• Most key stock categories are in positive intermediate-term trends.
• Only mid-cap, small-cap and micro-cap stocks are in positive short-term relative momentum trends.
• Most key bond categories are in negative intermediate-term trends and negative short-term relative momentum trends, except for some municipal bond categories.
• Equity REITs are in negative intermediate-term trends and short-term relative momentum trends, while gold and commodities are in positive intermediate-term trends, but gold is in a negative short-term relative momentum trend.

This letter presents these data for each of 42 key asset categories:

• QVM Intermediate-Term Trend Indicator (and its elements)
• QVM Short-Term Trend and Relative Momentum Indicator
• Price Distance from moving average trend Lines over multiple periods
• 3-year monthly charts containing the elements of the QVM Intermediate-Term Trend Indicator
• Annualized total return spread versus total return of S&P 500 and US Aggregate Bond index
• Short-term traditional technical ratings from BarChart.com
• Fundamental stock and bond valuation metrics.

The QVM Monthly Intermediate Trend Indicator is positive on stocks, gold, diversified commodities and some municipal bond categories, but negative on most bonds and equity REITs. Money market funds or ultra-short-term, investment-grade debt funds are a good placeholder for the bond allocation.

(click images to enlarge)

QVM Short-Term Trend and Relative Momentum:

Rules: All securities must have a 200-day trend line higher than 1 month ago, and their price must be above the trend line; and they must have price return higher than 3-month T-Bill total return over 1 month, 3 months and 6 months.

Stocks, REITs, gold and commodities must also have higher price return than price return of SPY (the S&P 500 proxy) over 1-month, 3 months and 6 months.

Bonds must also have higher price return than price return of BND (proxy for US Aggregate Bonds) over 1-month, 3 months, and 6 months.

Table Indications Summary:

• Mid-cap, small-cap and micro-cap stocks pass, while large-cap and mega-cap stocks do not.
• Long-term and high yield municipal bonds pass, while other bonds do not.
• Diversified commodities pass, while equity REITs and gold do not.

Price Distance from Moving Average Trend Lines:

The QVM Relative Momentum rules judge whether the price is above or below the 200-day trend line. This table quantifies the magnitude of the price deviation from the trend line; and the deviation from other common moving average trend lines.

Pink means the price is below the trend line. Green means it is above.

Asset Category QVM Intermediate-Term Trend Charts

These charts plot the 3-year cumulative percentage performance of each key asset category for comparability. The four elements of the QVM Intermediate-Term indicator are on each chart.

In the main panel: (1) the trend line in dashed gold, (2) the price in black, (3) the parabolic pace curve in dotted red. In the lower panel: (4) the money flow index within a 0 to 100 scale. The cumulative total return for the security is shown in the upper left corner of the main panel.

A desirable chart has (1) the leading edge of the trend line moving up; (2) the price above the trendline; (3) the price above the parabolic pace setting; and (4) the money flow index above 50. The trendline tip must be up for a security to have a 100 rating, and at least 2 of the other 3 elements must be positive. For mutual funds which do not have volume, we use RSI as a second-best alternative to money flow.

The QVM Intermediate-Term Trend indicator does not distinguish between a weakening and strengthening trend. Visual chart inspection and other indicators, such as the QVM Short-Term Trend and Relative Momentum indicator do that.

A 19-minute video explaining the indicator in more detail and providing performance of the indicator with the S&P 500 since 1901 may be accessed here.

Annualized Total Return Spread to Stock and Bond Benchmarks

This table shows the annualized total return of each security minus the annualized total return of SPY (representing the S&P 500) and BND (representing the US Aggregate Bond index) over 4 weeks, 13 weeks, 26 weeks, 1 year and 3 years.

The cells are color coded to quickly visually distinguish between better and worse performing securities.

Note the performance in the charts in the previous section is cumulative for the security. The performance in this table is the annualized performance in excess of the performance of a benchmark.

Short-Term Technical Indicators from BarChart.com

Traditional short-term technical indicators from BarChart.com see domestic stocks mildly positive, but international stocks as negative. They give a mixed mostly positive view of Treasuries, and negative on corporate bonds except for investment-grade short-term corporate bonds. The indicators have a mixed view on municipal bonds, a negative view of gold, and a positive view of equity REITs and diversified commodities.

Fundamental Data

These data are accessed via Morningstar and are not independently verified.

Fundamental data is not useful for understanding short-term historical or future price action but are important in the long-term.

It is a good idea to be aware of the valuation attributes of key asset categories.