The RecessionALERT Valuation Index (RAVI) is a multifactor valuation model that examines cyclically adjusted trailing SP-500 earnings (various multi-decade horizons), the SP-500 total-return index level, total stock market capitalization, Gross Domestic Product, non-financial corporate equities and liabilities, non-financial corporate business net-worth and percentage of investors’ allocation to stocks versus cash and bonds to determine 10, 5, […]
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.RecessionALERT Valuation Index (RAVI)
PART-1 There are currently 4 mainstream models used to forecast 10-year total returns on the SP-500 (dividends re-invested) The Shiller CAPE ratio (PE10) The Warren Buffet Indicator Tobin’s Q-Ratio Average Investor allocation to stocks The non-linear quarterly correlations between these four models (x-axes) and achieved 10-year future total returns (y-axes) on the SP-500 since 1970 are […]
Read full story · Comments are closed
Valuations not at nose-bleed levels yet
The recent run in the major U.S stock indices has resulted in Shiller-PE charts being trotted out showing how far we are off the historical mean, implying a nasty pullback is in the works. The problem with a historical mean is that it is a single horizontal value on a chart that fails to take […]
Read full story · Comments are closed
Fingerprints of a short-term market top
The SP-500 has rallied sharply since the 15th October bottom, recovering all her losses in a shorter time than it took to incur them. It was a very rare display of the opposite behavior to the norm where “the bull climbs the staircase and the bear comes down the elevator”, since in this case, the […]
Read full story · Comments are closed
Great Trough Detector Improvements
You will notice a new layout for the Great Trough Detector (GTR) chart as shown below. The Signal Panel has been revised to be more intuitive and we have added a new count panel below that: 1. The Signal Panel The first task of this panel is to highlight your two main opportunities: Class-B : […]
Read full story · Comments are closed
“Baby” correction belies verocity of breadth sell-off
The current stock market correction is diminutive in relative terms – hardly anything to sit up and take notice of. However an examination of underlying breadth deterioration reveals an astonishing plunge of the net new quarterly highs (the percentage of new quarterly highs less the percentage of new quarterly lows). This percentage has been languishing […]
Read full story · Comments are closed
New improvements
We have introduced three new improvements to the web site to enhance the user-experience; 1.Progress Loader Some of our pages, particularly the CHARTS page, can take some time to load due to the amount of historical data we allow you to view in the charts. If web site usage is heavy and/or the internet is very […]
Read full story · Comments are closed
DeMark analysis for SP-500
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 […]
Read full story · Comments are closed
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, […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]
Read full story · Comments are closed
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 […]