Archives for September 2012

The UK and US Market Charts remained positive and momentum stayed up for both charts indicating that in the longer timeframe the trend is up.

Last week I wrote that “Going forward either the short-term indicators will deteriorate further which may eventually cause the major trend to start breaking down, or, the short-term indicators will pick up again in line with the major trend”.  The latter seems to have played out as Risk-on Themes and Groups picked up strongly last week. For instance, within the Bonds Theme, High Yield Bonds stayed strong while UK Gilts deteriorated and in the Regions we saw Europe come back strongly.  Also, in the Sector Specific Theme, the Financial Opportunities sector picked up again.

I also said last week that “Commodities are looking stronger as the US Dollar has been moving weaker which supports the idea that, in the longer timeframe, riskier assets are experiencing a correction rather than anything more serious”.   Price action and relative price action last week did nothing to negate this view so we stick with it for now.   Note that Commodities continued to improve and the US Dollar remained weak.

Our main concern is the  Sentiment indicators where we note that the public are measurably more bullish than they have been for a while.  Although these readings have not yet reached what we would call extreme we are monitoring these indicators carefully (when the public become extremely bullish it usually indicates limited upside – at least).

Eugene Lawlor

The UK and US Market Charts remained positive and momentum stayed up for both charts indicating that in the longer timeframe the trend is up. Our shorter term indicators suggest that the market is currently in a correction to that trend. Going forward either the short-term indicators will deteriorate further which may eventually cause the major trend to start breaking down, or, the short-term indicators will pick up again in line with the major trend in which case we would add more risk.

Last week the Bonds Theme came back quite strongly. Our indicators show that Strategic, Corporate and High Yield Bonds are strong on both the short-term and longer-term timeframes with Gilts and Global Bonds being weaker in the longer-term with shorter term indicators turning back up.

In the Managed Theme the Cautious and Total Return groups have recently performed better than the Balanced and Active groups which is another risk-off indication in the short-term, as is the relative deterioration in the higher risk groups amongst the Regional and Sector Specific Themes.

However, Commodities are looking stronger as the US Dollar has been moving weaker which supports the idea that, in the longer timeframe, riskier assets are experiencing a correction rather than anything more serious.

The British Pound is looking strong against the U.S. dollar and against the Australian dollar, the Austrailian dollar looking particularly weak at the moment and again when this currency is weak, it is usually a general market risk-off indication.

Eugene Lawlor