IMPORTANT NOTICE : Since 2020, we no longer display charts shown below as the Demark Setup methodology we discuss below has been replaced with a far superior Trendex methodology. You can read about our proprietary Trendex Multi-Stop & Probability methodology over here : Trendex Market Timing/Risk Management PREAMBLE A detailed 18-year analysis reveals that the DeMark Setup indicators are suitable for the detection of market tops and bottoms on the SP-500 Index. We have made some modifications to the original algorithms to […]
About RecessionALERT
Dwaine has a Bachelor of Science (BSc Hons) university degree majoring in computer science, math & statistics and is a full-time trader and investor. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT into a company used by hundreds of hedge funds, brokerage firms and financial advisers around the world.Liquidity Crunch warning finally materialised
Fifteen trading days after our Average Liquidity Index (ALI) issued a liquidity crunch warning, the SP-500 finally succumbed into a decent sized correction. The two short-term liquidity indexes, one of which is described in “The HI-LO Breadth Indexes for the SP-500” issued warning even sooner, as can be seen below: At a level of -2, we are in a full blown liquidity outflow as can be seen on past occasions. Most up-turns in the ALI at current levels tend to […]
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SP-500 Liquidity Crunch Warning
Losses on the SP-500 on Friday 11th saw all our measures of breadth-liquidity fall into contraction, warning of a highly vulnerable market subject to further liquidity tightness and raised volatility. To many of my staff that actively trade the SP-500, this is treated as a bona fide correction warning. If you are scratching your heads as to where to find this chart updated on a daily basis in our charts menu, we will only be launching it in the coming […]
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The HiLo Breadth Indexes for SP-500
The HILO breadth index was developed by RecessionALERT for detecting short and medium-term SP-500 stock market peaks in advance. It deploys the following daily breadth data taken from the SP-500 index: New 13-week (quarterly) highs New 13-week (quarterly) lows New 52-week (annual) highs New 52-week (annual) lows The above data is then used to construct two daily components as follows: Net new 13-week highs% = (New 13-week highs LESS New 13-week lows)/issues traded*100 Net new 52-week highs% = (New 52-week […]
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Yellen’s Labor Dashboard suggests tightening in 2016
Federal Reserve Chair Janet Yellen recently used her “jobs data dashboard” to justify the Fed’s easy money policies and to argue there’s still considerable slack in the labor market five years after the recession’s end. Seven of the nine gauges on this dashboard have not recovered to levels reached before the last recession, reinforcing her belief that the economy will need “extraordinary support” from the Federal Reserve for “some time to come.” It appears the Federal Reserve has changed emphasis from […]
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U.S future economic outlook improves
The RecessionALERT monthly U.S Leading Growth Index (USMLI) is an index that attempts to capture future (6-9 months) U.S economic growth. The index has been constructed since 1960, but this report only displays data from 2000 onwards to capture the last two recessions. The USMLI consist of 10 sub-components that are in turn constructed from over 100 discreet monthly and weekly leading time-series data that capture the essence of U.S future economic growth from varying aspects, namely Manufacturing , Inventories & […]
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Seasonality approaching its worst point
We have entered the Mid-Term cycle in the Quadrennial Presidential Cycle, in which the months April through to September typically represent the worst SP-500 seasonal period for the entire 4 year cycle. The current cycle which commenced in 2012 has performed way above average so far, as shown below with the black dotted line: However it is plain to see from the chart above that the average gains through the 4-year cycle are composed of cycles that vary quite a […]
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FED in the driving seat
The chart below shows how the FED is firmly in the driving seat for the U.S stock markets through the monthly growth of their balance sheet, primarily through the purchase of U.S Treasuries and Mortgage Backed Securities. You can clearly see why talk of tapering sends shudders down everyone’s spine: It is interesting to note that in the prior economic expansion, the economy and company earnings clearly were in the driving seat – the good old days when good news […]
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Labor Market flags U.S Recession on horizon
Labor data last week surprised to the upside and pointed to an improvement in hiring and by implication the labor market. However, our leading Labor Market Growth Index, which tracks various diversified aspects of the general U.S labor market, experienced a sharp drop for the data representing the end of October 2013, to below the zero growth line. This is typically a signal for recession in 5-9 months time. However, we normally smooth the raw monthly data to cater for […]
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Things could get fun from here…
At last, a decent pullback with a fat red candle on the SP-500. If the premise (see “Seven Paw-prints of the Bear“) is that we are in a well established bull market (we don’t care if its liquidity or economically fueled) then this could become a desperately needed “buy on the dip” opportunity to get aboard the train if were not already on it, or place additional funds into the market. Firstly, the big red candle on the SP-500 has not […]
