Nothing has changed since last week. We see markets see sawing for the time being moving slightly upward. Our largest exposures are outside of Europe and the US. We did find a large change in negative sentiment in Europe and we currently do not have exposure to Europe.
We continue to like India.
Please check back next for any significant changes.
Monday, June 28, 2010
Sunday, June 20, 2010
Market Update 6.20.10
Each week BFIA runs its three indicators. What are the indicators predicting? Our long-term horizon indicator, 6 months or more, still indicates that India is the market to be in. It is our largest exposure. However, we are close look at our third indicator to indicate when India becomes overvalued.
Our short-term indicators which indicate how long momentum runs in the short-term, indicates that the short-term volatility of May has ended and to close any of your open hedges.
Last week we compared our third indicator to predict the weekly short-term dynamics of the US stock market by comparing the indicator to old values of 2004. We predicted last week was going to be big and it was. What does it say about this week? If the current values do compare to the July, August, September time period of 2004, we predict a lot of back and forth but with slight upward trend. Therefore, we are staying long in the market.
When the value increases it indicates a bullish sign. Decreasing indicates a bearish sign. If we compare 5/2/2010 to 7/11/2004 going forward, the US stock market should increase slightly from here. If the dynamics today do compare to 2004 than we should expect another large down month 7-9 months from today.
Date BFIA_old
7/11/2004 0.90089
7/18/2004 0.88128
7/25/2004 0.8719
8/1/2004 0.85502
8/8/2004 0.86791
8/15/2004 0.83308
8/22/2004 0.83273
8/29/2004 0.86366
9/5/2004 0.87112
9/12/2004 0.87606
9/19/2004 0.88527
9/26/2004 0.89168
Date BFIA_recent
5/2/2010 0.94169
5/9/2010 0.91633
5/16/2010 0.84932
5/23/2010 0.8705
5/30/2010 0.82822
6/6/2010 0.83201
6/13/2010 0.80986
6/20/2010 0.83363
Our short-term indicators which indicate how long momentum runs in the short-term, indicates that the short-term volatility of May has ended and to close any of your open hedges.
Last week we compared our third indicator to predict the weekly short-term dynamics of the US stock market by comparing the indicator to old values of 2004. We predicted last week was going to be big and it was. What does it say about this week? If the current values do compare to the July, August, September time period of 2004, we predict a lot of back and forth but with slight upward trend. Therefore, we are staying long in the market.
When the value increases it indicates a bullish sign. Decreasing indicates a bearish sign. If we compare 5/2/2010 to 7/11/2004 going forward, the US stock market should increase slightly from here. If the dynamics today do compare to 2004 than we should expect another large down month 7-9 months from today.
Date BFIA_old
7/11/2004 0.90089
7/18/2004 0.88128
7/25/2004 0.8719
8/1/2004 0.85502
8/8/2004 0.86791
8/15/2004 0.83308
8/22/2004 0.83273
8/29/2004 0.86366
9/5/2004 0.87112
9/12/2004 0.87606
9/19/2004 0.88527
9/26/2004 0.89168
Date BFIA_recent
5/2/2010 0.94169
5/9/2010 0.91633
5/16/2010 0.84932
5/23/2010 0.8705
5/30/2010 0.82822
6/6/2010 0.83201
6/13/2010 0.80986
6/20/2010 0.83363
Monday, June 14, 2010
Every Sunday there will be a new post regarding the results of our models. Please bookmark the site and take a look before the new week begins.
What does the model predict going forward. Again, BFI Advisors employs 3 indicators. One of the indicators integrates behavioral finance and agent-based modeling to indicate when markets are over and under valued. If the indicator is under 1 it is undervalued and over 1 means overvalued. We do see some similarities from May/June of 2010 with the month of July/August in 2004. Remember from 2000-2002 was similar to 2008 and 2003 was similar to 2004 as far as the direction of the market. The magnitude of the movements was distinct. And 2004 compares to 2010. Our under/over valued indicator in 2004 has similarities to 2010 as noted below. If we believe this similarity will continue than our 2010 indicator should rise in value over the next several weeks. What does this mean. It means we predict the stock market will rise in the next several weeks.
