iM Update – May 29, 2015

Market Signals Summary:

Both the IBH and MAC stock market models are invested. The recession indicator COMP is up from last week’s level, and iM-BCIg is lower than last week’s level.  MAC-AU is invested in the stock market. The bond market model avoids high beta (long) bonds, the yield spread is rising, both the gold and silver model are invested.

 

Stock-markets:

 The IBH-model is invested in the markets., The IBH model relies only on the long and short EMAs of the U.S. Weekly Leading Index’s growth rate.    The IBH-model is described here and the latest rules can be found here .

 

 

The MAC-US model signals a up-market and stays invested. MAC-US Fig 2 shows the spreads of the moving averages. The sell-spread is up from last week’s level. A sell signals is not imminent. The sell spread (red graph) has to move below the zero line for a sell signal.

 

 

The MAC-AU model is in the market. A buy signal was generated early in Jan-2015. The sell-spread is lower than  last week’s level. A sell signal will only be generated when the sell-spread (red graph) moves from above to below zero.

This model and its application is described in MAC-Australia: A Moving Average Crossover System for Superannuation Asset Allocations.

 

Recession:

Figure 3 shows COMP up from last week’s  level, and 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.

 

 

Figure 3.1 shows the recession indicator iM-BCIg is down from last week’s level. A recession is not imminent.

Please also refer to the BCI page

 

 

The Forward Rate Ratio between the 2-year and 10-year U.S. Treasury yields (FRR2-10) is near last week’s level and far away from signalling a recession.

A description of this indicator can be found here.