In PART-1 we looked at how we used the RecessionALERT Valuation Index (RAVI) to determine 10-year ahead forecasts on the SP500 Total Return Index (TRI) with a better than 0.89 correlation, and how we managed to derive 5,3 and 2 year ahead SP500 forecasts with correlations of 0.8, 0.68 and 0.55 respectively. In PART-2 we examined three methods to derive 1-year ahead forecasts for the Sp500 with correlations (r-squares) of 0.27, 0.34 and 0.43 respectively. In PART-3 we use the data from […]

In our prior research note “Detecting tops of rapid SP500 advances” we introduced a multi-factor model (BIGTOP, available now in the Dashboard) for signaling advance warning of major (infrequent) intra-bull SP500 stock market tops. Whilst not a precise actionable signaling tool, BIGTOP appears very good at warning you of when risks of major market tops are high, allowing you to mitigate downside risk. If you recall, we opined that experience has shown us that detecting market tops is far harder […]

Since the bull market that commenced in 2009 there have been around 10 major rapid advances in the SP-500 that ended in not-insignificant market tops. In our ZOOM calls with clients over the last year, a lot of interest has been expressed in how to detect for preemptive warning signs of these major tops. By pre-emptive we mean warnings that are issued before any significant declines set in. A problem with many traditional technical SELL models is that conditions or […]