TrendFlex Score

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This week, Classic shifted to Downtrend and Allegiance has shifted to Neutral (Cash).  The Traditional indicators remain on Downtrend. 

TrendFlex Signal Trend Signal Date Performance
TrendFlex Classic 1 Downtrend 08/24/15 -1.2%
TrendFlex Allegiance 1 Cash 8/24/15 0.0%
TrendFlex Classic II Downtrend 4/13/15 5.7%
TrendFlex Allegiance II Downtrend 4/6/15 3.8%

The TrendFlex Score decreased from its extreme reading at 2.56 to 2.19, and close below its three-week moving average, a short-term bullish development. We believe that this shift may be short-term; recent volatility suggests a series of "back and fill" moves in the indices until they settle down.

TFS08282015  

Last week we noted that the Portfolio Options Table recognized the bearish trend, however the high reading in the TrendFlex Score anticipated a short-term bounce in equities (hence the rather opportunistic "long futures & options" bullet below).  It was some bounce from the lows! This week we have removed the "long futures & options" as further short-term caution, anticipating that the bounce may have already played itself out. 

POT08282015 

Click here for the cumulative returns and trade history for the Baseline Analytics TrendFlex systems since their initial trades

The "uptrend" TrendFlex Classic and Allegiance signals took it on the chin this week as the S&P 500 sunk 5.7%. VIX and CBOE Put/Call Ratios hit extreme fear levels not seen since the October 2014 Ebola crisis.

As typical with market timing systems, circumstances develop that nullify technical analysis-based systems and highlight one or two technical conditions that forewarned of a trend shift even though the major trend appeared intact.  Such circumstances that have surfaced in the prior weeks include declining market breadth while the indices pushed to new highs, as well as modest VIX readings.

In fact, our Classic and Allegiance signals based on a risk premium indicator in Corporate vs. Treasury debt, which were our flagship signals from 2011 through 2014, flashed "Sell" signals as early as 4/6/15.  We chose to abandon these indicators given the impending shift in Federal Reserve policy toward a more hawkish stance (these indicators remain a component of the TrendFlex Score calculation).  Those "traditional" Classic and Allegiance signals would be up 6.7% and 4.8% today, respectively.  

Baseline Analytics will begin to provide the results of these alternative systems plus additional commmentary to pull it all together, on a weekly basis.  Additionally, we will continue to provide our "Top 5" timing systems for SPY and other top ETF's to lend further support to market positioning. Commentary will attempt to consider all systems and assess the risk/reward of long or short positions on a comprehensive basis, while tracking the results of each of the four TrendFlex systems. 

This week, Allegiance has shifted to Neutral with a score of 2.25.  Classic has shifted to Bearish at a score of 2.60.   The Traditional indicators remain on Downtrend signals established in April.

TrendFlex Signal Trend Signal Date Performance
TrendFlex Classic 1 Downtrend; shift to sell 8/24/15 05/15/15 -7.1%
TrendFlex Allegiance 1 Neutral; shift to cash 8/2415 11/03/14  -2.3% 
TrendFlex Classic II Downtrend 4/13/15 6.7%
TrendFlex Allegiance II Downtrend 4/6/15 4.8%

The TrendFlex Score increased from 2.17 to 2.56, which is the highest (and most extreme) score recorded since the 2.62 score recorded in May, 2012. Given the extreme reading in the TrendFlex Score, as well as the high readings in VIX and the CBOE Put/Call ratio (see our Baseline Analytics Blog posted midday Friday), we will be looking for a bounce in equities. One likely scenario may be a modest bounce Monday morning, followed by new lows, then a sustained bounce into the close.  We are not convinced yet that the market will bounce and recover quickly as it has several time so far this year, although as Investor's Business Daily has pointed out this weekend, many good follow-through days have occurred in August.

TFS08212015  

The Portfolio Options Table is recognizes the bearish trend, however the high reading in the TrendFlex Score anticipates a short-term bounce in euquities (hence the rather opportunistic "long futures & options" bullet below).  

POT08212015b 

Click here for the cumulative returns and trade history for the Baseline Analytics TrendFlex systems since their initial trades

The TrendFlex Classic and Allegiance signals strengthened a bit on the week following this week's .67% increase in the S&P 500. The Classic signal has improved on the week, as the TrendFlex Score as noted below has turned more bullish.  

TrendFlex Signal Trend Signal Date Performance
TrendFlex Classic Uptrend 05/15/15 -1.4%
TrendFlex Allegiance Uptrend  11/03/14  +3.6% 

The TrendFlex Score decreased from 2.25 to 2.17 and closed below its three-week moving average, a bullish development. 

TFS08142015  

 The Portfolio Options Table remains bullish with a slight improvement.   

POT08142015 

Click here for the cumulative returns and trade history for the Baseline Analytics TrendFlex systems since their initial trades

The TrendFlex Classic and Allegiance signals weakened a bit following this week's 1.25% decline in the S&P 500. The Classic signal shifted from Uptrend to Neutral. 

TrendFlex Signal Trend Signal Date Performance
TrendFlex Classic Uptrend 05/15/15 -2.1%
TrendFlex Allegiance Uptrend  11/03/14  +2.9% 

The TrendFlex Score increased from 2.20 to 2.25  and remains above its three-week moving average, a bearish development. 

TFS08072015  

 The Portfolio Options Table remains bullish but increasingly cautious, with no change from last week.  

POT07242015 

Click here for the cumulative returns and trade history for the Baseline Analytics TrendFlex systems since their initial trades

The TrendFlex Classic and Allegiance scores improved on the week, and both maintain their uptrend signals. As the short-term market bounce approaches the top of its recent trading range, we are becoming more cautious.  Not sure what catalyst can propel the indices to new highs as we continue through a traditionally weak season.

