The February 1, 2016 report points to an opportunity to “buy stocks on weakness”. In late January 2016 we obtained two of the six Market Trough Indicators, which is a sufficient number of Indicators to renter the equity market on weakness. Please read the accompanying report for more.
Japanese, European and British markets bottomed in the fourth quarter 2014. Reports September 26, 2014 and November 4, 2014 called for an improvement in their economic growth and market recovery – all supporting arguments were empirically derived.
“If the past holds, then the slowing in Great Britain, Japan & the EU is about to improve
and the dollar strength is temporary.”
“If we’re seeing recovery here since May 2014, then the EU should see it imminently. The
S&P 500 bottomed last February in anticipation of the U.S. economic recovery in May 2014. The EU
indexes troughed this October anticipating EU recovery that’s near at hand.”
Six weeks before Bernanke mused aloud about the Fed reversing QE and yields responded by rising, BCD Research argued empirically that the Fed would tighten policy by the 4th quarter 2013 and that the Unemployment Rate would reach 6.5% by the 4th quarter – both occurred on schedule. Click here to view this report.
Five months after the 2011 Summer market rebound a sufficient number of Market Peak Indicators surfaced to turn negative concerning the outlook for equities. Specifically, the S&P 500 was expected to peak in February 2012 and it peaked in March 2012, but at a higher level then initially expected. The higher mean-absolute-deviation focused on 1350, which was 2.9% short of the March 2012 monthly average peak level of 1389. Click here to view this one page report.
When there’s no recession only two Market Trough Indicators are needed to re-enter the markets on weakness and this proved to be the right strategy. Twenty-six trading days later the S&P 500 reached a bottom on October 3rd. Click here for full report.
Slow growth in Europe exposed the excessive leverage and triggered the Euro Crisis. This crisis surfaced coincident with the U.S. Budget Control Act, which explains the summer market correction. The Japanization of the U.S., occurring since early 2000, explains the U.S. slow growth and this has exposed the need to de-leverage, which will explain the growth for several more years. Click here to view full report.
During early August 2011, about the time the 50 day moving average moved below the 200 day moving average, or the “death cross” appeared in the S&P 500, market sentiment was deteriorating daily; however, the market fundamentals were starting to improve, as cited in the attached report. Recession discussion was rampant, but this was not the conclusion based on the data at the time and this proved to be a correct viewpoint. Read the attached for an objective perspective in early August 2011. Click here for full report.