Special Bulletin: August 31, 2020

The Trend Is Your Friend, Until It Ends

With the Fed’s foot firmly on the accelerator (zero interest rates & QE unlimited) and the financial markets awash with liquidity (stimulus and all the rest), the trend of this market is up. Not all areas are benefiting yet, mind you, but the abundance of cheap capital has started a fire in certain industries that should eventually spread to others as the rally continues to unfold.

Our Current Market Outlook has been upgraded to “Market in an Uptrend” with a “green” light. Three of our Core Four indicators are green, while the last one is still red. Key sentiment indicators remain at excessively high levels that often precede a correction. While the signal is back to green, that sentiment aspect suggests there is still an above average chance of a meaningful pullback during the fall.

We have long observed that there is a significant difference between actual real-time application and analytical market theory. To that point, we have uncovered an improvement to our C.M.O. traffic light signals this year resulting in potential earlier and longer green signals. This important refinement should positively impact our already stellar process.

What are investors to do now? Stay with the trend. Have your exit strategy in place if things go crazy into the election. While September can historically be a difficult month for stocks, keep in mind the technical conditions for a bear market are not present, yet.

Have a Triumphant day! ®  

Note: This update was originally slated for publishing late Monday evening (08/31) but due to a software subscription issue was not uploaded until Tuesday afternoon (09/01).