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Stephen Todd: Complex Bottoming Process

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Posted by Stephen Todd - Todd Market Forecasten Todd - Todd Market Forecast

on Wednesday, 04 April 2018 05:38

This monthly newsletter covers all major markets, Stocks, Bonds, Gold Canadian Markets and current market sentiment. This author is definitely worth reading. His hotline recommendations have yielded over 15% compounded since December 31, 2010. On his more conservative long term performance Stephen is ranked as one of only four services to have beaten the buy and hold over the past ten years - R. Zurrer for Money Talks 

COMPLEX BOTTOMING PROCESS

It's Monday morning. I'm putting the finishing touches on the April newsletter and the market is not looking very good. In fact, it's getting mangled. It's my belief that we're putting in a trading bottom, but it's very choppy right now.

Most of the technical gauges that we look at are oversold and sentiment is showing a lot of bearishness on the part of option buyers and investment advisors. This is what you expect at an inflection point.

A good example of oversold is shown in the chart below. The five week moving average of advances minus declines on the NYSE is approaching minus 500. This is the level which has seen some very good trading bottoms over the past months.      

todd1

AAII FIGURES ARE CONSTRUCTIVE

We're finally seeing some bearishness come into the American Association of Individual Investors survey. This is the part that has been missing from the overall bearish sentiment figures. Now, it's finally happening. When this survey shows 35% bears, we tend to be near some sort of multi week rally.

todd2

GOLD

We're bearish on gold, but the yellow metal probably isn't too far from a tradable bottom. RSI is rapidly approaching an oversold condition and the price isn't far from support. 

 

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BONDS

Bonds look to have made a saucer bottom and are now working higher. This means lower rates and most stocks favor this condition. The banks are an exception. RSI is very overbought, but near term setbacks aside, this market looks like it wants to move higher. 

todd4

CANADIAN MARKETS

Canadian stocks have had a correction that resembles the U.S. stock market, but it too appears to be in an improving situation. It was recently oversold and it is holding previous lows.  

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TRADING THROUGH FEBRUARY

For 2018, we have closed out five trades. Three have been successful and two have lost money. The last one was a doozy of 14 points. But, we are still profitable for the year by 1.81 SSO points. The SSO itself is lower by 3.98 points.

Since December 31, 2010, our hotline recommendations have profited by 92.16 SSO points which works out to be over 15% compounded. The chart for that period is shown below.

todd6

FINAL THOUGHTS

Everything seems to be lining up for multi week uptrend, but there is one caveat. If we have entered a bear market, these oversold conditions can become much more oversold. Right now we have a bit of a nervous twitch. After all this market has been in an uptrend for 9 years.

But bear markets tend to be associated with recessions and there is nothing suggesting that currently. Profits are good and business optimism is high. However, we do need to be alert to changes. We'll be here to help with that.

INTERMEDIATE TERM

Since 1993, we have given instructions to mutual fund investors to be either 100% invested or 100% on the sidelines. According to Timer Digest, of Greenwich, CT, which monitors over 100 advisory services world wide, we are only one of four services to have beaten the buy and hold over the past ten years.

We were rated # 1 for the past ten years at year end, 2003, 2004 and 2005. In 2006, we slipped to # 3. At the end of 2007 we were ranked # 4.

We were bond timer of the year at the end of 2007, 2008 and 2016. Which means we were ranked number 1 for those three years. We were rated # 1 in gold timing for 1997 and again in 2011. We were #2 in gold for the year 2014. Late update. We were tied for Timer of The Year 2017 by Timer Digest. We were number 3 in gold timing.

MANAGED ACCOUNTS

In association with Financial Growth Management, we can make available to you a low risk bond income program. Your account would be actively managed through TD Ameritrade or Trust Company of America.

Your funds will be exchanged between high-yield bond funds and money market funds based on a proprietary mathematical model. Our goal is to return 10-12% per year during a 3 to 5 year market cycle with very low risk.

If you would like more information, please contact Ray Hansen at 714 637 7784.

END OF LETTER

Todd7

 

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If your group needs a speaker on the stock market give our office a call at 909 338 8354


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