• Steve's question from April 29

     
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    A few days ago Steve posted the message below which was puzzling, because my own trend following method is limited to the next 20 days. Hence, what sort of indicator should we follow to get to the next bullish market, which is much further down the road?

    Pascal, David Rosenberg forecast write up in a Market Watch article.

    https://www.marketwatch.com/story/fe...KLY22_AUTO_NAH

    In the oncoming future economic hardship that's being forecasted by economists has me seeking answers as to how is this recession and rate cut going to unfold? I would like hints on what indicators to check on, which one are messaging the trend?
    This article gives me a roadmap for the landmarks I might observe during this negative journey. Rosenberg may not be completely right, however I now have something to compare with data. Steve
    As we all know it, interest rates rule the equities markets because they set the direction for fund flows.

    So, for now, it is important that we continue looking at equities valuation model in terms of yield comparison. Indeed, the 10Y yields should drop well below 3.4% in order for equities to become attractive... and yields will drop probably only if there is a recession.



    The above Figure tells us that equities are overvalued here and the Figure below tells that the momentum has turned down.



    However, the equities Money Flow has been positive since January. It is as if investors were already anticipating a 10Y rate reversal.



    Besides the above indicators, I would look at IYR and VNQ, which tell mood of real estate regarding interest rates. As far as the TEV pattern stays below its Pink line, this tells us that real estate investors do not expect lower rates soon.





    Then, the NHNL indicator will tell us when to buy market panic.



    Conclusions:

    1. Wait for a reversal in IYR/VNQ TEV patterns
    2. Wait for a NHNL bottom, which will also coincide with a 20DMF bottom
    Comments 1 Comment
    1. stharp's Avatar
      Thank you Pascal, the economists give landmarks, S&P 500 PE or Treasury 30 yr, to monitor, which become a wait and watch for the FED pause. One level removed from equity behavior. The trends posted here, reflect equity buyer/seller decisions as to when the bottom is in and sentiment turns bullish.
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