07-31-2015 AAR Strategy Update Posted

The July 31, 2015 AAR Strategy update is now available on the AAR Subscribers page.  If you are not currently a subscriber and would like to learn more about the strategy, there is a detailed description on the AAR Strategy page.

The AAR strategy is a conservative, long-only, asset allocation strategy that rotates monthly among five large asset classes: large-cap U.S. stocks, developed country stocks in Europe and Asia, emerging market stocks, U.S. Treasury Notes, and commodities. The strategy was inspired by the Ivy League portfolio and uses trend and technical filters to reduce downside risk.

If none of the five candidates pass their respective trade filters, the AAR strategy remains in cash for the month.   Stop-loss orders are used on every trade to control losses and to facilitate position sizing and risk management.

Brian Johnson

Copyright 2015 - Trading Insights, LLC - All Rights Reserved.

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Posted in Asset Allocation Rotational (AAR) Strategy, Market Timing, Relative Strength, Risk Management, Strategy Development, Technical Analysis | Tagged , , , , , , | Leave a comment

China’s Prices & Profits Diverge

I have written several articles about China recently, but I have just begun to scratch the surface of the problems. Data suggests that China's equity market is still massively overvalued, even after the recent correction. In a recent MarkeWatch article titled "China stocks suffer sharpest daily fall since 2007," the author (Chao Deng) points out that "data showed industrial profits in China falling 0.3% in June from a year ago." Continue reading

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Troubling Divergence Between Stock and Commodity Prices

It is logical to expect that commodity prices and equity prices are causally linked. It is simply a question of supply and demand. In an expanding economy, demand for commodities should increase and in a contracting economy, demand should decrease. Prices should respond accordingly. As a result, the MarketWatch article by Simon Maierhofer titled "Will the commodity crisis infect stocks" got my attention. Continue reading

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Recession Model Forecast: 07-01-2015

The following article updates the diffusion index, recession slack index, aggregate recession model, and aggregate peak-trough model through June 2015. In January 2015, I created a new explanatory variable for a market-based indicator and I added another new explanatory variable in April 2015. The total number of explanatory recession model variables is now 20. The current and historical data in this report reflect the current model configuration with all 20 variables.

In July 2014, two new explanatory variables were added to the Trader Edge Recession Models and one explanatory variable was replaced. The swapped variables measured similar economic data, but the new series had more predictive power and was more forward-looking. For more information on the changes in July 2014, please see "Two New Improvements to Trader Edge Recession Models." Continue reading

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Posted in Economic Indicators, Fundamental Analysis, Market Commentary, Market Timing, Recession Forecasting Model | Tagged , , , , , , , , | Leave a comment

China’s Make-Believe Stock Market

I continue to be shocked by ever new article that I read on China. I found a new tidbit of information in the following Bloomberg Business article by Paul Smith: "China's Stock Market Selloff Explained in Six Charts." In reading the article, I discovered that "A-shares listed on the mainland were 49% more expensive than their Hong Kong equivalents on Thursday - the widest premium since March 20, 2009." Continue reading

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More Stunning Developments in China

I could not believe the headline of the following MarketWatch article, so I had to pass it along to Trader Edge Readers: "China companies rush to suspend their shares; more than 40% of all stocks now in halt." The author (Laura He) reports information from the Southern Metropolis Daily, which cited data from "cninfo.com, the market information site sanctioned by China's securities regulator." Continue reading

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Oil Futures Down Over 7% Yesterday

In addition to posts related to my own research, I am beginning to pass along links to timely articles that are important in the context of the market or offer some new insights. For each article, I will also include a few of my own brief comments. Here is a link to another interesting MarketWatch article titled "5 big reasons for oil's plunge Monday." The author (Myra P. Saefong) highlights five different reasons for Oil's steep decline yesterday.

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Desperate Moves in China

Now that my new book has been published, I am beginning to catch up on my very long list of outstanding research projects. In addition, I am also finding more time to read timely articles, a few of which I would like to pass along to Trader Edge readers. Here is a link to an interesting MarketWatch article titled "Opinion: Why Beijing cannot let its bull market die."

The author (Craig Stephen) highlights a number of extreme steps Beijing has taken recently to prop up Shanghai's free-falling equity shares: Continue reading

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