Market Insight

TrendFlex Score & TrendFlex Signals for 1/19/2018

TrendFlex Credit Risk Premium Signals (CR)

There was no change in the TrendFlex signals this week.  Click here for a primer on the TrendFlex Score and TrendFlex Signals.

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 11/22/17 +8.20% +8.20%
TrendFlex Allegiance CR Long 4/13/16 +39.20% +39.20%
Historic Performance        

 TrendFlex Score

The TrendFlex Score increased from 1.14 to 1.23 and closed above its three-week moving average, a bearish development.  

TFS01192018

 

   TrendFlex Trend Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.    

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF Uptrend 9/14/17

12.60%

12.60% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 33.80% 33.80% 1.00
Historic Performance          

 Baseline Analytics Extremes Indicators

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and Put/Call Ratio
  2. Moving Average Cross Momentum Signals
  3. LQD vs. S&P 500 GAP reading

When one or more of these indicators has reached an extreme reading, chart and commentary will follow. The LQD indicator is at an extreme. All other indicators are neutral.

LQD01192018

 

 

 Portfolio Strategy Table

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

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4 Hits

TrendFlex Score & TrendFlex Signals for 1/12/2018

TrendFlex Credit Risk Premium Signals (CR)

There was no change in the TrendFlex signals this week.  Click here for a primer on the TrendFlex Score and TrendFlex Signals.

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 11/22/17 +7.30% +7.30%
TrendFlex Allegiance CR Long 4/13/16 +38.0% +38.0%
Historic Performance        

 TrendFlex Score

The TrendFlex Score decreased from 1.24 to 1.14 and remains below its three-week moving average, a bullish development.  It sits at an extremely low level, underscoring the risk to this level of equity prices. 

TFS01122018

 

   TrendFlex Trend Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.    

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF Uptrend 9/14/17

11.60%

11.60% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 32.7% 32.7% 1.00
Historic Performance          

 Baseline Analytics Extremes Indicators

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and Put/Call Ratio
  2. Moving Average Cross Momentum Signals
  3. LQD vs. S&P 500 GAP reading

When one or more of these indicators has reached an extreme reading, chart and commentary will follow. The LQD indicator is at an extreme. Also shown below is VIX and Put/Call readings.  The Put/Call ratio is near an extreme, while VIX is neutral.

LQD01122018

 

 PC01122018

 Portfolio Strategy Table

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

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23 Hits

Index & Sector ETF Signals - 1/12/2018 Update

Note: Next update following the market close of 1/5/2018.

TrendFlex signals for select index and sector SPDR ETF's below are based on a trend-following system filtered to identify the "risk" to a change in the trend. ETF's represent US and foreign equities, commodities, bonds and the US Dollar.

Major Index ETF's 

Symbol 

     Trend

Trend Change Risk 

Observations and Rationale
 SPY

 Bullish 

Hi

Increased risk of pullback

 DBA Bearish  Med Possibly forming a higher low; watch for major trend change
 GLD Bullish Med Trending up; attractive contrarian position and hedge; resistance at 130
 VGK Bullish   Hi Overbought; more attractive value vs. US stocks
 UUP Bearish High Nearing major support; oversold; rising rates positive
 TLT Bullish   Low Clean bounce from support near 123; likely trading range
EEM Bullish   Med Overbought

Select Sector SPDR ETF's

 Symbol  Trend

Trend Change Risk

Notes
XLK Bullish Hi New high; overbought
XLU Bearish Low Rotation out of rate-sensitive stocks
XLI  Bullish Hi Increased risk of pullback; support near 72.50
XLB Bullish Hi Overbought
XLV  Bullish Hi Overbought; support near 84
XLE Bullish Med Closing in on resistance newar 75
XLP  Bullish Med Trading range
XLY Bullish Hi Overbought; support near 101
XLF  Bullish Med Overbought; but macro trends favor sector

ETF Technical Leaders

The following table represents ETF's that are in bullish trends and represent technically attractive reward-to-risk entry points (for example, we will shy away from adding an overbought ETF). Although these ETF selections have been pre-screened, investors are advised to pursue their own research to determine whether they are appropriate for their portfolios. Selections are time-sensitive and represent short-term swing trading opportunities that may or may not follow-through on a longer-term basis. In addition, selections may be voided once a market trend change has occurred based on the TrendFlex signals. Visit our FAQ's  for more suggestions regarding ETF Zone. Check back frequently as additional ETF's may be added to the week's list. 

