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
972 Hits

Index & Sector ETF Signals - 3/10/2017 Update

TrendFlex signals for the major index and sector SPDR ETF's below are based on a trend-following system filtered to identify the "risk" to a change in the trend. 

Major Index ETF's 

 Symbol  Trend

Trend Change Risk

Notes
 DIA Bullish Hi Overbought; consider entry near 205
 SPY  Bullish Hi

 Overbought; long entry near 225

 QQQ Bullish Hi Overbought; entry near 128
 IWM Bullish Med Look for entry near 133
 DBA Bearish Med Setback from forming from long term bottom
 GLD Bullish Hi Settling back from resistance; attractive entry
 VGK Bullish Low Positive momentum; firm uptrend; nice value
 UUP Bullish Med Trading range but looking healthy
 TLT Bearish Med Support near 116.
EEM Bullish Low Attractive entry at 36.50


 Sector SPDR ETF's

 Symbol  Trend

Trend Change Risk

Notes
XLK Bullish Hi Overbought
XLU Bullish Med Backed off resistance at 51; possible trading range
XLI  Bullish Hi Overbought
XLB Bullish Low Strong bullish trend forming; attractive entry
XLV  Bullish Med Nice breakout; firm uptrend; breaking resistance 
XLE Bullish Low Attractive entry following consolidation 
XLP  Bullish Med Nice rally; resumption of uptrend; a bit overbought
XLY Bullish Med Bullish breakout; overbought
XLF  Bullish Med Attractive entry


 

 

ETF Technical Leaders

The following table represents ETF's that are in bullish trends and represent technically attractive reward-to-risk entry points (for example, we will shy away from adding an overbought ETF). Although these ETF selections have been pre-screened, investors are advised to pursue their own research to determine whether they are appropriate for their portfolios. Selections are time-sensitive and represent short-term swing trading opportunities that may or may not follow-through on a longer-term basis. In addition, selections may be voided once a market trend change has occurred based on the TrendFlex signals. Visit our FAQ's  for more suggestions regarding ETF Zone. Check back frequently as additional ETF's may be added to the week's list. 

Symbol Rationale Close Date Added
EWI iShares Italy ETF inexpensive and possible long-term bottom formed 22.13 12/02/16
XLY Retracement from recent gains; attractive entry point 81.44 12/02/16 
XLV  Post-election catch-up;  nearing positive moving avg. cross (50 over 200 day)  70.49 11/11/16 

 

Allocation Strategy is updated on a bi-weekly basis, and takes a longer-term view consistent with the TrendFlex Allegiance system. Allocations are based on a blend of macro-economic trends and technical analysis, and incorporate the insight of our Thought Leaders as expressed on the Baseline Analytics website, and our ETF Signals analysis.  Portfolio allocation corresponds to an investor profile of moderate risk and a 20-year investment horizon.  Updates to Asset Allocation may be issued more frequently depending on market conditions.

Asset Allocation Strategy - 2/24/2017   

Instrument 

Underweight

Neutral

Overweight

Equities            
Fixed Income            ♦       
Alternatives         
Cash          

Equities

Style

Large Caps      
   
Mid Caps          
Small Caps         ♦    

Sector

Staples           
Discretionary           
Technology          
Utilities    
     
Industrials          
Healthcare      
   
Materials        
Financials          
Energy      
   
Regions     
US          
Eurozone          
China    
     
India          
Japan          
Emerging Asia          
EMEA          
Latin America          

Fixed Income

Investment Grade          
High Yield          
Developed Market          
Emerging Market          
Treasuries          
TIPS          
Municipal          

Alternatives

Commodities          
Absolute Return        
REITS      
Convertible Bonds      
Continue reading
1397 Hits

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
940 Hits

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
926 Hits

Index & Sector ETF Signals - 3/3/2017 Update

TrendFlex signals for the major index and sector SPDR ETF's below are based on a trend-following system filtered to identify the "risk" to a change in the trend. 

