Should We Trust The Thrust (Again)?

So, while there can be no denying that the stock market is overbought, that sentiment borders on exuberant, and absolute valuations are extreme, I'm of the mind that investors should remain optimistic about the intermediate-term prospects of the market. Sure, a correction of 5-10% could occur at any time - because history shows that these "garden variety" pullbacks occur with regularity.

But the point is that with a fresh "thrust" signal, an uber-friendly Fed, another couple trillion in stimulus coming, the economic data exceeding expectations, and vaccinations happening, I believe a "buy the dips" and "follow the leaders" strategy remains appropriate.

Now let's turn to the state of my favorite big-picture market models...

The Big-Picture Market Models

There are no obvious changes to report on the Primary Cycle board this week. However, the Risk/Reward Model did slip a bit, which makes sense given the state of the current environment. As such, a pullback/correction should not come as a surprise at some point in the not too distant future.

(Click on image to enlarge)

Primary Market Models

* Source: Ned Davis Research (NDR) as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

Fundamental Factor Models

There are also no changes to the Fundamental board again this week. As I have been saying, I believe the message from the Fundamental board suggests that the risk is elevated.

(Click on image to enlarge)

Fundamental Factor Models

* Source: Ned Davis Research (NDR) as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

The Cyclical Market Cycle

Below is a weekly chart of the S&P 500 illustrating the current cycle, which we estimate began on March 24, 2020.

S&P 500 - Weekly

(Click on image to enlarge)

The Secular Market Cycle

Below is a monthly chart of the S&P 500 Index illustrating the current cycle, which we estimate began on March 9, 2009.

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The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should ...

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