The Trend Model can be an asset allocation model which applies trend following principles based on the inputs of global stock and commodity price. Update routine: I generally revise Trend Model readings on my blog on weekends and tweet any changes through the week at @humblestudent. For the last couple of weeks, my designs for the united states equity market is a bullish outlook, combined a setup for a rally of capital and product goods sectors.

With respect to the first theme of the bullish collateral outlook, I take advantage of the construction of the Zweig Breadth Thrust from the panic sell-off bottom of August and September (see Bingo! We’ve a buy sign!). In the context of a solid momentum thrust from a market bottom, this chart is an excellent road map of what may happen next.

We have been through a short period of consolidation and pullback. In general, the market will here grind up from. Further, we are approaching an interval of bullish seasonality. Sentiment models are also supportive of higher prices. The NAAIM survey of RIAs show that sentiment has recovered from bearish extremes and they’re trending bullish.

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  • Better on his CV (shows an effective changeover from IB to PE, good selling point for an MBA)

Risk appetite taken back slightly last week, however they have further room to run and portfolios aren’t fully invested. The BoAML Fund Manager Survey (FMS) shows that global managers stay underweight US equities, which indicates a potential for a bullish stampede even as we enter a period of positive seasonality along with the momentum tailwind of the Zweig Breadth Thrust.

I am also inspired by the latest readings from Barron`s of insider activity. We’ve seen fourteen days of heavy insider buying as the currency markets has pulled back again and consolidated its increases. The mixture of bullish momentum, positive seasonality and improving, but not overbought, sentiment readings point to a grind up into year-end. Buy risk (and cyclicals)). That trade setup continue to develop.

Technicians know that the an oversold and wash-out market combined with signals of reversal is a robust buy signal. Of that today in the late-cycle sectors We are beginning to see signals. The BoAML FMS is instructive on sentiment. The top three most crowded investments of long USD, short commodities and brief EM equities are all correlated and amount to the same macro theme. Fund managers’ biggest over and underweight positions relative to their history reveal the unloved nature of these industries.

The elephant in the room has been China, but managers think that the China growth outlook is stabilizing and recovering. Week that Tom McClellan had recognized a 10-month cycle in copper prices I pointed out last, that ought to be bottoming about now. McClellan also warned that he did not expect a durable bottom level until we saw price capitulation, as assessed by the 10-day rate of change. We might have seen that the other day. Before, copper prices have tended to rally whenever the 10-day ROC hit -10% (marked by the vertical blue lines).