Mr. Palmerton is the Founder of Baseline Analytics, and has 30 years of experience spanning corporate finance, asset management and financial markets research. He has held positions as CFO, Director of Finance, and Financial Management and Analysis roles for Fortune 500 and multi-national firms (ADP, Honeywell, Linde Group) as well as for early-stage and emerging growth ventures). Bob founded Baseline Analytics in 2005. With the objective to utilize technical analysis of the financial markets, coupled with macro-economic trends, Baseline Analytics strives to keep investors on the right side of the market at all times. Bob developed the TrendFlex indicator, comprised of a blend of financial indicators that assess the risk of a change in market trend. Baseline Analytics’ TrendFlex models are utilized as the basis for asset allocation strategies of The Absolute Return Market Trend Portfolio. Mr. Palmerton’s articles and blogs can be found on Seeking Alpha, Finding Technicals and Baseline Analytics.

TrendFlex Score & TrendFlex Signals for 4/28/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

There was no change to the TrendFlex Classic and Allegiance signals this week.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 3/28/17 +1.2% +1.2%
TrendFlex Allegiance CR Long 4/13/16 +18.1% +18.1%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score decreased 1.57 to 1.52 and remains below its three-week moving average, a bullish development.

TFS04282017 

TrendFlex Trend Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.    

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 +11.4% +11.4% 1.500
TrendFlex Allegiance TF Uptrend 5/31/16 +13.5% +13.5% 1.125
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  There are no extremes this week, as all indicators are at neutral readings. 

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.  A short position in an S&P 500 e-mini future contract, for example, is one strategy to help hedge long positions.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

TrendFlex Score & TrendFlex Signals for 4/21/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

There was no change to the TrendFlex Classic and Allegiance signals this week.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 3/28/17 -0.3% -0.3%
TrendFlex Allegiance CR Long 4/13/16 +16.3% +16.3%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score decreased from 1.61 to 1.57 and closed below its three-week moving average, a bullish development.

TFS04212017 

TrendFlex Trend Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.   Modest improvements in the scores this week suggest a potential breakout from the recent trading range. 

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 +9.8% +9.8% 1.900
TrendFlex Allegiance TF Uptrend 5/31/16 +11.8% +11.8% 1.125
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  There are no extremes this week, as all indicators are at neutral readings. 

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.  A short position in an S&P 500 e-mini future contract, for example, is one strategy to help hedge long positions.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

TrendFlex Score & TrendFlex Signals for 4/14/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

there was no change to the TrendFlex Classic and Allegiance signals this week.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 3/28/17 -1.2% -1.2%
TrendFlex Allegiance CR Long 4/13/16 +15.3% +15.3%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score increased to 1.61 and remains slightly above its three-week moving average.  

TFS04142017 

TrendFlex Trend Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     The Classic signal remains near a neutral score.

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 +8.9% +8.9% 2.10
TrendFlex Allegiance TF Uptrend 5/31/16 +10.9% +10.9% 1.375
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, the VIX reading hit an extreme (suggesting a potential bounce in equities).  The LQD chart shows a bearish shift above its moving average.

VIX04142017 

LQD04142017

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.  A short position in an S&P 500 e-mini future contract, for example, is one strategy to help hedge long positions.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

TrendFlex Score & TrendFlex Signals for 4/7/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

there was no change to the TrendFlex Classic and Allegiance signals this week.  TrendFlex Classic CR was rather volatile but ended bullish for the week.   

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 3/28/17 +0.0% -0.0%
TrendFlex Allegiance CR Long 4/13/16 +16.7% +16.7%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score remained unchanged at 1.58 and remains slightly above its three-week moving average.  

TFS04072017 

TrendFlex Trend Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     The Classic signal remains near a neutral score.

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 +10.1% +10.1% 1.70
TrendFlex Allegiance TF Uptrend 5/31/16 +12.2% +12.2% 1.375
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, there are no extreme readings in the Extremes technical indicators charts. 

