Recent Market Calls

Market Calls: US Stock Market, August 10th 2011

The US Stock Market

What We Said: "The current sharp decline in the US stock market is unlikely to continue appreciably further from here, if at all, without at least a multi-week corrective rebound first. Our research clearly shows investor panic — which history tells us is precisely when investors should be buying. Although current market conditions show the potential for one more eventual leg lower before the May US stock market decline runs its course, investors should consider putting some capital to work now."
What the Market Did: The market actually bottomed one day earlier, on August 9th, before rising by 136 points or +12% between August 10th and October 24th., The market actually bottomed one day earlier, on August 9th, before rising by 136 points or +12% between August 10th and October 24th.
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Global Stock Markets

What We Said: "A close above 5640 today in the German DAX Index would target a +12% rise to 6300. Considering the tight and stable 20-year positive correlation between the DAX and SPX, we would view a close above 5640 in the DAX as a leading indication of a similar breakout in the S&P 500 and, more important, an indication that a more sustainable bottom is emerging in both the US and Europe at the August lows."
What the Market Did: The German DAX met our 6300 target exactly one month later, on October 27th 2011, for a 722 point, 13% gain. During the same period the S&P 500 has risen by 204 points or 19%., The German DAX met our 6300 target exactly one month later, on October 27th 2011, for a 722 point, 13% gain. During the same period the S&P 500 has risen by 204 points or 19%.
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The US Stock Market

What We Said: "...at least a near term peak is in place in the US stock market at its recent highs. We are expecting an initial, and potentially sharp, 7% decline in the benchmark S&P 500, back to major underlying support at the 200-day moving average."
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What the Market Did: The S&P 500 declined by 82 points or -6% over the next month, to test its 200-day moving average by June 15th 2011.

Copper Prices & The US Stock Market

What We Said: "The big negative divergence between copper prices and the Dow Transportation Index since mid February strongly suggests that one of these two assets is temporarily mis-priced. Based on copper prices’ tendency to lead US equity prices, we believe that the US stock market is the mis-priced, over-priced one — and is vulnerable to an upcoming decline which could carry through Q2 and potentially into Q3 2011."
What the Market Did: The S&P 500 declined by 93 points or -7% between May 12th and June 16th 2011.
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US Interest & Rates & Treasuries

What We Said: "The positive shift in market momentum that took place in US Treasury prices as of the close on Monday April 18th confirms that the rise in Treasury prices that we have been anticipating since early this year is now underway. Our analysis suggests that rising US Treasury prices, amid declining US interest rates, is likely to coincide with a decline in the US stock market amid relative outperformance by the Utilities Sector."
What the Market Did: Since April 20th through mid June 2011 the price of the US 10-Year has risen by +5%, the yield of the 10-Year Note has declined by 45 basis points to 2.98%, the S&P 500 has declined by 109 points or -8%, and the Utilities Sector has outperformed the S&P 500 by +7%.
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The Consumer Staples Sector

What We Said: "Our analysis suggests favorable conditions for a new one to several month trend of relative outperformance to begin this quarter in the Consumer Staples Sector. Moreover, correlation analysis tells us that this upcoming trend of relative outperformance, should it materialize, is likely to coincide with a declining US stock market amid declining US interest rates."
What the Market Did: Consumer Staples outperformed the S&P 500 by +10% from March 3rd to June 20th 2011 amid sharply declining US interest rates and an 8% decline in the S&P 500 between May 2nd and June 16th.
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The Health Care Sector

What We Said: "Through the end of last week, just 6% of sector bet related assets resided in Health Care -- just one quarter of the historic daily average of 24% since 1998. This indicates that the Health Care Sector is severely under-invested versus the other sectors of the S&P 500, and thus susceptible to upcoming strength and relative outperformance as these assets eventually shift back toward their historic norm of 24%."
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What the Market Did: The Health Care Sector outperformed the S&P 500 by +10% between March 3rd and June 17th 2011