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 Model is an asset …
The things you don’t see at market bottoms: No fear edition
It is said that while bottoms are events, but tops are processes. Translated, markets bottom out when panic sets in, and therefore they can be more easily identifiable. By contrast, market tops form when a series of conditions come together, but not necessarily all at the same time. I have stated that while I don’t believe that the stock market …
Bullish exhaustion
Mid-week market update: You can tell a lot about the tone of the tape by how it reacts to news. There is growing evidence that the stock market is becoming immune to good news, which is a signal of bullish exhaustion. In all likelihood, the near-term path of least resistance for stock prices is down. The results from Q2 Earnings …
How Covel inadvertently exposed the chasm between investors and traders
As a rule, I don’t do book reviews. However, regular readers know that I am a big fan of trend following models and I use them extensively in my asset allocation work. When a publicist offered a free review copy of Michael Covel’s Trend Following, 5th Edition: How to Make a Fortune in Bull, Bear and Black Swan Markets, I …
No one rings a bell at the top, but…
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 Model is an asset …
Curb your (bullish) enthusiasm
Mid-week market update: Subscribers received an email update of the tactically fragile environment for US equities on Monday. There are plenty of reasons to be cautious. Trade Followers observed that the Twitter breadth of all sectors are bullish, and such conditions are reflective of overbought market conditions: Last week, sector sentiment gleaned from the Twitter stream had every sector positive. …
Why the labor market is tighter than you think
As the FOMC meets this week, one key question for Fed policy makers is, “How tight is the labor market?” A related question is, “In the face of tame inflation statistics, when are we going to see evidence of rising wage growth?” Both questions are important for monetary policy. The New York Times had an article that lamented the lack …
What would a contrarian do?
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 Model is an asset …
Things you don’t see at market bottoms: Wild claims edition
It is said that while bottoms are events, but tops are processes. Translated, markets bottom out when panic sets in, and therefore they can be more easily identifiable. By contrast, market tops form when a series of conditions come together, but not necessarily all at the same time. I have stated that while I don’t believe that the stock market …
What’s the upside target in this rally?
Mid-week market update: As the major US equity indices reach fresh all-time highs, it is time to ponder the question of how far the current upleg is likely to carry us. While technical analysts have several techniques available at their fingertips, I rely mostly on the venerable point and figure charting system (click link for primer), which was first used in …
In search of the elusive inflation surge
US bond yields began to settle down last week when Fed Chair Janet Yellen stated in her Congressional testimony that the neutral rate for Fed Funds is roughly the inflation rate, which is much lower than market expectations. In addition, she allowed that the Fed is likely to re-evaluate its tightening path in light of tame inflation figures. Even Fed …
Looking for froth in the wrong places
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 Model is an asset …
Things you don’t see at market bottoms, Retailphoria edition
It is said that while bottoms are events, but tops are processes. Translated, markets bottom out when panic sets in, and therefore they can be more easily identifiable. By contrast, market tops form when a series of conditions come together, but not necessarily all at the same time. I have stated that while I don’t believe that the stock market …
U-S-A! U-S-A!
Mid-week market update: Having reviewed sector rotation last week (see More evidence of an emerging reflationary rebound), it is time to apply the same analysis to countries and regions. First, let’s start with a primer of our analytic tool. Relative Rotation Graphs, or RRG charts, are a way of depicting the changes in leadership in different groups, such as sectors, …
Are stocks being stalked by a silent Zombie Apocalypse?
There was some minor buzz on the internet when Jonathan Tepper tweeted the following BIS chart and rhetorically asked if zombie firms was the cause of falling productivity during this expansion. BIS defines a “zombie” firm as a company that has been listed for 10 years or more and has an EBIT interest coverage of less than 1. As the …
A mid-year review of 2018 recession risk
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 Model is an asset …
The things you don’t see at market bottoms, bullish bandwagon edition
It is said that while bottoms are events, but tops are processes. Translated, markets bottom out when panic sets in, and therefore they can be more easily identifiable. By contrast, market tops form when a series of conditions come together, but not necessarily all at the same time. I have stated that while I don’t believe that the stock market …
More evidence of an emerging reflationary rebound
Mid-week market update: Further to my last post (see Nearing the terminal phase of this equity bull), There are numerous signs that the market’s animal spirits are getting set for a reflationary stock market rally. First of all, the BAML Fund Manager Survey shows that a predominant majority of institutional managers believe that we are in the late cycle phase of …
Nearing the terminal phase of this equity bull
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 Model is an asset …
Things you don’t see at market bottoms, 29-Jun-2017
It is said that while bottoms are events, but tops are processes. Translated, markets bottom out when panic sets in, and therefore they can be more easily identifiable. By contrast, market tops form when a series of conditions come together, but not necessarily all at the same time. I have stated that while I don’t believe that the stock market …