Market Update 7.31.11

We just received confirmation concerning the Asian trade. In the last several weeks we have been bullish on Indonesia, Malaysia etc. Other markets such as China, South Korea, and Thailand were in a grey area between bullish and bearish states. These markets have just transitioned into a bullish state while other markets such as the US and Europe have transitioned to a bearish state. The last of the Asian markets to transition to the bullish state now confirms the Asian trade is on.

What about the US? US government bonds are bullish however, the US equity market is bearish. But not bearish to the point of another financial crisis. The US is still considerably under its crisis threshold. However, investors are fleeing to some safety resulting in a bullishness of US government bonds. These results mean the market is not worried about US default. However, the long-term consequences are bearish for the US market.

Market Update 7.24.11

This week's results are confirming the an Asian trade and Gold and Silver. Continue investing in these markets. What is curious is that the number one ranked investment in our list is US Government Debt. In addition, gold and silver both have came back as good investments. We received the sell signal in April and now a buy signal. Lastly, the US market has a bad short-term measure. However, the long-term measure is in a stable zone.

This could mean some downside potential in the global financial markets. Even so, the Asian market trade of Indonesia, India, Malaysia, and Japan are continuing their trade which will outlast any short-term downside in the global financial markets.

Market Update 7.17.11

Last week we mentioned that the next trade was Asia. This is how our ETFs did last week compared to the US which we mentioned was in bearish territory.

ETF Market Return
EIDO Indonesia 0.55%
EWJ Japan 0.76%
EWM Malaysia -1.17%
INP India -2.48%
IWM US -2.73%

This past week was a confirmation of the Asia trade. We also received a new signal for another trade, precious metals such as Silver and Gold.

We suggest over weighting Asia and also putting some money into precious metals. Since this is a new signal we recommend allocating a small amount for now increasing your allocation as the trade is confirmed.

We are receiving bearish signals for the developed world except for Japan including the US, Canada, Australia, and Europe. At the beginning of the year, these were the countries to invest in and Asia was the region to not invest in. We are now receiving a signal these trades have switched.

Market Update 7.10.11

We are in the midst of the summer. The US market took a hit and then basically came back in a week. In a previous blog we said that a 7% decline from the high will be the bottom of the decline if we are right about 2011 looking like the summer of 2004. This is exactly what happened. Except the market sprung back a lot faster than in 2004.

What does the model say now? The model is not bullish on the US for the short-term. The long-term indicator is in the middle of bearishness and bullishness, but the short-term indicator is bearish. This means it is hard to determine where the US is going. Therefore, we recommend staying away from the US market for now.

The markets the model likes is:
India
Indonesia
Japan
Malaysia
Mexico

Looks like the Asian markets are the next trade. The model is not bullish yet on other Asian markets such as China, Korea, or Singapore. However, if the Asian trade is the next trade then these markets will start to follow suite.

Based on our analysis of previous periods with the same indicator levels, the US market will fall and rise until the end of September. At that point the US market will have a rally to the end of the year.

Market Update 7.03.11

There appears to be a changing of the guard now. The developed markets are out, energy is out, natural resources are out. The new trades appearing are India, Indonesia, Japan, Malaysia, and Mexico.

Base on the US indicators I believe there will be a sell of in the US after the 4th of July and then that will be the time to add to the above markets.

It is too early to indicate what will be the new trade for the rest of the year. It appear to be Asian markets which have not performed well this year. We need several weeks to confirm this trade.