The Fed left interest rates unchanged. I still believe it is all about the Fed. To that end, the Don’t Fight the Tape or the Fed indicator remains in a bullish signal. The short-term “however” is Investor Sentiment. It remains exceedingly bullish – which is short-term bearish for equities.
Most equity signals are bullish, yet my favorite indicator – the CMG NDR Large Cap Momentum Index remains in a sell signal. It uses longer-term trend indicators, along with other components, and it has not yet turned bullish. The short-term and intermediate-based indicators are bullish as shared below.
No change in the equity game plan. Valuations remain high, signaling the probability of 10-year annualized forward returns to be in the low single-digits (see valuations here). Same drill: Hedge that equity exposure and raise some cash. The market, based on investor sentiment, is too bullish. Risk remains high.
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.