Symbol Rationale Close Date Added
XBI SPDR Biotech ETF bounces at support after modest correction 82.28 12/7/17
PFF Long basing pattern; closed above 50-day moving avg; 5.97% yield 38.13 11/18/17
RSX Basing at 50-day moving average; attractive entry 20.49 8/24/17
EWI iShares Italy ETF inexpensive and possible long-term bottom formed 22.13 12/02/16
XLY Retracement from recent gains; attractive entry point 81.44 12/02/16 
XLV  Post-election catch-up;  nearing positive moving avg. cross (50 over 200 day)  70.49 11/11/16 
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26 Hits

Index & Sector ETF Signals - 1/5/2018 Update

Note: Next update following the market close of 1/5/2018.

TrendFlex signals for select index and sector SPDR ETF's below are based on a trend-following system filtered to identify the "risk" to a change in the trend. ETF's represent US and foreign equities, commodities, bonds and the US Dollar.

Major Index ETF's 

Symbol 

     Trend

Trend Change Risk 

Observations and Rationale
 SPY

 Bullish 

Hi

Increased risk of pullback

 DBA Bearish  Low Correcting following short-term rally
 GLD Bullish Med Trending up; attractive contrarian position and hedge; resistance at 130
 VGK Bullish   Hi Overbought; more attractive value vs. US stocks
 UUP Bearish High Nearing major support; oversold; rising rates positive
 TLT Bullish   Med Trading range; resistance 128 support 122-123
EEM Bullish   Med Overbought

Select Sector SPDR ETF's

 Symbol  Trend

Trend Change Risk

Notes
XLK Bullish Hi New high; overbought
XLU Bearish Low Rotation out of rate-sensitive stocks
XLI  Bullish Hi Increased risk of pullback; support near 72.50
XLB Bullish Hi Overbought
XLV  Bullish Hi Overbought; support near 84
XLE Bullish Med Approaching resistance newar 75
XLP  Bullish Med Trading range
XLY Bullish Hi Overbought; support near 99
XLF  Bullish Med Overbought; but macro trends favor sector

ETF Technical Leaders

The following table represents ETF's that are in bullish trends and represent technically attractive reward-to-risk entry points (for example, we will shy away from adding an overbought ETF). Although these ETF selections have been pre-screened, investors are advised to pursue their own research to determine whether they are appropriate for their portfolios. Selections are time-sensitive and represent short-term swing trading opportunities that may or may not follow-through on a longer-term basis. In addition, selections may be voided once a market trend change has occurred based on the TrendFlex signals. Visit our FAQ's  for more suggestions regarding ETF Zone. Check back frequently as additional ETF's may be added to the week's list. 

Symbol Rationale Close Date Added
XBI SPDR Biotech ETF bounces at support after modest correction 82.28 12/7/17
PFF Long basing pattern; closed above 50-day moving avg; 5.97% yield 38.13 11/18/17
RSX Basing at 50-day moving average; attractive entry 20.49 8/24/17
EWI iShares Italy ETF inexpensive and possible long-term bottom formed 22.13 12/02/16
XLY Retracement from recent gains; attractive entry point 81.44 12/02/16 
XLV  Post-election catch-up;  nearing positive moving avg. cross (50 over 200 day)  70.49 11/11/16 
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35 Hits

LQD Gap Indicator Supports Hedging Long Stock Positions

Our gap indicator showing the divergence between a ratio of LQD/SPX and its moving average, has expanded further below the moving average line.  See the chart below.

LQD010318

Such gaps tend to proceed a bit of profit taking in the S&P 500 (see the red dotted lines).  Interesting to note also the green dotted lines, whereby the gap is recovered (or there is a gap ABOVE the moving average), signaling a good time to be long.

Today's reading suggests that hedging long positions is in order.

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48 Hits

Unwinding of Tech (and Re-winding of Financials)

Today there was quite a reversal in financial stocks at the "expense" of technology.  The chart below plots a ratio of the XLF Finance SPDR vs. the XLK Technology SPDR.  Note today's surge:

xlfxlk

What is interesting is the "fits and starts" seen over the plotted timeframe since April.  This leads us to assess that what we saw today was merely a reversion to the mean for tech, and a resumption of the uptrend (along with the broader market) for financials.

Note the smaller charts below: XLK (Tech) is settling near its 50-day moving average (not there yet so some more potential downside in store). Financials (XLF), with their strong surge moves their index back to the "up" trendline.

So in our view, just a bit of sector rotation unwiding the excesses we have seen in tech, with laggard financials catching up.  

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107 Hits

Thinking About the Yield Curve

Baseline Analytics checks in on a monthly basis the status of the yield curve as displayed on StockCharts.com.  StockCharts does a great job showing the yield curve dynamically, correlating it with the price of the S&P 500 since the late 1990's.  

Here's a snapshot.  You can run the dynamic activity by visiting this link.

dyc

Marc chandler wrote this interesting blog as we think about the components of the yield curve and what it's up to. Click here to see Marc's blog.

