Reports Library

There are reasonable concerns about stocks as September unfolds. However, long-term investors with at least a six- to twelve-month time frame may take heart in recent indicator signals related to high beta versus high quality, option open interest, and IPO activity. Details herein.

The Market Environment Composite has dropped to 2, entering a historical "Danger Zone". Readings between 2 and 4 consistently generate annualized losses of -6% to -10%, warning investors to reduce risk until favorable conditions return.

Despite short-term macro fears and rising credit stress, quantitative signals remain structurally bullish. A rare AAII Bull Ratio signal and Real M2 money supply trends historically point to massive 12-month equity gains with a 100% win rate.

In Part 1 and Part II, we highlighted indicators based on analyzing the money supply using the M2 data series. Here in Part III, we combine those two indicators into a simple model for deeming the outlook for stocks as favorable or unfavorable.

In Part I, we looked at how short-term changes in the money supply can affect stocks. In Part II, we look at performance based on the trend in the relationship between stocks and the money supply.

Short-term breadth in the Nasdaq 100 has weakened while a majority of members remain above their 200-day averages. Similar setups offered little immediate direction, but healthier long-term breadth historically coincided with a smaller six-to-twelve-month downside tail.

One accurate assertion states that "money moves the markets." This series of notes will examine how changes in the money supply influence financial markets, including stocks, gold, and Bitcoin. Part I focuses on how monthly changes in the money supply can influence stock prices.

Conventional technical analysis claims narrowing breadth near market highs is bearish, but historical data proves otherwise. When under 15% of S&P 500 stocks sit near 1-year highs while the index hovers near peak levels, it boasts a 75% 1-month win rate.

Despite the multi-year bull market, individual investors have remained surprisingly wary of each new advance. A recent signal from the AAII Bull/Bear data may surprise you. Details herein.