Market Trend Indicators - 10/27/23

Investing Strategies Mechanical Investing
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As August, September, and now October have been mildly but generally steadily negative, it’s not surprising that these signals below are almost all “Bearish”, and especially US Small Caps (like the SIPro screen universe). Of note recently, the SMA Slope on the S&P just went neutral, bearish on the Russell 2000, and tpotos old 26w/52w intermediate signal went bearish on smallcaps. The Seasonal Timing indicator went bullish for 2 days 10/16-10/17 on the evaluation day, then flipped to bearish again, a headfake.

There are weak bottom signals appearing in the “so bad it has to get better soon” category, and a few signals are in oversold level.

Intermediate-Term
Type Signal Bear Bull As of Comment
BearCatcher Nasdaq New Highs/New Lows Bear 8/4/23
BearCatcher SMA Slope, S&P 500 10/27/23 Smallcaps bear 10/27
BearCatcher Dying Bullish Euphoria comb. Bull 2/1/23
BC Summary The Key 1 1 Watch Out
Momentum, Int # 26 week highs 7/14/23
Momentum, Int DMI Bear 9/22/23
Momentum, Int-Term 10/50 Crossover Bear 9/21/23
Momentum, Int PPO Weekly Bear 9/8
Momentum, Int 26W / 52W Bull 10/27/23 Smallcaps bear 10/27
Breadth, midterm PAMA Naz 50 Bear 9/8
Breadth, midterm Naz Bullish % Bear 9/6/23
Breadth, midterm S&P PAMA 200 Bear 2/24/23
Breadth Thrust Breadth Thrust Watch Last was Jan 23
Correction Mode >7% off last peak Bear 10/20/23 Tech Correction
Timing, Seasonal MACD on RUT Bull 10/16/23 Bearish Headfake
Interest Rates Corporate Bond Index Bear 9/29/23
Short Term
Momentum, ST PPO Daily Bear 10/20/23
Breadth, short term SP600 PAMA20 Bear 10/6
Breadth, short term PAMA5D %OFF 21dh Bear 10/27/23
Top, short term PAMA Divergence Highs 6/14/23
Top PAA Count 8/22/23
Top Recent Simple Top 11/19/21
Top Primary-Tech Divergence
Bottom Extreme PAMA low 10/27/23
Leverage, Macro Margin Debt to GDP 9/1/22
Valuation CAPE<1sd historical?
Sjuggerud? Bear 3/24 8/25

Those 5% annual yields on treasuries, more on GHY, looking better every day.

FC

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Hi FC,

Thanks for that…I know you dont have the crystal ball, but I do appreciate your wisdom/ experience…so, based on your experience/ intuition, what do you think are the odds for a Nov/ Dec year end rally?

And when does the institutions/ funds/ big money players do tax loss harvesting? I hope it was Sept/ October… I would be devastated if it is Nov/ Dec!

Are there any resources where we can get to identify or know these things as they happen…or in general, any resources that would help to get out before everything hits the fan, and we are left as the last of the bag holders.

Thanks,
Charlie

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I2L - I’d like to be able to, but no way I can give “odds for a Nov/Dec yearend rally”. The positive influences include the ephemeral seasonal effect starting now, hedge fund tax loss harvesting being over generally by end of October, and pure mean reversion - breadth is nearing negative extremes and some weak short term bottom indicators are popping.

Negative influences include the Fed and the Fed. If they keep raising interest rates, even marginally, more money is going to flow to 10 year treasuries and shorter term bonds; if they keep following QT (mortgage bond sales back), there will be less big $ chasing equities. After that, there’s the economy, and the growing uncertainty about the sociopathic clown show going on in the Capitol. And who wants to guess at that??

The trend is your friend until it isn’t, and I’m not risking losing (more) money on equities in the short term in what has turned into a decent little “correction” - until at least the short terms turn with some conviction, and then not more until the intermediate terms flip back. The saying I remember is a quote from Jeff Saut after the GFC - “there’s no harm preserving capital until a clearer picture emerges.”

These indicators (if you’re interested I could compile a list of the charts involved) mainly work as mean reversion, but they also highlight big money flows. When Covid hit they all nosedived, and even without more contextual detail it was obvious something unprecedented & massive was up & "get out’ was issued quickly; but then the V bounce happened because the government / Fed made it crystal clear they were not going to let the economy collapse - special situation, but within a couple of weeks it became clear it was time to get back in - the short term signals spiked back to bullishness first and led the way. TLDR: it all rolls up to “pretty safe to invest” or “not a good time to invest.”

All FWIW.

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Thanks a lot FC.

Yes, if possible, that would be awesome, thanks

Charlie