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 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).

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TrendFlex Score & TrendFlex Signals for 1/20/2017

  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 +6.2% +6.2%
TrendFlex Allegiance CR Long 4/13/16 +12.5% +12.5%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score decreased from 1.41 to 1.35 and closed below its three-week moving average (a bullish development).  

 TFS01212017

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 6.3% 6.3% 1.125
TrendFlex Allegiance TF Uptrend 5/31/16 8.3% 8.3% 1.200
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 none of the three indicators are at extremes.  

 

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

Growth vs. Value: Trend Shift in the Works?

Growth stocks, as represented by the Russell 2000 Growth Index, have generally outperformed value stocks since mid-2010 (see the chart below, denoted by the green boxes). Since the start of 2016, however, value has outperformed growth, as can be seen by the large red box on the right side of the chart.

A 50-day exponential moving average is employed to demonstrate the price activity in favor of one versus the other.  What is interesting on the chart is the top portion, which shows the RSI of the Growth/Value stock ratio.  That RSI was deeply oversold and has crossed above the 30 level, a bullish development.  This may be an indication of a shift in sentiment back toward growth stocks.

 

GV

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Gold Miner's Technicals - An Interesting Setup?

Gold and the Gold Miner's ETF (GDX) have been despised for quite a while.  It is often when an investment is shunned and ignored, that it is ripe for a shift in sentiment and price.  

Looking at the VanEck Vectors Gold Miners ETF (GDX), it is interesting to note that price has bounced from a long-term support level near 20 (see the monthly chart below) 

 GDX Mon

Also noteworthy, on the daily chart, the GDX has closed above its 50-day exponential moving average. GDX rallied from its recent lows near 19 on decent volume.

GDX daily

So we could be looking at a profitable turning point in GDX (and gold in general). Perhaps volatility and uncertainty regarding the new administration or even some early signs of price growth in the inflation readings, are influencing this recent price behavior. 

 

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TrendFlex Score & TrendFlex Signals for 1/13/2017

  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 +6.3% +6.3%
TrendFlex Allegiance CR Long 4/13/16 +12.6% +12.6%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score increased from 1.37 to 1.41 and is slightly above its three-week moving average (barely bearish).  

TFS01132017

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 6.3% 6.3% 1.125
TrendFlex Allegiance TF Uptrend 5/31/16 8.3% 8.3% 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.

The VIX indicator (below) remains at an extreme reading, partly offset by a neutral reading on Put/Call.  The other two Extremes indicators are neutral.  

VIX01132017

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 1/6/2017

  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 +6.4% +6.4%
TrendFlex Allegiance CR Long 4/13/16 +12.8% +12.8%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score increased from 1.28 (12/30/16) to 1.37 and remains about even with its three-week moving average.  It continues to rest at a level that in the past has preceded setbacks in equities.

TFS01062017

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 6.4% 6.4% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 8.4% 8.4% 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.

The large gap in the LQD/SPX ratio vs. its moving average that was previously printed in late December has narrowed to a non-extreme reading. The TED Spread is also neutral. The VIX indicator (below) has shifted to an extreme reading.  

VIX01062017

The Portfolio Strategies chart remains bullish. Hedges to long positions are in order given the extreme market readings and the low TrendFlex Score.  We would refrain from adding longs, waiting for a breather in the markets.      

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 Market Trend Risk Assessment - 12/27/2016

As equities reach new highs, several market trend risk indicators as measured by our proprietary TrendFlex system are underscoring the risk to long positions at this stage of the rally.

Our flagship TrendFlex Classis CR (credit risk premium indicator) is about as bullish (for equities) as it can be, which can be interpreted as a contrarian signal.  We are firm believers in "reversion to the mean," and as the chart below suggests, the wide gap between the ratio of corporate vs. treasury debt versus its moving average (dotted line) calls for a possible pause in the equity uptrend.

TFCCR12232016

The weekly version of the TrendFlex CR similarly demonstrates today's extreme readings:

TFACR12232016

No doubt that the charts above are wildly bullish.  Although we are trend followers, we take very seriously the indicators that measure the risk of a trend change.  

Baseline Analytics Extremes highlights three key TrendFlex Indicators and their level of extremes.  The key indicators include the following:

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

Here is what these indicators are telling us, following the market close of 12/23/16.

