No. of Recommendations: 7
Elan noted the S&P 500 is below its 200 day SMA and all his timing indicators rolled bearish. I like to peek at the BCC indicators at stock charts before Lohill posts the 'official' version and noticed that
tpoto's signal is now also bearish.

http://schrts.co/ktkQwZNj

On the other hand, if I understood MapG's market trend post, it's not so bad out there.

rrjjgg
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No. of Recommendations: 2
Don;t you think the "indicators" are tougher to trust in the current market/political environment where you have a lot more threats on tariffs which scare the markets one day, and then when people think it may get resolved, the markets run up again?

While no signal is close to 100%, I think the reliability is worse right now.

Its pretty hard to predict anything right now IMO.

Rich
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No. of Recommendations: 2
Don;t you think the "indicators" are tougher to trust in the current market/political environment where you have a lot more threats on tariffs which scare the markets one day, and then when people think it may get resolved, the markets run up again?

Depends on the indicators and the discipline with which they're used. The volatility you're describing is real, but it's short-cycle. Averages tend to smooth that out, and a modicum of hysteresis smooths things a bit further.

It's the emotion attached to volatility that makes things harder to trust, not the volatility itself.

Eric Hines
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No. of Recommendations: 4
tpoto's signal is now also bearish

In my toolbox, I keep tpoto's "2 ratio" signal from post #241906, which includes:

This was done using the SPY ETF, monthly
adjusted returns from Yahoo.

Calculations:
A= EOM close
B= EOM close six months ago
C= EOM close 13 months ago

Rule: Buy (or stay in) if either A/B OR B/C is >.965
Sell (stay out) if BOTH are <.965


As far as I can tell, these ratios are still above .965, unless I'm doing something wrong (which is a real possibility). Could someone confirm?

Thanks!
Cathy
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No. of Recommendations: 9
Don't you think the "indicators" are tougher to trust in the current market/political environment where you have a lot more threats on tariffs which scare the markets one day, and then when people think it may get resolved, the markets run up again?

While no signal is close to 100%, I think the reliability is worse right now.


One of the worst things you can do, now or ever, is try to predict the market's direction from current news events. (Except if Lehman Brothers goes bankrupt. :-)

Elan
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No. of Recommendations: 11
"Elan noted the S&P 500 is below its 200 day SMA"

And many thanks to Elan for posting so regularly for so long!

As Elan himself was cautioning, trying to predict future PRICES from news headlines or the S&P 500 200 day SMA (i.e. using it as a buy/sell signal) has not backtested well. But that's not what the SPX 200 day SMA should be used for IMHO. While future PRICES are almost impossible to predict future VOLATILITY is surprisingly predictable. This isn't just charting voodoo. Now that the SPX 200 day SMA has been violated market volatility is going to go up and there is a lot of backtesting to show that.

So my take on the increasingly scary news headlines (and tweets!) is that in an "risk off" higher volatility market you are going to see more and more of this headline/tweet driven behaviour. Flash crashes, bear, mega bears, Lehman Brothers bankruptcies(yikes!) are more likely now. Not guaranteed just more likely than before. The card deck is now officially against you.

I would like to draw attention to the monthly QTAA posts appearing on this board. I'm a BIG Meb Faber fan and his TAA (Tactical Asset Allocation) strategies are the result of outstanding research. The QTAA posts are following his Quantitative Tactical Asset Allocation strategy which I think would appeal to many mechanical investors on this board. Here is the link to the latest post:

https://boards.fool.com/qtaa-201905-34221107.aspx

Personally I follow a variation of the QTAA algorithm but I want to call attention to a nice little side effect of the person posting several months of results. I will quote just the last three months of that post here:

IVV IEFA CMDT IEF IYR %Cash IEMG IGOV EMB IFGL

MAY no no yes yes yes 40 no yes yes yes
APR yes yes yes yes yes 0 yes yes yes yes
MAR yes no yes yes yes 20 yes yes yes yes
.
.
.

Ignore all the columns to the right of the %Cash column. Those come from Mr. Faber's 2013 update to the QTAA algorithm. A link to his paper is in the post. Let's just look at the first five columns and the %Cash column. Look what happened, the %Cash allocation went from 0 to 40! Whoa.

Now I'm afraid I have to quote more from the post and I apologize for that in advance:

The 5 assets are:
international equities (IEFA),
commodities (CMDT),
US Treasuries (IEF),
US equities (IVV),
US REITS (IYR).
Your portfolio is divided equally among the 5 assets,
20% each. The decision to move in or out is based on a 10 month
look back monthly SMA.

So the May percentages are 0% for IVV (US Equities) and international equities (IEFA).
But commodities, US Treasuries and US real estate are fully funded plus 40% in cash. Wow. Talk about a bearish outlook for equities!

So my suggestion for those of you following Elan's timing signals and the BCC posts might want to include the QTAA posts as well even though QTAA is, by design, a lagging indicator.

My variation of QTAA moved 20% of my portfolio from QQQ (NASDAQ 100 ETF) to TLT (20 year+ US treasuries) last week in anticipation of increasing volatility. Let's just say I sleep a lot better on Sunday nights a little insulated from the current tweet storm environment!

Good luck to all.
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