Major Index ETF's 

 Symbol  Trend

Trend Change Risk

Notes
 DIA Bullish Hi Overbought
 SPY  Bullish Hi

 Overbought

 QQQ Bullish Hi Overbought
 IWM Bullish Med Settled back a bit from highs
 DBA Bearish Med Setback from forming from long term bottom
 GLD Bullish Hi Near resistance; overbought
 VGK Bullish Low Positive momentum; firm uptrend; nice value
 UUP Bullish Med Trading range but looking healthy
 TLT Bearish Med Resistance near 122
EEM Bullish Low Break to highs; overbought; entery near 37.5


 Sector SPDR ETF's

 Symbol  Trend

Trend Change Risk

Notes
XLK Bullish Hi New highs; overbought
XLU Bullish Med Broke resistance at 51; overbought
XLI  Bullish Hi Bullish breakout; overbought
XLB Bullish Low Strong bullish trend forming; attractive entry
XLV  Bullish Med Nice breakout; firm uptrend; resistance 75.50
XLE Bullish Low Attractive entry following consolidation 
XLP  Bullish Med Nice rally; resumption of uptrend; a bit overbought
XLY Bullish Med Bullish breakout
XLF  Bullish Hi Bullish breakout


 

 

ETF Technical Leaders

The following table represents ETF's that are in bullish trends and represent technically attractive reward-to-risk entry points (for example, we will shy away from adding an overbought ETF). Although these ETF selections have been pre-screened, investors are advised to pursue their own research to determine whether they are appropriate for their portfolios. Selections are time-sensitive and represent short-term swing trading opportunities that may or may not follow-through on a longer-term basis. In addition, selections may be voided once a market trend change has occurred based on the TrendFlex signals. Visit our FAQ's  for more suggestions regarding ETF Zone. Check back frequently as additional ETF's may be added to the week's list. 

Symbol Rationale Close Date Added
EWI iShares Italy ETF inexpensive and possible long-term bottom formed 22.13 12/02/16
XLY Retracement from recent gains; attractive entry point 81.44 12/02/16 
XLV  Post-election catch-up;  nearing positive moving avg. cross (50 over 200 day)  70.49 11/11/16 

 

Allocation Strategy is updated on a bi-weekly basis, and takes a longer-term view consistent with the TrendFlex Allegiance system. Allocations are based on a blend of macro-economic trends and technical analysis, and incorporate the insight of our Thought Leaders as expressed on the Baseline Analytics website, and our ETF Signals analysis.  Portfolio allocation corresponds to an investor profile of moderate risk and a 20-year investment horizon.  Updates to Asset Allocation may be issued more frequently depending on market conditions.

Asset Allocation Strategy - 2/24/2017   

Instrument 

Underweight

Neutral

Overweight

Equities            
Fixed Income            ♦       
Alternatives         
Cash          

Equities

Style

Large Caps      
   
Mid Caps          
Small Caps         ♦    

Sector

Staples           
Discretionary           
Technology          
Utilities    
     
Industrials          
Healthcare      
   
Materials        
Financials          
Energy      
   
Regions     
US          
Eurozone          
China    
     
India          
Japan          
Emerging Asia          
EMEA          
Latin America          

Fixed Income

Investment Grade          
High Yield          
Developed Market          
Emerging Market          
Treasuries          
TIPS          
Municipal          

Alternatives

Commodities          
Absolute Return        
REITS      
Convertible Bonds      
Continue reading
1497 Hits

Green Shoots and Market Bottoms – A contrarian and rational perspective

Written by Puneet Gupta, Chief Investment Officer of The Absolute Return, LLC.    

The Global Financial Markets are a real-time barometer by which the health of the economy can be assessed and even predicted.  Just as high volatility tells you that something is very wrong, in the same way low volatility and rising or stable equity prices with broad market participation tell you that things are robust no matter what the gloom-and-doomers may be saying, or that seemingly stable prices but with narrow market participation tell you that the tide may be ripening for a turn.  Macroeconomic data of course is crucial even though it can be lagging, to inform and re-inforce the story derived from the markets.

Continue reading
2832 Hits

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
964 Hits

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
847 Hits

Index & Sector ETF Signals - 2/24/2017 Update

TrendFlex signals for the major index and sector SPDR ETF's below are based on a trend-following system filtered to identify the "risk" to a change in the trend. 

Major Index ETF's 

 Symbol  Trend

Trend Change Risk

Notes
 DIA Bullish Hi Breakout to new high; overbought
 SPY  Bullish Hi

 New high; overbought

 QQQ Bullish Hi New high; overbought
 IWM Bullish Med Settled back a bit from highs
 DBA Bearish Med Setback from forming from long term bottom
 GLD Bullish Hi Near resistance; overbought
 VGK Bullish Low Positive momentum; firm uptrend; nice value
 UUP Bullish Med Trading range but looking healthy
 TLT Bearish Med Resistance near 122
EEM Bullish Low Break to highs; overbought; entery near 37.5


