S&P 500 Index 2071 (6/15/2016)
You’ll see in the indicators below that gold continues to perform well and remains in a defined cyclical uptrend. High yield moved to a sell signal early in the week. This was after a strong short-term performance gain. The fundamental outlook for high yield bonds remains challenged. We are currently positioned in Treasury bills. We expect defaults to increase sharply in the next recession. We favor tactical trend-following and setting stops to protect principal.
The Zweig Bond Model indicator remains in a buy signal, suggesting a positive environment for owning longer-dated Treasury bonds and high-quality corporate bonds. It has remained bullish on bonds for the majority of the last several years. Overall, it has been a good period to own bonds. When interest rates rise, longer-dated bonds will lose value. On sell signals, I use this indicator to shorten my portfolio’s high-quality fixed income exposure.
On the equity market: notable this week is that Volume Supply is now greater than Volume Demand – a bearish signal for the stock market. This means that the total volume of the stocks that are declining is greater than the total volume of the stocks that are advancing. More sellers than buyers.
Also, the CMG Ned Davis Research Large Cap Momentum Index remains in a sell signal. That signal occurred when the S&P 500 Index was at 2063. It closed at 2071 on June 15, 2016. Almost one year later, the market is up just 8 points. It reached 2093 in December 2014 and peaked at 2135 in May 2015. Bonds have performed much better over the same periods.
The most recent Trade Signals:
Equity Trade Signals (Green is Bullish, Orange is Neutral and Red is Bearish):
- CMG Ned Davis Research (NDR) Large Cap Momentum Index: Sell Signal – Bearish for Equities. (Last signal on June 30, 2015, S&P 500 Index level 2063.11)
- Long-term Trend (13/34-Week EMA) on the S&P 500 Index: Buy Signal – Bullish Cyclical Trend for Equities
- Volume Supply (selling) is greater than Volume Demand (buying): Sell Signal – Bearish for Equities
- NDR Big Mo: See note below (active signal: Buy signal on March 4, 2016 at 1999.99)
- Don’t Fight the Tape or the Fed: Indicator Reading = +1 (Bullish for Equities)
Investor Sentiment Indicators:
- NDR Crowd Sentiment Poll: Neutral Optimism (short-term Bullish for Equities)
- Daily Trading Sentiment Composite: Neutral (short-term Neutral for Equities)
Fixed Income Trade Signals:
- Zweig Bond Model: Buy Signal
- CMG Managed High Yield Bond Program: Sell Signal
Economic Indicators:
- Global Recession Watch Indicator – High Global Recession Risk
- U.S. Recession Watch Indicator – Low U.S. Recession Risk
Gold:
- 13-week vs. 34-week exponential moving average: Buy Signal – Bullish for Gold
Posted Wednesday, April 15. By Steve Blumenthal | For the rest of the story see Trades Signals: Gold Shines, HY Sells and S&P Remains Lower than it was in December 2014.
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.
