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
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