 Sector SPDR ETF's

 Symbol  Trend

Trend Change Risk

Notes
XLK Bullish Hi New highs; overbought
XLU Bullish Med Broke resistance at 51; overbought
XLI  Bullish Hi Bullish breakout; overbought
XLB Bullish Low Strong bullish trend forming; attractive entry
XLV  Bullish Med Nice breakout; firm uptrend; resistance 75.50
XLE Bullish Low Attractive entry following consolidation 
XLP  Bullish Med Nice rally; resumption of uptrend; a bit overbought
XLY Bullish Med Bullish breakout
XLF  Bullish Hi Bullish breakout


 

 

ETF Technical Leaders

The following table represents ETF's that are in bullish trends and represent technically attractive reward-to-risk entry points (for example, we will shy away from adding an overbought ETF). Although these ETF selections have been pre-screened, investors are advised to pursue their own research to determine whether they are appropriate for their portfolios. Selections are time-sensitive and represent short-term swing trading opportunities that may or may not follow-through on a longer-term basis. In addition, selections may be voided once a market trend change has occurred based on the TrendFlex signals. Visit our FAQ's  for more suggestions regarding ETF Zone. Check back frequently as additional ETF's may be added to the week's list. 

Symbol Rationale Close Date Added
EWI iShares Italy ETF inexpensive and possible long-term bottom formed 22.13 12/02/16
XLY Retracement from recent gains; attractive entry point 81.44 12/02/16 
XLV  Post-election catch-up;  nearing positive moving avg. cross (50 over 200 day)  70.49 11/11/16 

 

Allocation Strategy is updated on a bi-weekly basis, and takes a longer-term view consistent with the TrendFlex Allegiance system. Allocations are based on a blend of macro-economic trends and technical analysis, and incorporate the insight of our Thought Leaders as expressed on the Baseline Analytics website, and our ETF Signals analysis.  Portfolio allocation corresponds to an investor profile of moderate risk and a 20-year investment horizon.  Updates to Asset Allocation may be issued more frequently depending on market conditions.

Asset Allocation Strategy - 2/24/2017   

Instrument 

Underweight

Neutral

Overweight

Equities            
Fixed Income            ♦       
Alternatives         
Cash          

Equities

Style

Large Caps      
   
Mid Caps          
Small Caps         ♦    

Sector

Staples           
Discretionary           
Technology          
Utilities    
     
Industrials          
Healthcare      
   
Materials        
Financials          
Energy      
   
Regions     
US          
Eurozone          
China    
     
India          
Japan          
Emerging Asia          
EMEA          
Latin America          

Fixed Income

Investment Grade          
High Yield          
Developed Market          
Emerging Market          
Treasuries          
TIPS          
Municipal          

Alternatives

Commodities          
Absolute Return        
REITS      
Convertible Bonds      
Continue reading
1166 Hits

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
691 Hits

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
720 Hits

Index & Sector ETF Signals - 2/10/2017 Update

TrendFlex signals for the major index and sector SPDR ETF's below are based on a trend-following system filtered to identify the "risk" to a change in the trend. 

Major Index ETF's 

 Symbol  Trend

Trend Change Risk

Notes
 DIA Bullish Med Breakout to new high; overbought
 SPY  Bullish Med

 New high; overbought

 QQQ Bullish Med New high; overbought
 IWM Bullish Med  Break out to new high
 DBA Bullish Lo Uptrend forming from long term bottom
 GLD Bullish Hi Near resistance; overbought
 VGK Bullish Low Positive momentum; firm uptrend
 UUP Bullish Med Hitting resistance
 TLT Bearish Med Testing December lows
EEM Bullish Low Rallying; long way to new highs; nice long potential


 Sector SPDR ETF's

 Symbol  Trend

Trend Change Risk

Notes
XLK Bullish Med New highs; overbought
XLU Bullish Hi Consolidating recent gains; looking to resume uptrend
XLI  Bullish Med Bullish breakout; overbought
XLB Bullish Low Strong bullish trend forming; attractive entry
XLV  Bullish Hi Hitting resistance and overbought 
XLE Bullish Low Attractive entry following consolidation 
XLP  Bullish Low Uptrend firming; attractive entry
XLY Bullish Med Bullish breakout
XLF  Bullish Med Bullish breakout


 

 

ETF Technical Leaders

The following table represents ETF's that are in bullish trends and represent technically attractive reward-to-risk entry points (for example, we will shy away from adding an overbought ETF). Although these ETF selections have been pre-screened, investors are advised to pursue their own research to determine whether they are appropriate for their portfolios. Selections are time-sensitive and represent short-term swing trading opportunities that may or may not follow-through on a longer-term basis. In addition, selections may be voided once a market trend change has occurred based on the TrendFlex signals. Visit our FAQ's  for more suggestions regarding ETF Zone. Check back frequently as additional ETF's may be added to the week's list. 

