iM Update 7-26-13

Please also see the Best10 weekly update on the [Systems][Best10 Portfolio Management Systems] page.

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 is steepening, the gold model is not invested, but the silver model is invested. The recession indicators COMP and iM-BCIg are near last week’s levels. MAC-AU is also invested.

Stock-markets:

The IBH-model is out of the market as shown in Fig. 1. A sell signal was generated 19 weeks ago when the WLIg_shortEMA moved below the WLIg_longEMA. Currently the WLIg_shortEMA indicator is just below WLIg_longEMA. If the sell signal was correct then WLIg_shortEMA should move decisively below WLIg_longEMA.

 
The MAC-US model stays invested. MAC-US Fig 2 shows the spreads of the moving averages. The sell-spread is at about last week’s level, but the buy-spread is higher. 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 stays invested. MAC-AU Fig 2.1 shows the spreads of the moving averages of the Australia All Ordinaries Index. The sell-spread is lower from last week’s level, but the buy-spread is higher. The market may continue to move sideways. The sell spread (red graph) has to move below the zero line for a sell signal, This model and its application is described in MAC-Australia: A Moving Average Crossover System for Superannuation Asset Allocations

Bond-market:

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, and the overall trend continuing downwards. It will still take time for the lower offset line to be reached, so we can expect bond values to move lower for some time to come.

The Yield Curve:

The yield curve model shows the steepening trend of the 10-year and 2-year Treasuries yield spread. Figure 4 charts (i10 – i2). The trend is 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:

In Fig. 5 one can see that COMP is lower from last week’s level, but 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.

 
Fig. 5.1 shows our recession indicator iM-BCIg, same as last week’s revised level. A recession is not imminent as one can clearly see

Please also refer to the BCI page

Gold:

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 moved higher over the last 3 weeks as anticipated.

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. The current price (Friday’s London fix) is still a lot lower than the buy price. This indicator is described in Silver – Better Than Gold: A Modified Coppock Indicator for Silver