We now run our BFIA measures for additional markets including Thailand, Indonesia, Chile, and Canada. Based on our long-term behavioral measures, below are the top ten markets we like with number one being the most bullish market.
1 India
2 chile
3 thailand
4 turkey
5 canada
6 south africa
7 brazil
8 Korea
9 Malaysia
10 Eastern Europe
The next top ten list are the markets we like on a short-term basis.
1 turkey
2 Eastern Europe
3 brazil
4 India
5 canada
6 thai
7 China
8 south africa
9 Korea
10 Malaysia
Looking at our agent-based behavioral measure. If we compare the current stock market environment to back in March to May 2010 we would be in the second week of April. This means we may see very low volume for the next three weeks than major downside volatility. It is important to analyze the measures every week to understand the major changes.
Sunday, October 17, 2010
Sunday, October 10, 2010
Market Update 10.10.10
Last week we mentioned the market was going to continue up, overweight Turkey and South Africa. Summary of the week was the market went up and Turkey went up 7.96% for the week and South Africa was up 2.5% for the week.
Current model results indicate that India is still the largest exposure with Malaysia, South Africa, Turkey, and South Korea the next largest exposures. Based on our agent-based behavioral measure the US is still undervalued by 11%. We still see some more upside before year end. However, we are getting close to the point where we might see a decent pullback. We will keep you updated.
Current model results indicate that India is still the largest exposure with Malaysia, South Africa, Turkey, and South Korea the next largest exposures. Based on our agent-based behavioral measure the US is still undervalued by 11%. We still see some more upside before year end. However, we are getting close to the point where we might see a decent pullback. We will keep you updated.
Sunday, October 3, 2010
Market Update 10.03.2010
Based on our behavioral measures for the past year, we have been a bull on India. Since investing in India we are up over 40%, which is our best performing ETF. For the first time in months our behavioral measures have signaled to reduce the allocation to India slightly, 1.5%. The markets we should re-allocate to are Turkey and South Africa which are our second and third largest exposures at the moment. We are still bullish on high yield bonds, but we are running the models every week to determine the right time to sell. Our allocation to the US is still under 5%, our lowest exposure.
At the beginning of last week we said this week will help determine the direction of the markets for the next several weeks. Based on the week we believe the markets are going to continue going higher. Currently, our agent-based-behavioral measure for the US is 0.88. The last time it went as high as 0.88 was back in the beginning of March 2010. From that point it went up to 0.94 right before the flash crash. If the dynamics repeat themselves we see the markets going higher and then a slight correction.
At the beginning of last week we said this week will help determine the direction of the markets for the next several weeks. Based on the week we believe the markets are going to continue going higher. Currently, our agent-based-behavioral measure for the US is 0.88. The last time it went as high as 0.88 was back in the beginning of March 2010. From that point it went up to 0.94 right before the flash crash. If the dynamics repeat themselves we see the markets going higher and then a slight correction.
Sunday, September 26, 2010
09/26/2010 Market Update
Each week we run our behavioral measures. Based on the behavioral model, India is the largest exposure with Malaysia and South Africa tied for the second largest exposure and South Korea the third. High yield corporate debt still looks attractive based on what we have seen in our models. We are concerned about India, Malaysia, and high yield corporate debt become over valued as the measures are heading toward unprecedented bullish territory which is a contrarian indicator. However, at the moment we do not see any reason to sell.
We also run a third agent-based measure which has predictive power for short-term movements. This week will we believe will indicate where the market is heading the next several weeks. Our indicator for the US hit 0.86. Last two times the measure hit 0.86 the market fell dramatically the next week. However, before those two periods the US market went up to 0.94 right before the flash crash. Stay tuned for the right time to sell India and high yield corporate bonds. We are still involved in that trade and whether our agent-based measure is correct about the next several weeks.
We also run a third agent-based measure which has predictive power for short-term movements. This week will we believe will indicate where the market is heading the next several weeks. Our indicator for the US hit 0.86. Last two times the measure hit 0.86 the market fell dramatically the next week. However, before those two periods the US market went up to 0.94 right before the flash crash. Stay tuned for the right time to sell India and high yield corporate bonds. We are still involved in that trade and whether our agent-based measure is correct about the next several weeks.
Sunday, September 19, 2010
Market Update 9.29.10
As we look over at BFIA's first year of performance, the behavioral model signaled to overweight India the most relative to all other markets. India has returned up close to 30% since. In addition the model has signaled US high yield corporate bonds were preferred to US equity. Since September 2009 it appeared the model was incorrect. However, the model was built to pinpoint investment cycles and not short-term movements. Over the past year high yield corporate bonds have returned BFIA 17% relative to the S&P 500 which returned 6.5% over the same time period.