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.  A short position in an S&P 500 e-mini future contract, for example, is one strategy to help hedge long positions.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

TrendFlex Score & TrendFlex Signals for 3/31/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR signal shifted to Buy at the 3/28 market close (opening trade price at 3/29 market open). The short trade gained 0.4%. The longer-term Allegiance signal remains Long.  

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 3/28/17 +0.3% -0.3%
TrendFlex Allegiance CR Long 4/13/16 +17.0% +17.0%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score increased to 1.58 and remains above its three-week moving average, a bearish development.  

TFS03312017 

TrendFlex rlowing Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     The Classic signal remains near a neutral score.

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 +10.4% +10.4% 1.70
TrendFlex Allegiance TF Uptrend 5/31/16 +12.5% +12.5% 1.25
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, there are no extreme readings in the Extremes technical indicators charts. 

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.  A short position in an S&P 500 e-mini future contract, for example, is one strategy to help hedge long positions.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

Short-term Potential Buy Setup

Market close update: The TrendFlex Classic CR signal has shifted to a BUY.

TrendFlex Classic CR is setting up for a potential buy at today's close.  See the chart below:

TFCCR03282017

Continue reading

TrendFlex Score & TrendFlex Signals for 3/24/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

3/28/17 Update:

The TrendFlex Classic CR signal shifted to a BUY at today's close.

 

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR signal remains at a Sell.  The longer-term Allegiance signal remains Long.  

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Short 3/09/17 +0.9% -0.9%
TrendFlex Allegiance CR Long 4/13/16 +16.1% +16.1%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score remained unchanged at 1.55, sitting above its three-week moving average, a bearish development.  

TFS03242017 

TrendFlex rlowing Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     The Classic signal is nearing a neutral score.

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 +9.6% +9.6% 1.70
TrendFlex Allegiance TF Uptrend 5/31/16 +11.6% +11.6% 1.25
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, the LQD indicator moved from an extreme to a bearish position above its moving average (see bottom portion of chart below).

LQD03242017  

VIX and Put/Call bolted sharply above their respective moving averages, a sign that the short term weakness in equities may reverse.  However, they are not at extreme readings which would presage a strong rally.

VIX03252017

 

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.  A short position in an S&P 500 e-mini future contract, for example, is one strategy to help hedge long positions.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

TrendFlex Score & TrendFlex Signals for 3/17/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR signal remains at a Sell.  The longer-term Allegiance signal remains Long.  

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Short 3/09/17 -0.6% +0.6%
TrendFlex Allegiance CR Long 4/13/16 +17.8% +17.8%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score climbed from 1.44 to 1.55 and remains above its three-week moving average, a bearish development.  

TFS03172017 

TrendFlex rlowing Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 11.2% 11.2% 1.10
TrendFlex Allegiance TF Uptrend 5/31/16 13.2 13.2% 1.00
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, the LQD indicator continues to remain at an extreme, expanding the gap below its moving average.

LQD03102017  

TED closed in on an extreme (chart below), which could suggest a rebound soon.  As we hone in on the timing of its signals, the TED red zones can persist during a short-term downtrend.  We would look for a shift back up through the "0" line on the oscillator indicator (bottom of chart) to suggest that a pullback in the S&P500 has ended. VIX and Put/Call are neutral (chart not presented).

ted03102017

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.  A short position in an S&P 500 e-mini future contract, for example, is one strategy to help hedge long positions.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

TrendFlex Score & TrendFlex Signals for 3/10/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR signal shifted to a Sell at the market close of /9/16.  The Allegiance signal remains Long.  

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Short 3/09/17 -0.3% +0.3%
TrendFlex Allegiance CR Long 4/13/16 +17.5% +17.5%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score surged from 1.22 to 1.44 and closed above its three-week moving average, a bearish development. This coincides with the shift in the TrendFlex Classic CR score to a Sell signal. 

