Update 2-1-13

Stock-market:

ECRI reported the WLI at a level of 129.7 and the six months smoothed annualized growth WLIg at +8.3%, the index being lower but its growth rate higher from last week, as shown in Fig 2. One can see that the indicator graphs have a generally upward direction now which is usually the pattern for an upward bound market. The model is invested in the S&P500.

MAC Fig 3 shows the spreads of the moving averages, both having increased from last week. The sell spread (red graph) has moved further away from crossing the zero line, and a sell signal will not be generated in the near future. The model stays invested.

Bond-market:

The Bond Value Ratio is shown in Fig 7. The BVR has declined from last week and 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 model avoids high beta bonds

The Yield Curve:

Figure 5 charts (i10 – i2). The trend is up now as one can clearly see – 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. This model confirms the direction of the BVR.

Recession:

Attached is the updated COMP which has been flat over the last four week. This model is updated weekly with the new and revised data of its components and does not necessarily reflect last week’s reported level now, (reported 1/25/13 level = 22.52, revised 1/25/13 level = 21.38). This indicator is far away from a recession signal.

Gold:

The updated Coppock indicator for gold is shown in figure 4. It has not formed a trough yet, and no buy signal so far, but the year-over-year rolling return percentage change expressed in standard deviation terms seems to indicate an oversold condition. Gold would have to make a sustained move to $1700 and higher over the next few weeks for a buy signal, which could then appear earliest at the end of March, according to my projections.