The Vix/Put Call Gap versus their respective moving averages measures complacency among traders and investors. Note the VIX (top portion of chart below) falling well below its moving average.  As can be seen on the chart, such gaps below (and above) its moving average tend to precede shifts in the S&P 500. VIX is hinting at a potential setback in equities.  Interestingly, the Put/Call ratio is neutral.

VIX12232016

The TED Spread is a measure of perceived credit risk in the US Economy.  Peaks in the spread (see blue areas in bottom of chart below).  This indicator has preceded shifts in the market trend rather consistently over the timeframe displayed below.  It may be hinting at a firming of Treasuries following their rather sharp selloff since peaking in July.

TED12232016 

Finally, the gap between our LQD/S&P 500 ratio (a derivative of the Trendflex CR indicator) is sitting at an extreme low (see bottom portion of chart below).  This large gap suggests that equities have moved too far too fast and are in needs of a consolidation of recent returns.  

LQD Gap 12232016

We have also previously noted the progress in the Dow Theory technical indicator.  The two indices  (Dow Jones Industrial Average and Dow Transportation Index) recently hit new highs, a traditional technical measure of a confirmed bull market.  Again, however, we harken to a cautious stance given the swiftness of this move upward and the extreme readings in our various indicators.

Dow122316

What to do? Think about wading into long positions in instruments that have swooned during this uptrend (perhaps small positions in bonds, gold, agricultural commodities) to diversify and dollar-cost average.  Europe and emerging markets are also beginning to look interesting (perhaps VGK and EEM will play catch-up to the US). Hedging long positions with e-Mini S&P 500 futures may be in order, as well as selling call options.  

Equities have tended to do well in the week before the holidays and afterward, but have consistently slipped as the new year dawns.  We would rather hedge our bets and look for prices to settle down before adding to long positions, as the major indices, although overbought, are clearly bullish.  

Best to your investing, and Happy New Year!

Continue reading

TrendFlex Score & TrendFlex Signals for 12/23/2016

No Updates planned for 12/30 market close.

  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 +5.8% +5.8%
TrendFlex Allegiance CR Long 4/13/16 +12.1% +12.1%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score decreased from 1.30 to 1.28 and remains below its three-week moving average.  It is resting at a level that in the past has preceded setbacks in equities.

TFS12232016 

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  Cash 9/26/16 5.8% 5.8% 1.20
TrendFlex Allegiance TF Uptrend 5/31/16 7.8% 7.8% 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.

LQD Gap 12232016

A large gap in the LQD/SPX ratio vs. its moving average gets larger, suggesting that the recent rally may need a breather. The VIX indicator (below) has shifted to an extreme reading. 

VIX12232016

The TED Spread indicator has moved toward an extreme reading.

TED12232016

The Portfolio Strategies chart remains bullish. Hedges to long positions are in order given the extreme market readings and the low TrendFlex Score.  We would refrain from adding longs, waiting for a breather in the markets.      

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 12/16/2016

 

  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 +5.5% +5.5%
TrendFlex Allegiance CR Long 4/13/16 +11.8% +11.8%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score decreased from 1.33 to 1.30 and remains below its three-week moving average.  It is resting at a level that in the past has preceded setbacks in equities.

TFS12162016 

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.  Both remain at a "perfect" 1.0 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  Cash 9/26/16 5.5% 5.5% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 7.5% 7.5% 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.

LQD Gap 121616

A large gap in the LQD/SPX ratio vs. its moving average gets larger, suggesting that the recent rally may need a breather. The VIX Put/Call indicator (below) has settled to a neutral reading. 

VIX12162016

The Portfolio Strategies chart remains bullish. Hedges to long positions are in order given the extreme market readings and the low TrendFlex Score.  We would refrain from adding longs, waiting for a breather in the markets.      

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 12/09/2016

 

  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 hit 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 +5.6% +5.6%
TrendFlex Allegiance CR Long 4/13/16 +11.9% +11.9%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score decreased from 1.53 to 1.33 and remains below its three-week moving average.  It is resting at a level that in the past has preceded setbacks in equities.

TFS12092016 

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.  Both have improved and once again achieved a "perfect" 1.0 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  Cash 9/26/16 5.6% 5.6% 1.00
TrendFlex Allegiance TF Uptrend 5/31/16 7.6% 7.6% 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.