TFS03102017

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 10.9% 10.9% 1.10
TrendFlex Allegiance TF Uptrend 5/31/16 13.0% 13.0% 1.00
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, the LQD indicator continues to remain at an extreme, expanding the gap below its moving average.

LQD03102017  

TED closed in on an extreme (chart below), which could suggest a rebound soon.  As we hone in on the timing of its signals, the TED red zones can persist during a short-term downtrend.  We would look for a shift back up through the "0" line on the oscillator indicator (bottom of chart) to suggest that a pullback in the S&P500 has ended. VIX and Put/Call are neutral (chart not presented).

ted03102017

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.  A short position in an S&P 500 e-mini future contract, for example, is one strategy to help hedge long positions.   

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

TrendFlex CR Sell Signal

The TrendFlex Credit Rick (CR) timing signal shifted to sell today.  Normally we wait for one day's confirmation so the jury is still out until the markets close.  Should the signal remain below its moving average at today's close, it will represent the first short-term sell signal on the S&P 500 since the November 8th buy signal.  TrendFlex Allegiance CR, the longer-term signal, remains a buy.

TFACR03092017

Continue reading

TrendFlex Score & TrendFlex Signals for 3/3/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR and Allegiance signals remains Long, despite a scare on the Classic CR chart earlier thsi week. 

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 11/08/16 +11.4% +11.4%
TrendFlex Allegiance CR Long 4/13/16 +18.0% +18.0%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score declined from 1.32 to 1.22 and remains below its three-week moving average.  Reviewing past levels in the 1.30 area of the TrendFlex Score, the S&P 500 has corrected about 5%.  We continue to interpret this level of the TrendFlex Score as a bullish extreme, especially with the .10 drop from last week.

TFS03032017

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 11.4% 11.4% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 13.5% 13.5% 1.00
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, the LQD indicator remains at an extreme, expanding the gap below its moving average.

LQD03032017  

 TED is also looking close to an extreme (chart below).  VIX is neutral while Put/Call is barely at an extreme level (chart not presented).

ted03032017

 

 The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.      

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

Checking in on the Trend Extremes - 2/26/17

As the equity indices continue to forge new highs, our TrendFlex extreme indicators, utilized to identify a potential change in the market trend, hover around neutral to extreme readings.

Our Corporate Bond vs. S&P 500 index ratio as seen at the bottom half of this chart, pushed to a new low this week, and gapped widely below its moving average.  This is an extreme reading that bears watching for a trend shift.

LQD02242017

Our TED Spread indicator is neutral but on the verge of turning to a new extreme.  Note below how the CCI reading (bottom portion of chart), once it moves to the +100 level of the chart (blue sections), tends to precede a decline in equities.  Conversely, note the red zone (-100 reading) where the indicator foreshadowed a surge in the S&P 500.

ted02242017

Finally, our VIX and Put/Call indicators are mixed.  Although VIX has met up with its moving average (we look for large gaps from its moving average to confirm a pending trend change), it remains rather low at 11.47.

VIX02242017 

As the chart below depicts, VIX can remain low for a while before equities correct (see the blue vertical lines where VIX settled in the past near where it is today.

VXSPX

So perhaps equities are nearing the point where a consolidation or modest (5%?) correction is in the cards, which will hopefully dissipate some of the froth in the markets and introduce a new buying opportunity.  As the new administration moves further out of the honeymoon period, however, the challenge to pass business-friendly tax and other economic policies may begin to cast a shadow on bullish sentiment. 

Continue reading

TrendFlex Score & TrendFlex Signals for 2/24/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR and Allegiance signals remains Long, despite a scare on the Classic CR chart earlier thsi week. 

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 11/08/16 +10.6 +10.6%
TrendFlex Allegiance CR Long 4/13/16 +17.2% +17.2%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score increased from 1.29 to 1.32 and remains below its three-week moving average.  Reviewing past levels in the 1.30 area of the TrendFlex Score, the S&P 500 has corrected about 5%.  We continue to interpret this level of the TrendFlex Score as a bullish extreme.

