Some updates & market observations

The STM Seasonality Model is a unique composite that looks at average monthly gains, gain-to-loss ratios and percentage of winning months for 1,2,3 and 4 year cycles to arrive at a composite seasonality score for each month. For the last 18 months, the model has been running at 80% directional accuracy on calls on the SP500 future direction which is rather remarkable given the strange times we are living in.

Even though May month was forecast as a non-leveraged long month, the gains for May are not expected to be that large, in fact they could even be slightly down. It is the months of June and especially July that are materially bearish though:
SP500 Seasonality

The STM chart is updated with quite a bit of breakdown detail once per month with a 3-month look-ahead, as shown below:

You can read about the STM methodology at the following research note.

You will notice that all charts, data-files, dashboards and SuperIndex reports continue to be updated through Saturdays early morning (4am) and by no later Sunday 5pm US eastern time.

We are also now tracking the current Seasonality Signal, the Yield Curve Complex Diffusion and US Covid-19 situation in the new DASHBOARD page:

You will note from the above that 1 of the 10 yield curve aggregate components has inverted, moving us out of the SAFE zone. You can see from the Yield Curve Chart that it is the two less one year that has inverted:
US Yield Curve

You can read about this recession forecasting model in our August 2019 warning of an impending recession in this link .

Whilst our August note seemed prescient in penning in an earliest recession date of April 2020, we were hopelessly wrong on the severity of the recession, since this was triggered by an exogenous (black swan) shock followed by a voluntary hard stop of the majority of the US economy due to the Covid-19 global pandemic (which we warned of in first week of March 2020, before WHO). As we now know, this recession is anything but shallow, breaking all the historical records on just about any measure you care to look at.

While we are on the Covid19 topic we are now tracking the daily US Coronavirus situation in the dashboard gauges as well, and this just indicates the last pane in the COVID19 dashboard which is the score out of 10 :
US Covid19 Coronavirus dashboard

At the moment, 8 out of the possible 10 metrics we track are moving in the right direction and as you can see the scoring metric has steadily climbed from a reading of two to well above 6 now.

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.
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