iM Update 5-3-13

Market Signals Summary:

The IBH stock market model is out of the market. The MAC stock market model is invested, the bond market model avoids high beta (long) bonds, the yield curve may be flattening, the gold model is not invested, but the silver model is invested. The recession indicator COMP is little changed from last week’s level. Please also refer to A Modified Coppock Indicator for the S&P, this model is invested at least until the end of 2013.

Stock-market:

Fig 1 IBH 5-3-13
 

The IBH-model is out of the market as shown in Fig. 1. A sell signal was generated seven weeks ago when the WLIg_shortEMA moved below the WLIg_longEMA. Since then the S&P500 has gained about 4%.

 
Fig 2 MAC 5-3-13

The MAC-model stays invested. MAC Fig 2 shows the spreads of the moving averages, both levels higher than last week; they may be in the process of forming a top (rolling over). The sell spread (red graph) has to move below the zero line for a sell signal.

 

 

Bond-market:

Fig 3 BVR 5-3-13
The BVR-model avoids high beta bonds (long-bonds) and also intermediate duration bonds.

The Bond Value Ratio is shown in Fig 3. The BVR is lower than last week’s level, with the overall trend downwards. In the longer term BVR will reach the long-term trendline and long-bond investors will have suffered considerable losses by then.

 

The Yield Curve:

Fig 4 Yield Curve 5-3-13
The yield curve model shows the steepening trend, but seems to be making an interim mini-top. Figure 4 charts (i10 – i2). The trend is still up as one can see. FLAT and STPP are ETNs. STPP profits from a steepening yield curve and FLAT increases in value when the yield curve flattens. This model confirms the direction of the BVR.

 

Recession:

Fig 5 COMP 5-3-13
In Fig 5 one can see that COMP is unchanged from last week’s level. It is far away from signaling recession. COMP can be used for stock market exit timing as discussed in this article The Use of Recession Indicators in Stock Market Timing.

 

Gold:

Fig 6 GOLD 5-3-13
There is no buy-signal from the modified Coppock Gold indicator shown in Fig 6. This model has been out of Gold since Nov-26-2012. Gold would have to make a sustained move to $1700 and higher over the next few weeks for a buy signal according to my projections. This seems highly unlikely in view of the recent price decline. This indicator is described in Is it Time to Buy Gold Again? – Wait for the buy signal …….

Silver:

Fig 7 SILVER 5-3-13
There was a buy-signal recently from the modified Coppock Silver indicator shown in Fig 7. This indicator is described in Silver – Better Than Gold: A Modified Coppock Indicator for Silver

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