|technical analysis, trading systems, investing, market-timing methods, stock market, money management
Technical Market Indicators
Dow Theory, W.D. Gann, MetaStock, system tester, indicator builder, custom formulas, momentum, overbought, oversold, buy, sell, signals, top, bottom, Bull, Bear, consolidation, sentiment, contrary opinion
June 27, 2022
Preview from my weekly report*
Our asset management clients have made significantly positive relative returns while taking much less risk. We offer complete transparency, anytime access to your funds, and low fees. You keep control over your money. See: ColbyAssetManagement.com
Stock Market Outlook: Does the Fed actually know what it is doing?
Following years of wildly-excessive monetary stimulus, leading to the inevitable upsurge in price inflation, more market strategists now fear the Fed will go too far in the opposite direction, tightening monetary policy until it breaks the economy, and causing a dreaded hard-landing recession that would further depress the stock market.
The benchmark S&P 500 stock price index fell 24.52% from the January high to the June low this year, based on intraday extreme price ranges. It can fall much more than that in a full-blown recession. Most stocks are down more than the S&P 500 index already.
The objective evidence continues to suggest that Potential Market Risk is greater than Potential Reward. Preserve capital.
We are very concerned that the significant losses so far this year could increase further if present bearish market conditions continue in months ahead, as we expect they will, based on a large variety of technical and fundamental indicators we analyze daily.
We have succeeded in preserving our clients’ capital, with no significant loss of capital. As long-time readers of this report know, we did not believe that the financial markets were on a sound foundation in 2020-2021, and now it is becoming increasingly apparent that was the correct assessment.
Furthermore, the markets appear to have further to go on the downside to correct the excesses of 2020-2021. Do not be fooled by fleeting oversold rallies that are typical of bear markets. Thanks to our decades of experience, we know how to navigate bear markets, and we intend to protect our clients from large risks.
The University of Michigan Index of Consumer Sentiment collapsed below 40-year lows. Consumer Expectations are a leading economic indicator. Consumer discretionary spending is the main driver of economic growth, and so rising Expectations are positive and falling Expectations are negative for economic growth prospects. Consumers are worried about high and rising inflation and feel pessimistic about economic growth prospects ahead.
Sentiment indicators for the stock market signal mostly oversold sentiment for the short term. As we wrote previously, oversold sentiment “could make the stock market vulnerable to short-squeeze rally attempts at any time. With bearish momentum so strong, however, any rally attempts could quickly fizzle out. Keep in mind that price momentum can sustain a trend in motion beyond sentiment extremes.”
Unfortunately for the world, the list of market risks for 2022 has been getting worse. Fortunately for our asset management clients, we have managed to avoid significant losses, thanks to our continuous analysis of global financial conditions that allows us to anticipate potential negative changes ahead of time. Here is what this report stated on 12/31/2021:
"Looking ahead, the times appear to be changing, and market performance for 2022 appears unlikely to resemble the performance of 2021. The Federal Reserve is expected to reduce monetary stimulus, eventually leading to rising interest rates and higher discount rates applied to asset price valuations, which could put downward pressure on stock prices. The pace of economic and earnings growth appears likely to slow down. Inflation has been higher and more persistent than the authorities expected. Supply chain disruptions may continue. Geopolitical tensions appear to be rising, with Ukraine, Iran, and China the most obvious current hot spots--and there are other possibilities. Wall Street expectations and stock allocations have been very optimistic, quite possibly overly optimistic, for many months, leading to an overvalued stock market. Financial Stress is rising. From a long-term perspective, stocks remain overbought and overvalued relative to traditional measures: sales, earnings, dividend yields, and book value. Stocks are priced for an extremely optimistic future, ignoring all potential bumps in the inherently unpredictable road ahead. Berkshire Hathaway's Charlie Munger thinks stock valuations are "crazier" now than they were in the dot-com bubble in years 1999-2000. History shows that overly high stock prices are followed by low returns, and overpaying for stocks is not profitable in the long run."
Our full report reviews indicators that we monitor every day and offers clear and unbiased guidance on the following each week:
Global stock markets
The Defensive stock sectors
The Health Care sector
The Cyclical sectors
The Technology sector
The Financials sector
U.S. bonds and notes
Commodities (Oil, Metals, Agriculture)
Objective Quantitative Rankings for hundreds of Exchange Traded Funds
Now is the time to take action. Preserve your capital by placing your assets under our careful management--before the next major bear market of -20% to -50% devastates most portfolios.
Make no mistake, the ongoing global economic and financial crisis has not been fixed by any sound or lasting solution. History shows that the authorities will not protect you or give you any advance warning--but we will.
If you agree that making money while staying safe is better than taking big risks in the stock market and exposing your nest egg to potentially ruinous losses, we would be very happy to implement our time-tested strategies for all of your assets. It makes good sense to choose protection--especially at this time when the financial world is stretched out of proportion.
We are always happy to discuss your goals and concerns and answer all your questions.
Call us now for a free consultation.
by phone: 646-652-6879
or by email: email@example.com
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11-Year Outperformance by the
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Weekly Rankings of Major Trend Relative Strength
My weekly Top 10 ETFs ranked by the Major Trend Relative Strength outperformed the S&P 500 by over an 11-year period of real-time weekly tests. Click here for a graph of simulated performance.
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See The Colby Global Markets Report (click here).
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My ETF Rankings are not investment advice. Rather, they are an objective ongoing research study.
Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.
According to CFTC Rule 4.41, hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
Trading and investing involve risk of significant loss. Your use of this site means that you have read, understood, and accepted my Disclaimer.
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