The Responsible Investor’s Narrative

So we get the bull’s narrative; STIMULUS! 

Okay, but, ultimately, or I should say, responsibly, we really need to see more by way of developments — other than how the Dow’s doing — to justify flipping to a bullish posture, don’t you think?

As we dig for clues, and as we’ve been reporting herein, we’re seeing zero support for going growthy in the fundamentals, in fact, quite the opposite. And, frankly, for us the fundamentals are paramount. We don’t even need to see a return to all-out growth in the economy, but we do need to see a marked slowdown — on a trend basis — in negative rate-of-change terms in the aggregate data…

But what about the technicals? 

While, again, the fundamentals come first, we do respect, and therefore closely track, the technicals.

Well, on a day to day (and intraday) basis, there have indeed been some bullish signals flashing, but the deeper, more-telling, stuff — the stuff the “responsible” investor might consider — pretty much jibes with the fundamentals.

Here are a few highlights from our weekly drill:   Red shaded areas highlight past recessions…

Click each insert to enlarge…

The S&P 500 vs smallcap and transportation stocks:

S&P 500/Treasury Bonds Ratio:

Weekly Moving Averages/PWA Macro Index Score:

200-Day Moving Average:

Monthly Bollinger Bands:

Monthly MACD and RSI:

Weekly MACD and RSI:

My apologies for dispensing with definitions/narratives for the above (I’m about to head and out and break the social-distancing rules (or try to) and see if I can’t get close to a trout), but you should catch my drift just by eyeballing the graphs.

Other proprietary stuff keeping us from piling in:

Note the improvement in our Equity Market Index. Ironically, that comes from low sentiment readings from individual investors and advisors (although advisors are feeling a bit less fearful of late), as well as huge short interest (betting on a fall) by futures and ETF traders. I.e., fear is good! Per the green shading around the -75 score for our Fear and Greed Barometer (max fear is -100).

While, again, a high degree of fear is good, the supporting data say it’s presently more than justified.

Have a great day!


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