Market Monitor Newsletter Overview - AAIILA.org
Transcript of Market Monitor Newsletter Overview - AAIILA.org
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1© 2018 - Robert Bernstein
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Market Monitor Newsletter Overview
Los Angeles Chapter AAII – Strategic Investing Group
Presented by Rob Bernstein, President RGB Capital Group LLC
June 2, 2018
This document is provided for educational purposes only. It does not constitute an offer to sell or a solicitation to buy a security, and is not an offer to provide any specific investment advice. Past performance is not indicative of future results. Changes in equities markets, interest rates, exchange rates, economic conditions, political conditions and other factors may influence future performance.
Contact Information: Rob Bernstein RGB Capital Group [email protected]
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2© 2018 - Robert Bernstein
All Rights Reserved
Market Monitor Newsletter
The Market Monitor newsletter is intended for individual investors with a desire to manage the conflicting goals of managing risk and earning a fair return by providing a unique perspective of general market conditions.
Originally developed for the attendees of the San Diego Chapter of AAII – Risk Management Special Interest Group with the goal of providing frequent updates on overall market conditions.
NOT designed to provide any specific investment recommendations.
First published in October 2017.
Written in the evening of the second Wednesday of the month and distributed on Thursday morning. The schedule is subject to change.
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3© 2018 - Robert Bernstein
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Top Down Approach
Economic (Business) Cycle
Market Breadth
a) Long-Term
b) Short-Term
The Junk Bond Indicator
Major Indices
Market Watch List
a) Bond/Income Funds
b) Commodities
c) Equity Sectors
d) Foreign Groups
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4© 2018 - Robert Bernstein
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Section 1: Economic (Business) Cycle
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5© 2018 - Robert Bernstein
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Economic (Business) Cycle
Is the economy expanding or contracting?
Is the rate of growth increasing or decreasing? Is the rate of growth considered by be inflationary?
Is the Federal Reserve trying to stimulate or slow the economy?
Are corporate profits likely to increase or decrease in the near term?
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6© 2018 - Robert Bernstein
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Economic (Business) Cycle
The economic cycle is defined as alternating periods of expansion and recession.
The purpose of reviewing the economic cycle is to provide a guide to the macro-economic environment.
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7© 2018 - Robert Bernstein
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Economic (Business) CycleImpact on Different Asset Classes
Stage I – Bonds Bottomo Bullish for bondso Bearish for stockso Bearish for commodities
Stage II – Stocks Bottomo Bullish for bondso Bullish for stockso Bearish for commodities
Stage V – Stocks Topo Bearish for bondso Bearish for Stockso Bullish for commodities
Stage VI – Commodities Topo Bearish for bondso Bearish for stockso Bearish for commodities
Stage III – Commodities Bottomo Bullish for bondso Bullish for stockso Bullish for commodities
Stage IV – Bond Prices Topo Bearish for bondso Bullish for stockso Bullish for commodities
Source: Michael Price
Analysis based on a model defined by Martin Pring in The All Season Investor.
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8© 2018 - Robert Bernstein
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Market Breadth
How much of the market is participating in an advance? Is the market advance broad or narrow? Are all boats rising?
How much of the market is participating in a decline? Is the market decline broad or narrow?
Are divergences (bullish or bearish) forming that may provide clues to future market action?
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9© 2018 - Robert Bernstein
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Market Breadth
Market Breadth is a technical analysis technique used to gauge the future direction of the market with something other than price. Examples include volume, advancing/declining issues, and new highs/lows.
Comparing market breadth indicators with the underlining index (price) may identify strength or weakness that is not apparent in the index.
Market breadth can provide clues to both the short-term (tactical) or longer-term (strategic) market environment.
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10© 2018 - Robert Bernstein
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Section 2: Long-Term Market Breadth
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11© 2018 - Robert Bernstein
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Market BreadthLong-Term Market Breadth
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12© 2018 - Robert Bernstein
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Section 3: Short-Term Market Breadth
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13© 2018 - Robert Bernstein
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Market BreadthShort-Term Market Breadth
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14© 2018 - Robert Bernstein
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Section 4: Junk Bond Indicator
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15© 2018 - Robert Bernstein
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Junk Bond Indicator
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16© 2018 - Robert Bernstein
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Junk Bond Indicator
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17© 2018 - Robert Bernstein
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Section 5: Major Indices
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18© 2018 - Robert Bernstein
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Major Indices
What is the trend of the market? Are the major indices in agreement with respect to the trend?
Does the market have a capitalization bias (large vs. mid vs. small)?
Does the market have a growth or value bias?
What do other technical indicators tell us about the overall trend of the market?
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19© 2018 - Robert Bernstein
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Major Indices
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20© 2018 - Robert Bernstein
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Market Watch List
What sectors are out performing / under performing?
What is the relative performance of different sectors?
Are certain sectors gaining momentum?
What sectors have underperformed that may be poised for outperformance in the future?
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21© 2018 - Robert Bernstein
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Market Watch List
Components of the Market Watch List are created by Rob Bernstein for recipients of the Market Monitor. These groupings are not published to the general public.
Bond / Income Groups are an equally weighted average of 10 large mutual funds representing that group, with the exception of the Preferred Securities group which is an equal weighted average of five preferred securities mutual funds.
Commodity, Equity and Foreign Groups – each group is an equally weighted average of ETFs and tradable mutual funds that represent that category. The number of ETFs/mutual funds in each group varies.
You cannot invest directly in one of these groups.
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22© 2018 - Robert Bernstein
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23© 2018 - Robert Bernstein
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24© 2018 - Robert Bernstein
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Overview
The introductory page (page 1) is the last page I write. This is an opportunity to summarize the current market environment and share my thoughts with readers.
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25© 2018 - Robert Bernstein
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Overview
At the bottom of the first page is a Summary Assessment:
a) Intended to provide readers a quick snapshot of the overall market environment.
b) Legend:
+ Positive
- Negative
? Questionable
Market Monitor 5/10/18
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26© 2018 - Robert Bernstein
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Rob Bernstein ● 858-367-5200 ● [email protected]