TFS02242017

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 10.6% 10.6% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 12.7% 12.7% 1.00
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, the LQD indicator remains at an extreme, expanding the gap below its moving average.

LQD02242017  

 TED is also looking close to an extreme (chart below).  VIX is neutral while Put/Call is barely at an extreme level (chart not presented).

ted02242017

 The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.      

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

TrendFlex Score & TrendFlex Signals for 2/17/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR and Allegiance signals remains Long, despite a scare on the Classic CR chart earlier thsi week. 

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 11/08/16 +9.9 +9.9%
TrendFlex Allegiance CR Long 4/13/16 +16.4% +16.4%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score declined from 1.38 to 1.29 remains below its three-week moving average, a bullish development.  Reviewing past levels in the 1.30 area of the TrendFlex Score, the S&P 500 has corrected about 5%.  We would interpret this level of the TrendFlex Score as a bullish extreme.

TFS02172017

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 9.9% 9.9% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 12.0% 12.0% 1.00
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, the LQD indicator remains at an extreme, expanding the gap below its moving average.

LQD02172017  

 

 The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.      

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

TrendFlex Score & TrendFlex Signals for 2/10/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR and Allegiance signals remains Long, despite a scare on the Classic CR chart earlier thsi week. 

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 11/08/16 +8.3 +8.3%
TrendFlex Allegiance CR Long 4/13/16 +14.7% +14.7%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score declined to 1.38 from 1.39 and closed slightly below its three-week moving average, a bullish development.  

 TFS02102017

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 8.3% 8.3% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 10.3% 10.3% 1.00
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, the LQD indicator remains at an extreme, with the continued potential of a double bottom flashing a warning sign to long equity positions.  

 

 LQD02102017

 The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.      

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

Trend Change Risk Assessment: February 6, 2016

The TrendFlex Classic CR (“Credit Risk”) indicator is a short-term measure of the risk of a change in the trend of the S&P 500.  We follow this indicator versus a moving average line and note Buy and Sell signals as the indicator crossed up (Buy) or down (Sell) through its moving average. 

As the S&P 500 has seen increased volatility while consolidating its recent gains, the TrendFlex CR indicator is close to breaching its moving average to the downside, a bearish development.  The signal tends to lead equities price movement, so we take this development as another caution sign for equities. 

Although the intermediate-term trend clearly is up, the risk of a short-term trend change appears to have increased.  See the chart below:

TFC02062017

Continue reading

TrendFlex Score & TrendFlex Signals for 2/3/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR and Allegiance signals remains Long, as the major indices continue to flirt with new highs.

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 11/08/16 +7.34 +7.4%
TrendFlex Allegiance CR Long 4/13/16 +13.8% +13.8%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score increased from 1.39 to 1.40 and is slightly above its three-week moving average.  

 TFS02032017

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 7.4% 7.4% 1.20
TrendFlex Allegiance TF Uptrend 5/31/16 9.4% 9.4% 1.25
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week, the VIX and Put/call ratios pushed back to mildly extreme readings.  

 VIX02032017

 Although the LQD indicator has narrowed the gap vs. its moving average, it appears to be working on a double-bottom, which could suggest risk to equities in the near future.

LQD02032016

 

 The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.      

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

A Neutral Reading in our "Extremes" Indicators

Taking a look at the CBOE VIX and Put/Call Ratios at today's close, it appears that one of our more consistent "Extremes" indicators has turned neutral.

Equities have traversed through fits and starts of volatility recently, and that behavior had manifested itself in an extreme reading in late January (see the blue arrows on the right side of the chart below. 

This extreme was highlighted in our recent Market Trend blog, introducing the potential for a short-term decline in equities (which happened).

The S&P 500 has since settled back to near its 34-day moving average (blue line) as recent gains are consolidated.

VIX02022017 

Our take is that with stock market settling back, it appears to be preparing for the next leg upward (resumption of the major trend).  Indeed, major indices have been pushing up against overbought levels and upside momentum has been waning.  

