Tweets, Headlines, and Charts for 2014-08-29

Tweets, Headlines, and Charts for 2014-08-27

Bull Bear Report

I’m introducing a new report to the site called the “Bull Bear Report”.  This is a simple trend following model using a moving average crossover system to determine if a market is in a bull market or a bear market.  The moving averages I am using are the 9-month EMA and the 12-month EMA.  When the 9-month is above the 12-month, the market is in a bull market.  When the 9-month is below the 12-month, the market is in a bear market. The report contains how many months there has been since the last crossover, which provides a duration for the bull or bear market.  This is important because it helps identify markets that are late in bull or bear markets, or early in new bull or bear markets.  The idea would be to be skeptical of markets that have been in bull or bear markets for a long time (the rough average for a cyclical bull market is 3-5 years and a cyclical bear market 1-3 years) and be interested in markets that are potentially entering new bull or bear markets. This system works well for trending bull and bear markets, as you can see in the chart of GDX below.  GDX had a fairly clean bull signal in 2009 and a bear signal in early 2012 without a lot of crossover.

gdx

For choppy bear markets this system does not work well, such as what happened with EEM between 2012 and 2014.  Multiple false signals in both directions.  Choppy markets are the nemesis of trend followers.

eem

In the current report, we can see that the major indexes such as the Nasdaq, S&P 500, and Dow Jones are all in near 5-year bull markets.  Major market sectors are approaching 5 year bull markets too.  I’m not surprised that things like energy have been catching up this year because as you can see on the report they were not as deep into their bull markets as other major markets. On the early bull market side we have things like Palladium, Coffee, Emerging Markets, and Bonds.  On the bear side most of the things in bear markets are commodities related.  Notice that copper and gold miners are now almost in 3-year bear markets.  The GCC commodities index actually just threw a whipsaw signal swinging back to a bear market over the last couple of months. So the overall picture is one of stock indexes and sectors in later stage bull markets and commodities in later stage bear markets.  Bonds and some commodities and emerging markets are in early bull markets.  I will publish these results each month to capture trend changes with the idea of finding early bull markets to profit from.

Bull Markets

Ticker Months Chart
SHY 133 Chart
XRT 61 Chart
QQQ 60 Chart
XLK 60 Chart
XLY 59 Chart
XLP 59 Chart
DIA 58 Chart
XLV 58 Chart
SPY 57 Chart
IWM 57 Chart
IYT 57 Chart
XLI 57 Chart
IYR 56 Chart
XLU 54 Chart
XLE 47 Chart
XHB 33 Chart
XLB 32 Chart
IYZ 31 Chart
XLF 30 Chart
PALL 21 Chart
OIL 13 Chart
FXE 13 Chart
FXF 12 Chart
FXB 11 Chart
EEM 5 Chart
JO 5 Chart
IEF 4 Chart
TLT 4 Chart

 

Bear Markets

Ticker Months Chart
JJC 35 Chart
GDXJ 33 Chart
GDX 30 Chart
CANE 23 Chart
FXY 22 Chart
SLV 21 Chart
PPLT 19 Chart
WEAT 19 Chart
SIL 19 Chart
FXC 19 Chart
GLD 18 Chart
CORN 17 Chart
FXA 16 Chart
UUP 12 Chart
GCC 2 Chart
SOYB 1 Chart