Charlie Bilello won the NAAIM Wagner Award for his work on the lumber/gold ratio: Lumber’s sensitivity to housing, a key source of domestic economic...
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...
Mid-week market update: Stock prices are still consolidating sideways. The technical pattern could either be described as range-bound, or as a triangle. The market tested the bottom of the triangle this week, but support held. The market indecision could be traced to the continued disagreement between fundamental and technical investors. Several weeks ago, I...
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