LQD Gap 120916

A large gap in the LQD/SPX ratio vs. its moving average gets larger, suggesting that the recent rally may need a breather. The VIX Put/Call indicator (below) has also moved to an extreme, pointing to an increased likelihood of a setback in equities.

VIX12092016

The Portfolio Strategies chart remains bullish. Hedges to long positions are in order given the extreme market readings and the low TrendFlex Score.  We would refrain from adding longs, waiting for a breather in the markets.      

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

Hedging Our Bets - 12/8/16 Midday Update

Overbought equities and extreme readings in several TrendFlex market trend indicator convinced us to add hedges to long positions. We will update the TrendFlex Score and charts this weekend.

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New Month, New Dividends: Welcome December!

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.

Profitable investing!

Baseline Analytics

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Extreme Reading Turning Neutral - Buying Opportunity?

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 

 

 

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Extreme reading turning neutral

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).

 

 

Continue reading

TrendFlex Score & TrendFlex Signals for 12/02/2016

 

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR and Allegiance signals 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 11/08/16 +2.4% +2.4%
TrendFlex Allegiance CR Long 4/13/16 +8.6% +8.6%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score increased from 1.48 to 1.53, and remains bullishly below its three-week moving average.  

TFS12022016 

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.  Both have weakened slightly from their "perfect" 1.0 scores from last week.   

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  Cash 9/26/16 2.4% 2.4% 1.30
TrendFlex Allegiance TF Uptrend 5/31/16 4.4% 4.4% 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.

LQDGap1202016

A large gap in the LQD/SPX ratio vs. its moving average suggests that the recent rally may need a breather.  Thegap was a max before this week's modest setback. The VIX Put/Call Extreme has shifted from extreme (pointing to the resulting setback in equities) to neutral, following this week's consolidation of recent gains.

The Portfolio Strategies chart remains bullish, especially with regards to recent market strength and positive seasonality.      

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

 

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Dow Theory Bullish

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

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TrendFlex Score & TrendFlex Signals for 11/25/2016

 

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR and Allegiance signals 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 11/08/16 +3.4% +3.4%
TrendFlex Allegiance CR Long 4/13/16 +9.6% +9.6%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score declined from 1.64 to 1.48, and settled below its three-week moving average.  New highs in the major equity indices helped drive the score lower this week.

TFS11252016 

TrendFlex Trend-Following Signals (TF)

The TrendFlex Classic TF and Allegiance signals remain in Uptrend.  Both have settled on 1.0 scores, as bullish as you can get.  

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  Cash 9/26/16 3.4% 3.4% 1.0
TrendFlex Allegiance TF Uptrend 5/31/16 5.4% 5.4% 1.0
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.

LQDGap112516

A large gap in the LQD/SPX ratio vs. its moving average suggests that the recent rally may need a breather. Likewise, the CBOE VIX reading has fallen well below its moving average (see top portion of chart below), although Put/Call is neutral.  The VIX extreme is worth watching, however it can meander at this low level for several days. 

VIX112516

The Portfolio Strategies chart remains bullish, especially with regards to recent market strength and positive seasonality.  Partial hedges to long positions may be in order though as we observe the two Extremes indicators noted above.    

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 11/18/2016

 

  Follow for TrendFlex Signal and Blog Update Alerts!

TrendFlex Credit Risk Premium Signals (CR)

TrendFlex Classic CR and Allegiance signals 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 11/08/16 +2.0% +2.0%
TrendFlex Allegiance CR Long 4/13/16 +8.1% +8.1%
Historic Performance        

 

TrendFlex Score

The TrendFlex Score remained unchanged at 1.64 and closed equal to its three-week moving average.  

TFS11182016 

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  Cash 9/26/16 2.0% 2.0% 1.300
TrendFlex Allegiance TF Uptrend 5/31/16 3.9% 3.9% 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.

LQDGap111816

A large gap in the LQD/SPX ratio vs. its moving average suggests that the recent rally may need a breather. Likewise, the CBOE VIX reading has fallen well below its moving average (see top portion of chart below), although Put/Call is neutral.  The VIX extreme is worth watching, however it can meander at this low level for several days. 

VIX111816

The Portfolio Strategies chart remains bullish, especially with regards to recent market strength and positive seasonality.  Partial hedges to long positions may be in order though as we observe the two Extremes indicators noted above.    

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

 

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Dow Theory Buy Signals Looking Promising

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

 

DT1116

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