Baseline Analytics Blog

Market risk assessment tools and tactical investment opportunities driven by curated financial insight

dvdsBaseline Analytics has refined a series of stock and ETF-screening algorithms that pinpoint timely, high-probability trades and investment opportunities.

The results of Baseline Analytics' stock and ETF screens are delivered in a downloadable Excel file.  This file can be sorted to identify various performance and technical criteria to help provide a further edge to your trading and investments. Instructions are provided to guide you through your review. Our goal is to deliver such opportunities at your fingertips, with minimal research and analysis needed on your end.  We do provide a link to Yahoo Finance for each of our timely picks should you want to delve further into particular equities or ETF's.

Baseline Analytics has published its list of the stocks going Ex-Dividend in December that exhibit favorable technical trends. Perhaps a dividend-payer or two will emerge as a timely, attractive investment. 

This list is offered free of charge.  Please check out our Premium Services , at a price of only $79 per year!

Click here for the list.

Subscribers to Baseline Analytics receive our proprietary screens regularly, and this screen in particular will be honed even further for more targeted opportunities, including noteworthy fundamental and technical criteria.  Receive these updates as well as our TrendFlex family of market trend signals and risk assessment tools as a subscriber to Baseline Analytics.

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We look for peaks and troughs in the CBOE VIX indicator versus its moving average (see chart below).  Peaks tend to coincide with short-term market lows, and troughs with market highs (measured by the S&P 500 index).  

Note how VIX hit a trough before the S&P 500 settled back from its recent high.  Since then, VIX has turned neutral (closing in on its moving average).  We read this as a bullish sign, as recent consolidation in the S&P 500 may present a less risky opportunity to add to longs.

VIX12022016 

 

 

We look for peaks and troughs in the CBOE VIX indicator versus its moving average (see chart below).  Peaks tend to coincide with short-term market lows, and troughs with market highs (measured by the S&P 500 index).  

Note how VIX hit a trough before the S&P 500 settled back from its recent high.  Since then, VIX has turned neutral (closing in on its moving average).

 

 

Can't ignore the positive correlation of the Dow Jones Industrial Averages and the Dow Transportation Index.  Transports not far from hitting a new high to join the Industrials.  A bullish trend.  Watch out for extremes however (in sentiment and momentum indicators).  Our new TrendFlex Extremes readings are updated regularly as they develop.

 

DT112916

Check out the confirming uptrends in both the Dow Industrials and Transports.  Another sign of support for the uptrend.

 

DT1116

In April 2015 we saw a break in the SPDR Barclays High Yield Bond ETF as it fell to its early 2016 lows.  As that happened, the S&P 500 see-sawed, mildly correcting and then failing to resume an uptrend until the JNK ETF resumed its uptrend.

We have seen confirmation (both in uptrends) since early 2016.  Recently, however, divergence has appeared as the JNK ETF recently pulled back from its highs.  The S&P 500 has been fighting toward new highs but is beginning to feel the resistance.  

This relationship bears watching should JNK continue to pull back. 

 

junk diverges

Baseline Analytics was founded in 2005 with a vision to assemble a variety of indicators that could identify extremes in the stock market, and to profit from the shifts in market trend following the occurence of an extreme indicator reading.

Our TrendFlex subscribers now receive timely indicator extreme alerts.  We have categorized our key indicator extremes as follows:

  1. CBOE VIX Reading and CBOE Put/Call Ratio
  2. TED Spread
  3. LQD vs. S&P 500 GAP reading

When one or more of these indicators has reached an extreme reading, chart and commentary will follow.  Here are examples of charts depicting these extreme indicators and what they suggest will happen to the market trend.

CBOE VIX and CBOE 

Look for extreme readings in VIX and Put/Call versus a moving average of each indicator. Peaks and troughs in VIX and Put/Call offer strong indications of a short-term shift in the trend of the S&P 500.

CBOE11132016

TED Spread

Shifts in the TED Spread also help to spot extremes.  As can be seen in the chart below, an oscillator indicator at the bottom of the chart spots potential buy and sell opportunities in the S&P 500.

TED11132016 

LQD:S&P 500 Ratio GAP vs. Moving Average

Here is our basic Bond vs. Stock Market Indicator.  A large GAP in the ratio (see bottom portion of chart below) provides the extreme reading and opportunity to go long or short equities.

LQD Gap

Baseline Analytics subscribers receive updates on these indicators when they have reached extreme readings. These indicators also play a role in the TrendFlex Score, which represents a weighting of 12 key market trend indicators. Subscribers include Registered Investment Advisors, individual investors, and portfolio managers.

Subscribers most often use our indicators to hedge portfolios (one popular strategy is to short S&P 500 e-Mini futures when the CBOE VIX reading is at a trough compared to its moving average).

Visit our Premium Services page for information on our services.  Baseline Analytics is currently OPEN ACCESS, however our modest $79 annual fee will be re-introduced in the coming days (A 4-week Free Trial will be available).

 

We've shown this chart before, highlighting the Buy and Sell signals for the S&P 500.  Just when I thought the post-election rally was getting a bit extended, the TED Spread signal flashed a convincing Buy.

 

TED1110

A powerful 2.2% rally in the S&P 500 propelled the index off its 200-day moving average.  Volume was on the lighter side.  VIX settled back from its extreme fear reading and the Put/Call ratio remains at a high 1.22,

We hedged longs a bit in the mid-afternoon, considering the possibility that equities moved a bit too fast for our liking going into Election Day.  Let's see what transpires tomorrow.  Trading enthusiasts might want to daytrade S&P 500 e-Mini futures while election results are posted in the evening. 

BLA11072016

A powerful 2.2% rally in the S&P 500 propelled the index off its 200-day moving average.  Volume was on the lighter side.  VIX settled back from its extreme fear reading and the Put/Call ratio remains at a high 1.22,

We hedged longs a bit in the mid-afternoon, considering the possibility that equities moved a bit too fast for our liking going into Election Day.  Let's see what transpires tomorrow.

BLA11072016

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