What Widening Investment Grade Spreads Are Saying About The Stock Market

 

As you can see, this is neither consistently bullish nor bearish for gold, except maybe 2 years later.

Our market studies have been mixed recently, which highlights that towards the end of bull markets, fundamentals are more useful than technicals.

Conclusion

Here is our discretionary market outlook:

  1. For the first time since 2009, the U.S. stock market’s long term risk:reward is no longer bullish. This doesn’t necessarily mean that the bull market is over. We’re merely talking about long term risk:reward.
  2. The medium term direction is still bullish  (i.e. trend for the next 6-9 months)
  3. The short term is a 50/50 bet

Goldman Sachs’ Bull/Bear Indicator demonstrates that while the bull market’s top isn’t necessarily in, risk:reward does favor long term bears.

 

 

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Our discretionary outlook is not a reflection of how we’re trading the markets right now. We trade based on our clear, quantitative trading models, such as the  more

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