TrendFlex Signal Trend Signal Date Performance
TrendFlex Classic Uptrend 05/15/15 -0.9%
TrendFlex Allegiance Uptrend  11/03/14  +4.2% 

The TrendFlex Score increased from 2.13 to 2.20  and remains above its three-week moving average, a bearish development. The market bounced at the recent score high of 2.42 as reported in our intra-week update, which turned out to be a profitable short term bullish trade. The weekly TrendFlex Score has languished over 2.0 and does not display any strong indication of a strong uptrend resuming.

TFS07312015  

 The Portfolio Options Table remains bullish but increasingly cautious.  We recommend keeping stops in place and raising income with covered call writing on profitable holdings.  We are cautious toward adding any long positions at this time.

POT07242015 

Click here for the cumulative returns and trade history for the Baseline Analytics TrendFlex systems since their initial trades

The TrendFlex Score jumped from 2.13 to 2.42 following Monday's close, suggesting that the equity markets are ripe for a bounce.  This level of the score has in the past coincided with a resumption in the short-term uptrend.  We caution however that any bounce may be followed by resistance pressure from traders looking for an exit, as we may simply see a "tradeable rally."

TFS07272015  

Equity markets continue their wide trading range. One noteworthy development is the shift in the S&P 500 "High-Low" percentage, which dipped into negative territory with Friday's close and nearly matches the low reached in October, 2014.  Both TrendFlex Classic and Allegiance signals weakened following this week's 2.21% decline in the S&P 500.    The Classic score shifted from neutral to bearish, although the S&P 500 remains in a wide-ranging trading range.  Our Classic signal may shift to Downtrend pending Monday's activity. The Allegiance score increased slightly (a bearish development) but remains in Uptrend.  

TrendFlex Signal Trend Signal Date Performance
TrendFlex Classic Uptrend 05/15/15 -2.0%
TrendFlex Allegiance Uptrend  11/03/14  +3.0% 

The TrendFlex Score incraeased from 1.98 to 2.13  and closed above its three-week moving average, a bearish development. 

TFS07242015  

 The Portfolio Options Table remains bullish but increasingly cautious.  We recommend keeping stops in place and raising income with covered call writing on profitable holdings.  

POT07242015 

Click here for the cumulative returns and trade history for the Baseline Analytics TrendFlex systems since their initial trades

Both TrendFlex Classic and Allegiance signals remain in Uptrend mode following this week's 2.41% climb in the S&P 500.    The Classic score improved from neutral to bullish, while the Allegiance score remained unchanged.

TrendFlex Signal Trend Signal Date Performance
TrendFlex Classic Uptrend 05/15/15 +0.2%
TrendFlex Allegiance Uptrend  11/03/14  +5.4% 

The TrendFlex Score declined from 2.24 to 1.98 and closed below its three-week moving average, a bullish development. Now that the TrendFlex Score is in a bullish mode, its relatively high level of 1.98 provides ample room for further upside action in the market before it reaches a level considered risky for continuation of the uptrend.

TFS07172015  

 The Portfolio Options Table remains bullish  We recommend keeping stops in place and raising income with covered call writing on profitable holdings.  We suggest cautiously adding to long positions. On our StockStash page, check out our updated stock scans and their downloadable Excel files for timely long opportunities.

POT07182015 

Click here for the cumulative returns and trade history for the Baseline Analytics TrendFlex systems since their initial trades

Both TrendFlex Classic and Allegiance signals remain in Uptrend mode following this week's 0.01% decline in the S&P 500.    The Classic and Allegiance scores remained unchanged.

TrendFlex Signal Trend Signal Date Performance
TrendFlex Classic Uptrend 05/15/15 -2.1%
TrendFlex Allegiance Uptrend  11/03/14  +2.9% 

The TrendFlex Score declined slightly from 2.26 to 2.24 and remains above its three-week moving average. We would be looking for a decent fall below its 3-week moving average to add to long positions.  

 TFS07102015

The Portfolio Options Table remains bullish on a long term basis. We recommend keeping stops in place and raising income with covered call writing on profitable holdings.  We refrain from "adding to longs" as we await volatility to settle down and the TrendFlex Score to dip closer to the 2.0 area. We continue to suggest some opportunitstic short positions, given the potential for seasonal weakness.

POT07022015b 

Click here for the cumulative returns and trade history for the Baseline Analytics TrendFlex systems since their initial trades

Both TrendFlex Classic and Allegiance signals remain in Uptrend mode following this week's 1.18% decline in the S&P 500.    The Classic signal score at 2.40 is slightly bearish. Caution toward long positions remains. Allegiance remains long-term bullish.

TrendFlex Signal Trend Signal Date Performance
TrendFlex Classic Uptrend 05/15/15 -2.1%
TrendFlex Allegiance Uptrend  11/03/14  +2.9% 

The TrendFlex Score climbed slightly from 2.06 to 2.26 and remains above its three-week moving average. As noted last week, a closing TrendFlex Score near the 2.0 area in the recent past has preceded a market bounce and recovery to new highs.  We'll be looking for a bounce in the market at these levels. 

 TFS07022015

The Portfolio Options Table remains bullish on a long term basis. We recommend keeping stops in place and raising income with covered call writing on profitable holdings.  We have removed "adding to longs" as we await volatility to settle down. We continue to suggest some opportunitstic short positions, given the potential for seasonal weakness.

POT07022015b 

Click here for the cumulative returns and trade history for the Baseline Analytics TrendFlex systems since their initial trades

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