I believe China’s surprise Yuan devaluation keeps the Fed on hold. Raising rates will further strengthen the dollar. A stronger dollar may ultimately be our greatest market risk – triggering crisis in the $9 trillion EM U.S. dollar denominated debt.
While the US economy looks ok, the global economy is at or near recession. We are in a debt driven deflationary spiral. So as market stress intensifies we collectively hope and pray for Fed support. Watch for Fed signaling that September is off the table. All about that Fed – until it’s not.
Sentiment is again reading extreme pessimism. Historically, such readings are bullish for the market. Big Mo and 13/34 Week EMA trend charts remain in buy signals. The Zweig Bond models buy signal, triggered several weeks ago, continues to look good. The 10-year Treasury yield has declined from 2.45% to 2.10%.
Following a defined process is important. For me, the overall trend, while weakening, remains bullish. Risk remains high. I continue to favor hedging equity exposure, allowing tactical processes and other alternative strategies to further portfolio diversification.
See the full story and important disclosures in Trade Signals from Steve Blumenthal: Extreme Pessimism (Bullish), Zweig Bond Model Says Stay Long Bonds http://t.co/twe9SqJWyy
— CMG Wealth (@askcmg) August 13, 2015