Symbol Rationale Close Date Added
EWI iShares Italy ETF inexpensive and possible long-term bottom formed 22.13 12/02/16
XLY Retracement from recent gains; attractive entry point 81.44 12/02/16 
XLV  Post-election catch-up;  nearing positive moving avg. cross (50 over 200 day)  70.49 11/11/16 

 

Allocation Strategy is updated on a bi-weekly basis, and takes a longer-term view consistent with the TrendFlex Allegiance system. Allocations are based on a blend of macro-economic trends and technical analysis, and incorporate the insight of our Thought Leaders as expressed on the Baseline Analytics website, and our ETF Signals analysis.  Portfolio allocation corresponds to an investor profile of moderate risk and a 20-year investment horizon.  Updates to Asset Allocation may be issued more frequently depending on market conditions.

Asset Allocation Strategy - 2/3/2017   

Instrument 

Underweight

Neutral

Overweight

Equities            
Fixed Income            ♦       
Alternatives      ♦      
Cash          

Equities

Style

Large Caps      
   
Mid Caps          
Small Caps         ♦    

Sector

Staples           
Discretionary           
Technology          
Utilities    
     
Industrials          
Healthcare      
   
Materials        
Financials          
Energy      
   
Regions     
US          
Eurozone          
China    
     
India          
Japan          
Emerging Asia          
EMEA          
Latin America          

Fixed Income

Investment Grade          
High Yield          
Developed Market          
Emerging Market          
Treasuries          
TIPS          
Municipal          

Alternatives

Commodities          
Absolute Return        
REITS      
Convertible Bonds      
Continue reading
1250 Hits

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

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1242 Hits

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
727 Hits

Index & Sector ETF Signals - 2/3/2017 Update

TrendFlex signals for the major index and sector SPDR ETF's below are based on a trend-following system filtered to identify the "risk" to a change in the trend. 

Major Index ETF's 

 Symbol  Trend

Trend Change Risk

Notes
 DIA Bullish Med Breakout to new high
 SPY  Bullish Med

 New high

 QQQ Bullish Med New high 
 IWM Bullish Med  Break out
 DBA Bearish Lo Uptrend forming
 GLD Bullish Low Positive moving average cross; long run potential 
 VGK Bullish Low Positive momentum; firm uptrend
 UUP Bullish Low Modest retracement; attractive entry 
 TLT Bearish Med Testing December lows
EEM Bullish Low Rallying to new highs


 Sector SPDR ETF's

 Symbol  Trend

Trend Change Risk

Notes
XLK Bullish Med New highs 
XLU Bullish Hi Consolidating recent gains; looking to resume uptrend
XLI  Bullish Med Bullish breakout
XLB Bullish Low Strong bullish trend forming; attractive entry
XLV  Bullish Low Returning to an uptrend 
XLE Bullish Low Attractive entry 
XLP  Bullish Low Uptrend firming; attractive entry
XLY Bullish Med Bullish breakout
XLF  Bullish Med Bullish breakout


 

 

ETF Technical Leaders

The following table represents ETF's that are in bullish trends and represent technically attractive reward-to-risk entry points (for example, we will shy away from adding an overbought ETF). Although these ETF selections have been pre-screened, investors are advised to pursue their own research to determine whether they are appropriate for their portfolios. Selections are time-sensitive and represent short-term swing trading opportunities that may or may not follow-through on a longer-term basis. In addition, selections may be voided once a market trend change has occurred based on the TrendFlex signals. Visit our FAQ's  for more suggestions regarding ETF Zone. Check back frequently as additional ETF's may be added to the week's list. 

Symbol Rationale Close Date Added
EWI iShares Italy ETF inexpensive and possible long-term bottom formed 22.13 12/02/16
XLY Retracement from recent gains; attractive entry point 81.44 12/02/16 
XLV  Post-election catch-up;  nearing positive moving avg. cross (50 over 200 day)  70.49 11/11/16 

 

Allocation Strategy is updated on a bi-weekly basis, and takes a longer-term view consistent with the TrendFlex Allegiance system. Allocations are based on a blend of macro-economic trends and technical analysis, and incorporate the insight of our Thought Leaders as expressed on the Baseline Analytics website, and our ETF Signals analysis.  Portfolio allocation corresponds to an investor profile of moderate risk and a 20-year investment horizon.  Updates to Asset Allocation may be issued more frequently depending on market conditions.

