The CMG Managed HY Bond Program moved back to a buy signal early this week. Bonds (the Zweig Bond Model remains in a buy signal), emerging markets, even gold (gold remains in a buy signal below) are all moving higher.
Also notable last week: the 13-week Exponential Moving Average (EMA) line crossed above the longer-term 34-week EMA line. Trend followers smooth the historical price performance and, when a shorter-term trend line crossed above or below, it identifies a change in trend.
Do you see how the large market declines tend to occur when the short-term blue line dropped below the long-term red line? In simple English, the trend evidence (by this measure) has just turned bullish.
My favorite “weight of evidence” indicator is our CMG Ned Davis Research (NDR) Large Cap Momentum Index. It remains in a cyclical trend “neutral” signal. There is not yet enough technical evidence to turn this indicator bullish. I like hedging equity exposure when it is in a sell signal and raising some cash. Since the sell signal, the S&P 500 Index is up by approximately 0.5%. Overall, I’m neutral on the equity market and concerned about the high valuations. Please refer to my recent piece, “A Powerful and Reliable Determinant of Long-Term Investment Returns.”
By Steve Blumenthal | See the full story in Trade Signals: Neutral on Trend & Sentiment: Bullish on Bonds & Gold
The current opinions and forecasts expressed herein are solely those of Steve Blumenthal and are subject to change. They do not represent the opinions of CMG. CMGs trading strategies are quantitative and may hold a position that at any given time does not reflect Steve’s forecasts. Steve’s opinions and forecasts may not actually come to pass. Information on this site should not be used as a recommendation to buy or sell any investment product or strategy.