iM Update* – December 19, 2014

Bond-market:

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

The Bond Value Ratio is shown in Fig 4. The BVR is up from last week’s level. According to the model, only when BVR turns upward after having been lower than the lower offset-line should one consider long bonds again.

One can see by the upward sloping graph that long bonds gained from January 2014 onward. The model failed to signal the lower turning point of BVR.

 

The Yield Curve:

The yield curve model shows the generally steepening trend from mid 2012 of the 10-year and 2-year Treasuries yield spread. Figure 5 charts (i10 – i2). Although the curve has flattened from the beginning of 2014, the general trend from middle of 2012 is up. 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..

 

Gold:

The modified Coppock Gold indicator shown in Fig 6. and is now invested.

This indicator is described in Is it Time to Buy Gold Again? – Wait for the buy signal …….

 

 

Silver:

The modified Coppock Silver indicator shown in Fig 7 and is currently invested.

This indicator is described in Silver – Better Than Gold: A Modified Coppock Indicator for Silver.