The model has switched to a CASH/NEUTRAL signal. The market has been sloppy with a cluster of distribution days over the last few weeks so is at greater odds of remaining this way or even suffering a more substantial correction given how leading stocks continue to underperform. Keep in mind the year before a Presidential election tends to be bullish overall, and QE is alive and accelerating. This has been reflected by the rising price of gold this year as well as the U.S. dollar against global currencies as fiat continues to debase. In non-QE markets, a rising dollar tends to be bearish for gold but in this 'golden' Age of QE, other central banks must dance to the tune of the U.S. Federal Reserve. As rates continue to fall, the U.S. being the world's reserve currency is strengthened and hard assets including gold are bolstered. Nevertheless, the more debt that gets monetized, the greater the debasement of all fiat thus the more bullish for hard assets.
As I've written, recession occurs most likely once QE exhausts itself. This can happen by seeing inflation in some countries spiral out of control, and/or by the Fed hiking rates at the wrong time, and/or by major countries such as Germany slipping into a full-blown recession, and/or the accelerated boost provided by exponential growth technologies occurring later than sooner. But in the meantime, the longer term trend in real estate, stocks, gold, and bitcoin remains up with the occasional sharp correction along the way. Central banks will not stop printing unless we get sufficient help from exponential growth technologies that help boost GDP thus gives the Fed room to hike rates. But this may not happen until after the recession.
Market Direction Model - Model switches to CASH/NEUTRAL on October 1, 2019
|Published:||1 Oct 2019 10:43 ET|
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