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TimingPundit

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Market Timing in Australia

Sunday, May 24, 2020

On a short-term basis, the Australian All Ord’s share price index has gone bullish with its red 10-day trendline now surpassing its blue 30-day trendline. Note that the stock market’s momentum oscillator has been positive since March 30^th.  However, on a longer-term basis, the stock market is still bearish with the All Ord’s red 30-day trend line still well below its blue 300-day trendline and its green Coppock momentum oscillator still heading south.  Note that short-term trend-tracking works best when a bear market is V or U- shaped since it responds faster to changes in market direction whereas longer-term trend-following applies best to W or L shaped bear markets.  How this market will pan out is anyone’s guess. But for the moment it is bullish short term, yet still bearish long term.

 Government pump-priming and central bank money printing are on an unprecedented scale to stop another 1930’s style of great depression following the coronavirus social and business lockdown. Most of the increased liquidity is flowing into the stock market fuelling a recovery in stock prices and indices.

Furthermore, in every state or province that has been afflicted by the pandemic, the worst seems to be over after two months. This suggests that the pandemic burns itself out allowing an economy to restore full capacity within about six months. China, the origin of the pandemic, returned to work on April 8^th and only small localized outbreaks of the virus have occurred since then. These outbreaks have been quashed by imposing martial law in affected towns or neighborhoods thereby protecting the rest of society and the economy from the second wave of infections.

Australia’s economy is better placed to snap back than any other major economy so its All Ord’s index should catch up to and overtake the S&P500 index in the near future. China is boycotting Australian secondary exports (beef and barley) but is unlikely to move against our iron ore, coal, and gas exports since it’s too dependent on them. And as China steps up its infrastructure spending to counter its falling exports, Australian mining will be the chief beneficiary.

The harsh truth is that the world has undergone a flash depression (fall in GDP of at least 10% in just one quarter) that temporarily closed most industry sectors and has put others on hold indefinitely. This has eroded the working capital of many enterprises and caused many to default. Many SMEs have closed their doors and won’t reopen.

The collapse in international trade, migration, tourism, and investment (the main drivers of post-war growth) will take two to three years to recover. The worsening cold war between the USA and China will disrupt supply chains and the free movement of capital that will put a brake on growth.

Finally, democratic countries can’t impose martial law like China so they will experience further waves of the pandemic as social discipline breaks down. Reimposing lockdowns will extend and deepen this depression. Stock markets are denying economic reality, but eventually will be mugged by reality.

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The No-Load Fund Advisor

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Leveraged Momentum

Monday, May 18, 2020

Investors continue to gamble that a vaccine will be developed quickly and that steps to open businesses will not trigger another spike in infections requiring renewed quarantine measures which impair future earnings.

Our LevBands strategy is currently in UPRO after another whipsaw recently due to volatility and uncertainty (TimerTrac shows an annualized return of +16.93% for the LevBands strategy since tracking began on 4/27/16).  LevCrosses remains in UPRO (TimerTrac shows an annualized return of -13.55% since tracking began on 4/10/18).

TQQQTrends remains in TQQQ (TimerTrac shows an annualized return of -2.04% since tracking began on 11/24/18).
UPROTrends will sell TMF and buy UPRO when it rises to its buy indicator (buy low; TimerTrac shows an annualized return of -10.01% since tracking began on 3/25/19).

LevIndex is invested 25% in UPRO and 75% in TMF (performance data will be referenced 15 days after one year of tracking on TimerTrac which began 9/16/19).  Leveraged FANG (FNGUTrends) is in FNGU (performance data will be referenced 15 days after one year of tracking on TimerTrac which began 4/7/20).

Performance data and charts for each of these strategies along with the index of your choice (for comparison) can be obtained on the Graphs page of the TimerTrac site.

Market Timing in Australia

Saturday, May 16, 2020

The Australian stock market has been drifting sideways since mid-April, while the American market has had a slight upward bias since then. On short term trend and momentum analysis, the Australian market is on the cusp of switching from being bearish to bullish even though it’s meandering sideways. By contrast, the US market went short term bullish after mid-April. 

America’s stock market’s outperformance against the rest of the world continues to widen largely because tech stocks are concentrated in the USA and have bounced back quicker than other stocks. In Australia’s case, the market is buoyed by our success in suppressing COVID-19 which is allowing the economy to be gradually reopened. But offsetting that is China’s decision to redirect its imports of beef and barley from Australia to Russia and the USA. Also, China’s Ambassador has warned that Chinese consumers, tourists, and students might boycott Australia because it is no longer perceived as China-friendly.

Given that the 2020 Global Covenomics Crisis is the worst since the Great Depression, don’t be surprised if the RBA is forced to take a bigger role in the future. Already the US Federal Reserve in the last few months has accelerated QE at a rate never seen before. By contrast, the RBA has been the most conservative central bank in the developed world in terms of monetary expansion relative to GDP.

This has meant the Australian Treasury has had to be the most radical in the world in terms of fiscal expansion to offset the fall in private spending associated with the lockdown. Australia’s fiscal relief measures amount to 10.6% of annual GDP, more than five times the average effort of all countries. 

If you are an active TimerTrac Developer and would like to submit your commentary to our broadcast, send your submissions to [email protected].  