Although this neutral "extremes" indicator does not suggest any sharp downside risk, equities may need some more time to prepare for the resumption of the uptrend.  A firm consolidation to the 34 or 50-day moving average, as the S&P 500 appears to be attempting, may be what is needed to prepare for the next leg up.

Our Credit Risk Extreme indicator is no longer at an extreme reading (measured by the gap vs. its moving average in the chart below).  However, it is interesting to note that the indicator appears to be forming a double-bottom.  A breakout from that basing range could suggest a shift to the downside in equities (and begin to favor bonds).  

LQD02022016

We will watch this relationship carefully, as a shift above its moving average signifies risks to equity positions.  The good news (for equity bulls) is that the indicator is so low to begin with, that a shift above its moving average may not entail the meaningfulness as it had in the past.  The jury is still out on the significance of this indicator as we close out the trading week.

 

 

 

Continue reading

TrendFlex Score & TrendFlex Signals for 1/27/2017

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR and Allegiance signals remains Long, as the major indices continue to flirt with new highs.

TrendFlex Signal Trend  Date  Return

S&P 500  Return

S&P 500 timing signals based on credit risk (CR) premiums (corporate vs.Treasury debt). 
TrendFlex Classic CR Long 11/08/16 +7.3% +7.3%
TrendFlex Allegiance CR Long 4/13/16 +13.6% +13.6%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score increased from 1.35 to 1.39 and is even with its three-week moving average.  

 TFS01272017

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.     

TrendFlex Signal Trend  Date  Return

S&P 500  Return

Score

S&P 500 timing signals based on a weighted score of US Market technical indicators. Classic (short-term) and Allegiance (intermediate to long term).  Score:  Bullish = 1.0-1.75; Neutral = 1.75-2.25; Bearish = 2.25-3.0

TrendFlex Classic TF  Uptrend 11/8/16 7.3% 7.3% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 9.3% 9.3% 1.00
Historic Performance          

 

Baseline Analytics Extremes

Baseline Analytics Extremes highlights four key TrendFlex Indicators and their level of extreme readings.  The key indicators include the following:

  1. CBOE VIX and 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.  This week all three indicators are at extremes.  

LQD01272016 

 

ted0127

 

VIX01272017

 

The Portfolio Strategies chart remains bullish, with an edge toward risk-aversion.      

Portfolio Strategies*
Reduce Longs
 Sell Calls
 Hedge Longs
Set Stops on Longs
Short Overbought Equities
 Add to Longs
Sell Puts
Hedge or Reduce Shorts
 Long Futures and Options

 *Red highlighted items are recommended strategies

 

Continue reading

State of the Extremes as Equities Challenge their Highs

Two key indicators have reached extreme readings, which tend to precede shifts in the equity market trend.  

Both the CBOE VIX indicator and the CBOE Put/Call Ratio have gapped well below moving average measures that have been useful as contrarian signals for short-term downside shift in equities.  As can be seen in the chart below, a low reading in VIX vs. its moving average denotes short-term peaks in the S&P 500.  We may be seeing one of those peaks following Tuesday's (January 24th) market close.  Although this extreme reading indicator does not always pinpoint the day of a trend change, it is worth considering as a warning sign that the rally may be reaching its climax.

vix01242017

Another extreme indicator we follow is the TED Spread, or the spread between the 10-Year Treasury and Eurodollar futures.  Peaks (or rises) in the TED spread tend to be an indicator of credit risk.  While it does not appear evident that credit risk is seeping through the financial markets, the rise in the TED spread expresses expectations of risk that bears watching.  Note in the chart below how the peaks displayed in the lower portion of the chart (blue portions of the oscillator) tend to precede equity declines.

ted01242017

Although the equity market indices are clearly bullish, extreme readings as such are cause for pause and reinforce the importance to preserve capital (and refrain from getting caught up in new high euphoria).

Continue reading