Asset Allocation Strategy - 2/3/2017   

Instrument 

Underweight

Neutral

Overweight

Equities            
Fixed Income            ♦       
Alternatives      ♦      
Cash          

Equities

Style

Large Caps      
   
Mid Caps          
Small Caps         ♦    

Sector

Staples           
Discretionary           
Technology          
Utilities    
     
Industrials          
Healthcare      
   
Materials        
Financials          
Energy      
   
Regions     
US          
Eurozone          
China    
     
India          
Japan          
Emerging Asia          
EMEA          
Latin America          

Fixed Income

Investment Grade          
High Yield          
Developed Market          
Emerging Market          
Treasuries          
TIPS          
Municipal          

Alternatives

Commodities          
Absolute Return        
REITS      
Convertible Bonds      
Continue reading
1208 Hits

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
918 Hits

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
769 Hits

Index & Sector ETF Signals - 1/27/2017 Update

TrendFlex signals for the major index and sector SPDR ETF's below are based on a trend-following system filtered to identify the "risk" to a change in the trend. 

Major Index ETF's 

 Symbol  Trend

Trend Change Risk

Notes
 DIA Bullish Med Breakout to new high
 SPY  Bullish Med

 New high

 QQQ Bullish Med New high 
 IWM Bullish Med  Break out
 DBA Bearish Lo Rally looking tired
 GLD Bullish Low Positive moving average cross 
 VGK Bullish Low Positive momentum; firm uptrend
 UUP Bullish Low Modest retracement; attractive entry 
 TLT Bearish Med Testing December lows
EEM Bullish Low Resumption of uptrend


 Sector SPDR ETF's

 Symbol  Trend

Trend Change Risk

Notes
XLK Bullish Med New highs 
XLU Bullish Hi Consolidating recent gains
XLI  Bullish Med Bullish breakout
XLB Bullish Low Strong bullish trend forming
XLV  Bullish Low Slowly returning to an uptrend 
XLE Bullish Low Attractive entry 
XLP  Bullish Low Uptrend firming; attractive entry
XLY Bullish Med Bullish breakout
XLF  Bullish Med Bullish breakout


 

 

ETF Technical Leaders

The following table represents ETF's that are in bullish trends and represent technically attractive reward-to-risk entry points (for example, we will shy away from adding an overbought ETF). Although these ETF selections have been pre-screened, investors are advised to pursue their own research to determine whether they are appropriate for their portfolios. Selections are time-sensitive and represent short-term swing trading opportunities that may or may not follow-through on a longer-term basis. In addition, selections may be voided once a market trend change has occurred based on the TrendFlex signals. Visit our FAQ's  for more suggestions regarding ETF Zone. Check back frequently as additional ETF's may be added to the week's list. 

Symbol Rationale Close Date Added
EWI iShares Italy ETF inexpensive and possible long-term bottom formed 22.13 12/02/16
XLY Retracement from recent gains; attractive entry point 81.44 12/02/16 
XLV  Post-election catch-up;  nearing positive moving avg. cross (50 over 200 day)  70.49 11/11/16 

 

Allocation Strategy is updated on a bi-weekly basis, and takes a longer-term view consistent with the TrendFlex Allegiance system. Allocations are based on a blend of macro-economic trends and technical analysis, and incorporate the insight of our Thought Leaders as expressed on the Baseline Analytics website, and our ETF Signals analysis.  Portfolio allocation corresponds to an investor profile of moderate risk and a 20-year investment horizon.  Updates to Asset Allocation may be issued more frequently depending on market conditions.

Asset Allocation Strategy - 1/13/2017   

Instrument 

Underweight

Neutral

Overweight

Equities            
Fixed Income            ♦       
Alternatives      ♦      
Cash          

Equities

Style

Large Caps      
   
Mid Caps          
Small Caps         ♦    

Sector

Staples           
Discretionary           
Technology          
Utilities    
     
Industrials          
Healthcare      
   
Materials        
Financials          
Energy      
   
Regions     
US          
Eurozone          
China    
     
India          
Japan          
Emerging Asia          
EMEA          
Latin America          

Fixed Income

Investment Grade          
High Yield          
Developed Market          
Emerging Market          
Treasuries          
TIPS          
Municipal          

Alternatives

Commodities          
Absolute Return        
REITS      
Convertible Bonds      
Continue reading
1417 Hits

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
1127 Hits

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
740 Hits