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100 Hits

TrendFlex Classic CR Signal

True to recent whipsaw activity (modest market setbacks followed by continuation of the uptrend), the TrendFlex Classic CR signal crossed above its moving average (rather decisively) on 11/21.  See the chart below.

TFC11222017

A number of other indicators are flashing warnings (i.e. RSI for the S&P 500 is showing negative divergence). Caution still rules, however the TrendFlex Classic CR signal may reset following this week's market activity.

Diverge

 

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118 Hits

Small Cap Relative Strength Picks Up

Small Cap stocks have lagged in relative strength versus their larger-cap brethren. Recently, however, improved market breadth has brought along a resurgence in small caps.

Note the improved relative strength in Small Cap Value (IJS) and the Russell 2000 (IWM) ETF's as a ration of the indices with the S&P 500.  Broader market participation of the small cap sector invites us to seek growth and value-oriented small cap opportunties.

 

IWM Snippet

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101 Hits

High Yield Bond Risk - Time for Defensive Strategies?

Investors have poured billions of dollars into Exchange-Traded Funds focused on high-yoeld securities. In this article, David Fabian of FMD Capital Management addresses the recent volatility in high yield bond ETF's and defensive strategies to protect capital.  Click here for David's article.

 

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93 Hits

TrendFlex CR Sell Signal Remains in Effect

Opportunity to hedge long positions continues.  The SELL signal for the S&P 500 established at the market close of November 9th has a positive return of +0.8%.  See the updated chart below:

TFCCR11152017

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117 Hits

Sell Signal TrendFlex Classic CR

At the market close of 11/8/2017, the TrendFlex Classic CR signal avoided a SELL despite an intraday dip into SELL territory.  Today, the indicator has once again turned bearish, as can be seen in the chart below.  We require a close below its moving average, so at this time the SELL signal is not a done deal, but we suspect it will be and have noted today's market close as a new SELL signal.

TFCCR11092017b

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104 Hits

Pending Sell Signal TrendFlex Classic CR

The TrendFlex Classic CR indicator is heading toward a sell signal.  It has been on a buy signal since 9/14/17.  Confirmation will be based on a close below its moving average (see red circle to the right on the chart below).

 

TFCCR11072017

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123 Hits

Low Volatility ETF's

There is a growing batch of US and global low-volatility ETF's - many of which sport decent dividend yields.  See this article by David Fabian of FMD Capital Management about the "Ins and Outs of Low Volatility ETF's."

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251 Hits

NYSE High/Low Ratio: Time for SPX to Take a Breather

In the chart below, see the section labeled "$NYHL."  The New York Stock Exchange High/Low Ratio shows peaks and troughs which correspond to peaks and troughs in the S&P 500.  The green lines are bullish equity signals, while the red are bearish.

This scenario portends hedging longs after this recent "melt up" in equity prices.

NYHL10062017

 

 

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260 Hits

LQD Gap Extreme Is Growing

One of our extreme indicators is the gap in our LQD/IEF ratio vs. its moving average.  The chart below suggests that this gap, which has preceded past declines in the S&P500, may be forewarning a setback in equities.

 

LQD09212017

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220 Hits

TrendFlex Signal Update - 8/17/17

The TrendFlex Classic CR remains in sell mode.  Next support for the S&P500 is 2425 with 2400 as major support.

TFCCR08172017

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257 Hits
Featured

Short-term Negative Momentum Signals

At Baseline Analyitcs, we review about 30 key charts per day.  Two charts recently have flashed negative (bearish) indicators.

We track the momentum activity printed by the NYSE McClellan Oscillator. Note on the chart below, the vertical lines: green being bullish, red being bearish.  Note on our NYMO chart below, the solid red line on the right, which corresponded quite well with a "near peak" in the S&P 500 (pink line). Other bullish and bearish signals can be compared to recent levels of the S&P 500. 

NYMO07102017 

Our next chart is the % of stocks in the S&P 500 trading over their 50-day moving average.  We have recently seen a shift of that indicator below its 34-day exponential moving average.  Note the grren and red vertical lines and how they correspond with short-term peaks and troughs in the S&P 500.

 

50R07102017

 We utilize indicators such as these in order to decide whether to hedge equities in a positive or negative fashion.

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585 Hits

TRIN Extreme Suggests Selling is Over-Done

Looking at the intra-day TRIN reading, note the sharp drop into extreme territory. Extreme dips in the past have led to short-term recoveries in the S&P 500.  

 

TRIN062917

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425 Hits

Short Term Buy Opportunity Soon?

While the TrendFlex signals remain bullish, the VIX extreme has reached a level that suggests a bounce is in order. See the blue circle on the right. Based on support levels, we would look for another dip in the S&P 500 of 15-20 points to encourage long positions.

VIC0517

 

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415 Hits