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The TimerTrac Broadcast is an e-mail broadcast available to the public.  Anyone can subscribe or unsubscribe to the TimerTrac Broadcast list at any time, free of charge. A subscription to the TimerTrac Broadcast does not include a subscription to TimerTrac.com.  TimerTrac Developers DO NOT see a list of TimerTrac Broadcast subscribers. 

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System Research LLC

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Market Timing in Australia

Saturday, May 9, 2020

In a short term time frame, the US share market went bullish on 13^th April and the Chinese share market followed on the 6^th of May, but the Australian share market is still flirting with that prospect but is not there yet. On a longer-term basis, all stock markets are still bearish.

On the pandemic crisis, the bulls say “it's all over rover”, new cases have been plummeting in Italy and Spain since late March and in New York since early April with no sign yet of a second wave outbreak. The rise outside New York is because it started there later and has not yet peaked. And the plateauing in Britain hides its fall in London but rises elsewhere as the virus ripples out.

Bulls say the economy will quickly bounce back because it was caused by a mandated shutdown which once lifted will see consumer and investor sentiment soar. Many companies have discovered innovative ways to market their products and saved money on shifting to remote working which will lift their profits in the future. Zombie companies have fallen by the wayside and will be replaced by others with stronger balance sheets. This creative destruction will give the share market a new lease on life. 

Furthermore Australian mining exports (iron ore, coal, and gold) remain strong so our trade surplus is growing. This is strengthening the Australian dollar which has also been buoyed by the international acclaim of Australia’s successful handling of the pandemic compared with its shambolic management in Europe and America.

Leveraged Momentum

Monday, May 11, 2020

Investors seem to be gambling that a vaccine will be developed quickly and that steps to open businesses will not trigger another spike in infections.

Our LevBands strategy switched from TMF to UPRO recently when it rose above its lower band (buy low; TimerTrac shows an annualized return of +18.54% for the LevBands strategy since tracking began on 4/27/16).  LevCrosses also switched from TMF to UPRO recently when its indicator turns positive (buy low; TimerTrac shows an annualized return of -11.46% since tracking began on 4/10/18).

TQQQTrends switched from TMF to TQQQ on Friday when it rose to its buy indicator (buy low; TimerTrac shows an annualized return of +1.58% since tracking began on 11/24/18).  UPROTrends will sell TMF and buy UPRO when it rises to its buy indicator (buy low; TimerTrac shows an annualized return of -5.80% since tracking began on 3/25/19).

LevIndex is invested 50% in UPRO and 50% in TMF (performance data will be referenced 15 days after one year of tracking on TimerTrac which began 9/16/19).  Leveraged FANG (FNGUTrends) is in FNGU (performance data will be referenced 15 days after one year of tracking on TimerTrac which began 4/7/20).

Performance data and charts for each of these strategies along with the index of your choice (for comparison) can be obtained on the Graphs page of the TimerTrac site.

If you are an active TimerTrac Developer and would like to submit your commentary to our broadcast, send your submissions to [email protected].  

Please review our broadcast policies before submitting your commentary. *

The TimerTrac Broadcast is an e-mail broadcast available to the public.  Anyone can subscribe or unsubscribe to the TimerTrac Broadcast list at any time, free of charge. A subscription to the TimerTrac Broadcast does not include a subscription to TimerTrac.com.  TimerTrac Developers DO NOT see a list of TimerTrac Broadcast subscribers. 

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Oracle Portfolio Management

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Market Timing in Australia

Saturday, May 2, 2020

The Australian market on a short term basis has refused to shift from being bearish to bullish. By contrast, the US share market on a short-term framework remains bullish, notwithstanding a slowing of its momentum oscillators.

Value stock funds have performed worse than growth stocks since the GFC. Observe how the worlds’ top 100 listed multinational companies fund (IOO)  has done better than global diversified share market fund (IWLD). Both these funds are listed on the ASX. Clearly investors think the world’s biggest companies can withstand an economic shock better than a broader range of companies in the developed world.

Of course, what really matters in this crash is not growth or value but the strength of a company’s balance sheet. In a bear market survival is more important than a company’s share price relative to earnings. And survival is about the standing of a company’s balance sheet, management, and competitive advantage and its post-pandemic growth prospects.  

Martone Capital Management, Inc.

Saturday, May 2, 2020

The benchmark S&P 500 (SPX) will begin next week just below major overhead resistance at 2938-3005, which was tested and held last week. This sets up a major decision point for the US Stock market. How SPX responds to this area over the next week or so will be seen as a key indication of whether the current late March rebound in the US stock market is the resumption of its previous 2009 secular uptrend or just a corrective bounce in an uncompleted major downtrend. 

If you are an active TimerTrac Developer and would like to submit your commentary to our broadcast, send your submissions to [email protected].  

Please review our broadcast policies before submitting your commentary. *

The TimerTrac Broadcast is an e-mail broadcast available to the public.  Anyone can subscribe or unsubscribe to the TimerTrac Broadcast list at any time, free of charge. A subscription to the TimerTrac Broadcast does not include a subscription to TimerTrac.com.  TimerTrac Developers DO NOT see a list of TimerTrac Broadcast subscribers.