The IBH model produced a basic-sell signal early this week and a few days later a sell-A signal. The MAC stock market model is invested, the bond market model avoids high beta (long) bonds and intermediate duration bonds as well, the yield curve is getting steeper, and gold and silver models are not invested. The recession indicator COMP moved higher again.
As indicated last week we were expecting a basic sell signal. What is surprising is that it generated a sell-A signal so quickly after the basic sell signal.
MAC Fig 2 shows the spreads of the moving averages, both having increased a bit from last week. The sell spread (red graph) has moved further away from crossing the zero line. MAC is far away from a sell signal.
The Bond Value Ratio is shown in Fig 3. The BVR is at about the same level as last week, but the trend is 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:
Figure 4 charts (i10 – i2). The trend is up now as one can clearly 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.
Comp can be used for stock market exit timing as discussed in this article The Use of Recession Indicators in Stock Market Timing.
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 indicator is described in Is it Time to Buy Gold Again? – Wait for the buy signal …….
This model has been out of Silver since Apr-25-2011. This indicator is described in Silver – Better Than Gold: A Modified Coppock Indicator for Silver