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Waiting for clarity from the Nov 30 Powell speech

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...

A cyclical rebound mirage?

I highlighted a widening gulf between the technical and macro outlook in August (see “Price leads fundamentals”, or “Don’t fight the Fed”?). At the time, the technical indicators were wildly bullish because of strong price momentum, while the macro outlook was cautious. The macro view eventually won out.   A similar divide may be appearing...

Things are breaking beneath the surface

Mid-week market update: I thought that I would publish an early mid-week market update in light of the shortened US Thanksgiving trading week. As the S&P 500 consolidates in a narrow range between 3900 and 4000, things are breaking beneath the surface.   Let’s begin the analysis at the extreme risk part of the market....

Sentiment whipsaws are masking the bear trend

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 Fed cratered stock-bond diversification, what’s next?

The performance of balanced funds has become especially challenging in 2022. In most recessionary equity bear markets, falling stock prices were offset by rising bond prices or falling bond yields. The fixed income component of a balanced fund portfolio has usually acted as a counterweight to equities.     Not so in 2022. You would...

Time to jump on the year-end rally bandwagon?

Mid-week market update: The stock market surged last week in reaction to the soft CPI reading. It got better news this week when PPI came in lower than expected. As well, China unveiled a 16-point package to try and stabilize its cratering property market and softened some of its Zero COVID policies. Berkshire Hathaway unveiled...

Soft CPI is helpful, but it’s still a bear market

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...

Who’s swimming naked as the tide goes out?

Warren Buffett famously said that when the tide goes out, you find out who has been swimming naked. Now that the Fed is tightening financial conditions and the tide is going out, I undertake an analysis to find out what countries and sectors have been swimming naked, and who has been opportunistically swimming with the...

Why the risk-off tone? Isn’t divided government bullish?

Mid-week market update: Why have the markets gone risk-off? Isn’t divided government supposed to be equity bullish?   While the exact results of the mid-term elections aren’t known just yet, polling models and PredictIt odds, which represent consensus expectations, show a narrow Republican majority in the House and a probable Democrat control of the Senate....

The hidden story of investor capitulation

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...