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Market Update 17/10/13 [PUBLIC]
The political standoff associated with the debt ceiling and government shutdown has made its impact felt the last 3 weeks on the weekly leading data. Two out of the 5 main components of the WLInr are now firmly planted in recession warning territory with some 30% of all underlying 50 weekly time series also camped there: With the government shutdown now over we hope to restore full reporting service next week as the data starts coming through. We had our […]
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Market Timing Strategies – putting it all together
We offer a number of timing strategies for the SP-500 as described below: 1.Long-term investment models These are primarily focused on funds-grade long-term investing models such as the Recession Forecasting Ensemble (RFE) and the Composite Market Health Index (CMHI). These are high confidence, infrequent traders. They attempt to capture as much upside of the market (SP-500) as possible whilst avoiding the bear markets. The CMHI is focused on purely technical factors whilst the RFE is focused purely on econometric factors. […]
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Zweig Breadth Thrust – The RecessionALERT Redux
Martin Zweig was an American stock investor, investment adviser, and financial analyst. According to Forbes Magazine, he was renowned for his “eccentric and lavish lifestyle” as well as having had the most expensive residence in the United States at the time, atop The Pierre on Fifth avenue in Manhattan. He was most well known for his 1986 book “Winning on Wall Street“, which is an investment classic, and his “Zweig Forecast” newsletter which, according to Hulbert Financial Digest, was the top market […]
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World Economy Update – as at July 2013
These are extracts compiled from our monthly World Economy Report that comes standard with a RecessionALERT annual subscription: It does not matter which way you look at it – the global economy has rebounded into growth territory from which surely could have been classified as a World Recession a few quarters ago. We can see this from the percentage of countries posting positive quarter-on-quarter GDP growths: …as well as the percentage of countries with positive Leading Economic Indicator growths: EXTERNAL […]
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Measuring Selling Pressure for Market Entry Timing
This project uses a composite approach to constructing a broad representation of selling pressure on the SP-500 Index, for the purposes of gauging intensity of corrections, identifying ideal buying points for “buy on the dip” opportunities and provision of warnings of oncoming corrections. The motivation behind using many measurements for selling pressure (as opposed to say how much % the index has corrected for example) is that no single measurement provides safety from false positives(bad signals) and a consensus model can […]
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Seven Paw-prints of the Bear
For decades, investors have sought out methods to detect oncoming bear markets. With this current bull market now in its 5th year the subject has become even more topical – “Has the bull market still got legs?” is a question pondered every day by millions of investors. In this research note, we cover seven of ten reliable Bear Market warning signs we use and how they can be combined into a simple stock market exposure allocation strategy. But first, let’s […]
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Market Update 11/07/2013
The SuperIndex has jumped smartly this week from mostly positive data from eLEI and the ISM report. However growth in ETI, GDP and Initial claims has slowed. A few months back on this radio interview we forecast there would be no “Summer Swoon” for the monthly leading data as with the three prior summers. With this new high SuperIndex print, we can put that one to bed. Although the visual upward trend on the monthly leading indicators is obvious, we […]
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Don’t count on FED tapering any time soon
Whilst the market has sold off in the expectation of FED tapering in the face of an improving economy, and co-incident economic data continues to show improvement, the leading data is likely to do otherwise in the coming months. This means that after an initial improvement of short duration the pressure will again be back on the co-incident data, and hence the FED. Whilst the stock market could have many reasons to be selling off in the near future, fears […]
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World Recession Update – May 2013
We have first quarter 2013 GDP data for about 53% of the OECD countries list. The full World Economy Report is available from the MEMBERS downloads section in the WORLD REPORT tab. There are a number of interesting observations we can make this month. The first is that whilst the percentage of economies experiencing a single quarters negative growth seems to have subsided from a meteorite rise, the percentage of economies experiencing two consecutive negative quarters seems to be marching […]
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Once in a year opportunity
We have spend the better part of a decade in the search for the ultimate indicator for the stock markets. Whilst it became clear early on in this quest that no one indicator would work all the time and every time, there are a few that stand out from the rest. One of them is our HILO Breadth Index which we introduce in this research note. Apart from a multi-decade track record, the HILO index is very adept at warning […]