What do the other indicators say about which markets to invest long-term. The model is still over weighting India, South Africa, and Israel. India and South Africa have weathered the May storm well relative to other markets. However, Israel has not. We do recommend to hold off on Israel until our short-term indicators indicate to close the hedge. Currently, there is no hedge on India or South Africa. We will keep you updated next week.
4/25/2010 0.92496 7/4/2004 0.90089
5/2/2010 0.94169 7/11/2004 0.89277
5/9/2010 0.91633 7/18/2004 0.88128
5/16/2010 0.84932 7/25/2004 0.8719
5/23/2010 0.8705 8/1/2004 0.85502
5/30/2010 0.82822 8/8/2004 0.86791
6/6/2010 0.83201 8/15/2004 0.83308
6/13/2010 0.80995 8/22/2004 0.83273
8/29/2004 0.86366
9/5/2004 0.87112
9/12/2004 0.87606
9/19/2004 0.88527
9/26/2004 0.89168
What does the model predict going forward. Again, BFI Advisors employs 3 indicators. One of the indicators integrates behavioral finance and agent-based modeling to indicate when markets are over and under valued. If the indicator is under 1 it is undervalued and over 1 means overvalued. We do see some similarities from May/June of 2010 with the month of July/August in 2004. Remember from 2000-2002 was similar to 2008 and 2003 was similar to 2004 as far as the direction of the market. The magnitude of the movements was distinct. And 2004 compares to 2010. Our under/over valued indicator in 2004 has similarities to 2010 as noted below. If we believe this similarity will continue than our 2010 indicator should rise in value over the next several weeks. What does this mean. It means we predict the stock market will rise in the next several weeks.
What do the other indicators say about which markets to invest long-term. The model is still over weighting India, South Africa, and Israel. India and South Africa have weathered the May storm well relative to other markets. However, Israel has not. We do recommend to hold off on Israel until our short-term indicators indicate to close the hedge. Currently, there is no hedge on India or South Africa. We will keep you updated next week.
4/25/2010 0.92496 7/4/2004 0.90089
5/2/2010 0.94169 7/11/2004 0.89277
5/9/2010 0.91633 7/18/2004 0.88128
5/16/2010 0.84932 7/25/2004 0.8719
5/23/2010 0.8705 8/1/2004 0.85502
5/30/2010 0.82822 8/8/2004 0.86791
6/6/2010 0.83201 8/15/2004 0.83308
6/13/2010 0.80995 8/22/2004 0.83273
8/29/2004 0.86366
9/5/2004 0.87112
9/12/2004 0.87606
9/19/2004 0.88527
9/26/2004 0.89168
Friday, June 4, 2010
Stay Strong
BFI Advisors employs three indicators. The first two are based on behavioral biases. One is a short-term and the other is a long-term indicator. The short-term indicators indicate volatility will continue and to maintain any hedge you have opened for now. However, more importantly, the long-term indicators indicate to stay long. That we are not in a double dip recession nor another financial crisis.
The third indicator is a hybrid indicator exploiting agent-based modeling and behavioral finance. Our agent-based indicator indicates whether a market is under or overvalued. Surprisingly, Europe and the US are both undervalued which corroborates the long-term behavioral indicator.
Given the model results we are not selling here, but will look for an opportunity to buy in the near term.
The third indicator is a hybrid indicator exploiting agent-based modeling and behavioral finance. Our agent-based indicator indicates whether a market is under or overvalued. Surprisingly, Europe and the US are both undervalued which corroborates the long-term behavioral indicator.
Given the model results we are not selling here, but will look for an opportunity to buy in the near term.
Subscribe to:
Posts (Atom)