Stock-market:
ECRI reported the WLI at a level of 128.3 and the six months smoothed annualized growth WLIg at +5.4%, as shown in Fig 2. Six weeks ago the IBH model generated a sell-basic signal and 2 days later a sell A signal, indicating that the model had exited the S&P500. So far the S&P has gained since the sell signal.
MAC Fig 3 shows the spreads of the moving averages. The sell spread (red graph) may be in the early stage of forming a trough. No sell signal has so far been generated from this model. The model stays invested.
Bond-market:
The Bond Value Ratio is shown in Fig 7. The BVR has been flat lately. In the longer term BVR will reach the long-term trendline and long-bond investors will have suffered considerable losses by then. The model stays invested in low beta bonds.
The Yield Curve:
Figure 5 charts (i10 – i2). The trend seems to be up – the model expects the yield curve to steepen. FLAT and STPP are ETNs. STPP profits from a steepening yield curve and FLAT increases in value when the yield curve flattens.
Recession:
Attached is the updated COMP which gained further since last week and the trajectory is upwards. This indicator is far away from a recession signal.