Sunday, January 3, 2016

The road to a 2016 market top

Trend Model signal summary

Trend Model signal: Neutral
Trading model: Bearish (downgrade)

The Trend Model is an asset allocation model which applies trend following principles based on the inputs of global stock and commodity price. In essence, it seeks to answer the question, "Is the trend in the global economy expansion (bullish) or contraction (bearish)?"

My inner trader uses the trading model component of the Trend Model seeks to answer the question, "Is the trend getting better (bullish) or worse (bearish)?" The history of actual out-of-sample (not backtested) signals of the trading model are shown by the arrows in the chart below.

Update schedule: I generally update Trend Model readings on my blog on weekends and tweet any changes during the week at @humblestudent.

I am not bearish!
First of all, I want to set the record straight. Despite the headline about a possible US stock market top in 2016, I am not intermediate term bearish on stocks right now.

There is an adage amongst technical analysts that while bottoms are events, tops are processes. The purpose of this post to outline the process of how the US equity market is likely to top out in 2016. I don't mean to convey the impression that I believe that equities go down right away. In fact, there is likely some upside left before the market makes its ultimate top before turning down. Let me explain.

The full post is at our new site here.

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As well, I would like to remind readers that we will cease to accept new subscribers as of January 15, 2016 as a way to better control the growth of our new community. Hurry, the deadline is coming up faster than you think.

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