We have become more confident with our weighting system given our one year track record. Currently, we are still over weighting India and Malaysia. Other markets we like continue to be South Africa, Turkey, Taiwan, and South Korea.
Another interesting signal we have discovered in our continued research is based on the spread between our long-term and short-term indicators. Based on the spread, BFIA likes China, Taiwan, Turkey, and Brazil for the short-term, short-term meaning at least 1 month.
As far as bonds, we do see unprecedented bullish in our measures, which means we see a turnaround in the bond market at some point. However, at this point we do not see any signals points to exit bonds.
We have become more confident with our weighting system given our one year track record. Currently, we are still over weighting India and Malaysia. Other markets we like continue to be South Africa, Turkey, Taiwan, and South Korea.
Another interesting signal we have discovered in our continued research is based on the spread between our long-term and short-term indicators. Based on the spread, BFIA likes China, Taiwan, Turkey, and Brazil for the short-term, short-term meaning at least 1 month.
As far as bonds, we do see unprecedented bullish in our measures, which means we see a turnaround in the bond market at some point. However, at this point we do not see any signals points to exit bonds.
Sunday, September 12, 2010
Market Update 9.12.10
The past week was a good week for the financial markets. The BFIA fund is up 3.3% so far this month. However, since May the markets have note been able to sustain a long positive up trend. Below you can find our agent-based indicators for the last several months. It shows that the US has been in the range of .77 to .86 for the last several months. If we stay in that range it means there is little more upside and a high probability of downside to come since the US is currently at .846. Since BFIA fund is not a trading strategy we are remaining long, but we recommend to be cautious for the next several weeks.
Our long behavioral indicators are still bullish on India and Malaysia. Since we purchased Malaysia in August we are up over 10% even over the month of August which was a horrible month for the US stock market. South Korea, Turkey, and South Africa are also markets we are over weighting. We still see some bullishness left in US high yield bonds and less in US government bonds.
5/16/2010 0.84867
5/23/2010 0.8698
5/30/2010 0.82752
6/6/2010 0.83135
6/13/2010 0.80929
6/20/2010 0.83315
6/27/2010 0.85641
7/4/2010 0.82415
7/11/2010 0.77513
7/18/2010 0.82649
7/25/2010 0.81462
8/1/2010 0.84754
8/8/2010 0.84509
8/15/2010 0.86223
8/22/2010 0.82405
8/29/2010 0.81916
9/5/2010 0.81119
9/12/2010 0.84639
Our long behavioral indicators are still bullish on India and Malaysia. Since we purchased Malaysia in August we are up over 10% even over the month of August which was a horrible month for the US stock market. South Korea, Turkey, and South Africa are also markets we are over weighting. We still see some bullishness left in US high yield bonds and less in US government bonds.
5/16/2010 0.84867
5/23/2010 0.8698
5/30/2010 0.82752
6/6/2010 0.83135
6/13/2010 0.80929
6/20/2010 0.83315
6/27/2010 0.85641
7/4/2010 0.82415
7/11/2010 0.77513
7/18/2010 0.82649
7/25/2010 0.81462
8/1/2010 0.84754
8/8/2010 0.84509
8/15/2010 0.86223
8/22/2010 0.82405
8/29/2010 0.81916
9/5/2010 0.81119
9/12/2010 0.84639
Monday, September 6, 2010
Market Update 9.05.10
Markets have performed well in the last week. After running our weekly behavioral model, allocations have not changed much. We still overweight India and Malaysia as well as high yield corporate bonds.
We believe these markets will become over valued in the next year, two, or three as the behavioral model is indicating that they are slowly reaching a contrarian threshold. Our models are designed to determine when that exit point occurs.
Our agent-based market signals an interesting market to look at is Japan. Out of all the markets we study Japan is the most under valued. The US is also one of the most under valued markets. Our model is not a fundamental model and does not explain if there exist structural factors coming into play that are keeping these markets under valued which make take years before they are fixed. Therefore, we have small exposures to these markets for now, but we are looking for appropriate points to add additional exposure.
We believe these markets will become over valued in the next year, two, or three as the behavioral model is indicating that they are slowly reaching a contrarian threshold. Our models are designed to determine when that exit point occurs.
Our agent-based market signals an interesting market to look at is Japan. Out of all the markets we study Japan is the most under valued. The US is also one of the most under valued markets. Our model is not a fundamental model and does not explain if there exist structural factors coming into play that are keeping these markets under valued which make take years before they are fixed. Therefore, we have small exposures to these markets for now, but we are looking for appropriate points to add additional exposure.
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