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Model Review

Published 09/27/2021, 12:31 AM
Updated 07/09/2023, 06:31 AM

I've decided to make an adjustment to the publishing schedule of my blog/oftentimes meandering market missive.

Going forward, I plan to publish the "Model Review" report on Monday mornings. This will be the same group of models that you have come to know over the years. The idea is to start the week with a quick check on the key market models/indicator boards.

In addition, I plan to provide our view of the primary market drivers (aka, "The State of the Market" report) in a separate post as time permits, which will be published mid-week.

Now let's get the new week started with a review the "state of the market" from a modeling perspective...

The Big-Picture Market Models

We start with six of our favorite long-term market models. These models are designed to help determine the "state" of the overall market.

Primary Cycle Models

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

The Fundamental Backdrop

Next, we review the market's fundamental factors including interest rates, the economy, earnings, inflation, and valuations.

Fundamental Factors

* Source: NDR as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

The State of the Trend

After reviewing the big-picture models and the fundamental backdrop, I like to look at the state of the current trend. This board of indicators is designed to tell us about the overall technical health of the market's trend.

Price Trend Indicators

The State of Internal Momentum

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Next, we analyze the momentum indicators/models to determine if there is any "oomph" behind the current move.

Momentum Indicators

* Source: NDR as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

Early Warning Signals

Finally, we look at our early warning indicators to gauge the potential for counter-trend moves. This batch of indicators is designed to suggest when the table is set for the trend to "go the other way."

Early Warning Indicators

* Source: NDR as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

Thought for the Day:

"You can't pay back - you can only pay forward." --Woody Hayes

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