Overhead resistance test = Possible weakness ahead

Mid-week market update; The S&P 500 has undergone a powerful rally off June’s bottom, but it’s now approaching technical resistance in the form of a 200 dma and a falling trend line. In addition, the market is overbought as measured by the 5 and 14-day RSIs, much in the manner of early November 2021.  ...

A warning from a market leadership review

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 overlooked reason why the market is so strong

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...

What’s “Black Swan” in Chinese?

Mid-week market update: Here we go again. Just when you thought world events were under control, House Speaker Nancy Pelosi’s visit to Taiwan raised the geopolitical risk premium.     And just as I predicted on the weekend (see In what world is fighting the Fed a good idea?), we’ve had a cacophony of Fed...

In what world is fighting the Fed a good idea?

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...

Bearishness begone!

The returns of my Trend Asset Allocation Model have been strong. Based on an “out of sample” record of signals from 2013 and a simulated portfolio that varies up to +/- 20% from a 60/40 benchmark, the model portfolio has managed to achieve equity-like returns with 60/40-like risk. Performance has also been consistently positive in...

Cutting through the noise: Why today’s Fed decision doesn’t matter

Mid-week market update: It’s always difficult to make a stock market comment on FOMC announcement day. Equity prices can exhibit strong reversals after the announcement and press conference. As well, it’s also not unusual for the move to reverse itself the next day.   It’s not clear whether the 2023 FOMC pattern of weakness into...

A powerful new bull? Don’t be fooled!

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...

Revealed, the secret lives of corporate insiders

Why are stocks rallying? Maybe it’s because for much of this year, corporate insiders have been stepping up to buy dips in the stock market. The purchases have occurred in the face of growing recession risk and apparent challenging valuations.     What does this group of “smart investors” know that we ordinary mortals don’t?...

An FOMC market nosedive ahead?

Mid-week market update: I recently identified a 2022 market formation where the S&P 500 declines into an FOMC meeting and rallies afterward. The key question for investors is whether the same pattern will repeat itself for the July meeting. If so, the market should top out about now.     Here are the bull and...

Three catalysts that could spark a “rip your face off” rally

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...

How to trade the hot CPI report

Mid-week market update: So much for the Cleveland Fed inflation nowcast which was calling for a tame CPI surprise. The market reacted to the hot CPI print this morning by adopting a risk-off tone, though it recovered later in the day.   For equity investors, keep in mind that the intermediate-term structure of the S&P 500...

China blinked, but can it save the world again?

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...

What if the market bottomed and no one realized it?

It's stunning how market psychology has changed. In the space of a few months, we've swung from "everyone is bullish" to "everyone is bearish". These results from the BoA Global Fund Manager Survey were done in early June and sentiment has likely deteriorated since then.     The good news is the market is becoming...

Numb to bad news

Mid-week market update: You can tell a lot about the tone of a stock market by the way it reacts to news. The 2s10s yield curve just inverted again, which has been a sign of an impending recession. If history is any guide, yield curve inversions have marked major market tops. The exceptions, shown as...

When does the pain end?

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...

Q2 earnings season = Market abyss?

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...