Market Update 11.13.11

The last time we have seen a movement in our indicators such as the movement in the last three months were the following dates: 1971, 1978, 1986, 1994, and 2006. The only year that a recession did not occur a year or two later was 1994. A recession occurred in the other four periods on average 1 and half years later. We predict a global recession within the next year.

However, our behavioral indicators suggest that before that global recession occurs global markets increase. Therefore we are bullish to an extent over the following year afterwards we are bearish.

The following markets we like:
1. South Africa
2. Turkey
3. US government bonds
4. Gold
5. India
6. Mexico

Our indicators suggest several emerging equity markets will do over the upcoming year. Right not emerging markets have not performed well but we think these markets will do well in the upcoming year.

Market Update 10.23.11

The model results suggest no imminent 2008 type global crisis. The short-term measures have come down considerably. The crisis indicators for Europe and specific European countries of Greece, Spain, and Italy are near the crisis threshold but still below. Typically when a crisis is going to hit our indicators pass the threshold months in advance. Since the markets have already been rattled we believe the current measures near crisis threshold are more contemporaneous. When this occurs it typically means the end is near, however, the market is susceptible to another major shock 3-12 months out.

What to invest in today?
The top five markets we like are:
South Africa
Turkey
India
Mexico
Japan

Market Update 10.16.11

Two weeks ago we posted that the global markets were near a bottom based on our measures. Since then they have rebounded considerably. We are not out of the woods yet though. US Treasuries and Gold are still very much bullish according to the model. Even so, they are losing some bullish strength. Once the model suggest no more bullishness then we are out of the woods for the time being.

However, select equity market are now becoming bullish which is a good sign. Prior to July 31 there were no equity markets that were bullish. Here are the top equity markets:

South Africa
Mexico
India
Japan
China

For those that are risk takers, we view Indonesia and Malaysia are coming back hard. When markets are at the bottom of our list we find they typically come back strong. These markets are at the bottom of our list now.

Market Update 10.02.11

Financial markets have been crazy the past two months. It does not look like it will subside until the European debt crisis and more info about the US economy becomes available.

Either way what does the model say? The model is not predicting another global financial crisis such as in 2008. Ignore the fear that is out there. We find irrational fear is at one of its greatest points in our history since 1970. This means the bottom is close. Also our US measure is close to its financial crisis threshold. When the market moves down 10-20% and then hits the financial crisis threshold it also means the market has bottomed. It is not at the threshold yet but the most we see the market fall is between 5-10%. Not another 2008.

Where do you place your money?

We like select equity markets such as Japan, Mexico, South Africa, Turkey, and India. Treasuries are still bullish.

9.11.11 Market Update

Based on recent model results we do not see stock markets falling that much further. Looks like the markets will battle back and forth until uncertainty settles. The US and Europe are still well under their financial crisis thresholds. If this was a financial crisis brewing our indicators would have already indicated a financial crisis.

Our model still favors gold and treasuries of course. As far as equity markets our model still likes Asian markets such as the Asian Tigers as well as China and India. Of course we are concerned about what the markets will bring us. However, our models suggest the worst is behind us. Markets are overreacting to a point. At the same time there are no bullish signals for any one particular market other than gold and treasuries which suggests the markets will not increase in the immediate future, but the markets will not fall another 10 or 15% again.

Blog 9.04.11

The media has been taking about a double dip recession. What do our indicators say? It says there is no US recession. Going back to 1970 our indicators have indicate there was a US recession before every US recession. What does this mean? It means the markets are forecasting a worst case scenario.

Our model suggests to keep a good exposure to gold, however, also to emerging Asian markets such as Indonesia, Thailand, and Malaysia.

Market Update 8.14.11

Last week we suggested the market would flat to slightly positive based on some of our indicators. A pretty bold move given the great uncertainty. The market was slightly down. We believe the US market is near a bottom and it will recover until the middle of September. By then it will fall late September and early October and increase until the rest of the year. At that point we will have to evaluate. However, the outlook is not great.

Even so our indicators do like the Asian tigers such as Indonesia and Thailand.

The model likes gold as well. However, we sold because of the large run up. We will look to buy later on. In addition, commodity markets are becoming slightly more bullish such as Brazil and South Africa. With the Fed keeping interest rates low this could mean more gains for commodities. We are waiting to receive a confirmation of this trade before acting on it.