Tactical Composite Trend Model Update for May 6

Key points:

• The composite risk warning model count falls to zero
• The TCTM long-term trend model is moving closer to a potential trend change
• I'm monitoring the composite washout and thrust models for signs that the correction window is closing

Data as of 5/5/22. 

Tactical Composite Trend Model - Bullish 

The TCTM maintains a cautious bull status as the recession and long-term trend models remain in a favorable position despite the composite risk warning model signal. Now that the market has corrected, I will be monitoring the washout and thrust models for indications that the countertrend move in the market is over. However, we could potentially see a bull to bear trend change for the long-term trend model.

The TCTM is not a pure black-box model that says we should be all in or out. And it should act as a complementary tool to your research process.

To see any published research about this model, click here.

1. Long-Term Trend Model - Bullish

The long-term trend model remains in a bullish position. Annualized returns are favorable when the model is positive.

The TCTM long-term trend model combines a moving average slope indicator with price momentum measures across several durations. When both conditions are unfavorable, the TCTM trend model turns negative. I would note that both components are moving in a direction that could potentially flip the model to a negative trend.

2. Composite Risk Warning Model - Neutral

The composite count has now fallen to 0% with the expiration of the AD line divergence model.

Please click on the following links if you would like to read the notes for the components that triggered the risk-off signal.

1. New Lows Spike Model
2. 52-Week Low with Percent above 200-Day Model
3. New 52-Week High Low Ratio Model
4. Advance-Decline Line Divergence

To see published research about the risk warning model, click here.

3. Composite Recession Model - Neutral

While we've seen some less than robust economic data of late, I would not expect any changes to the recession model count for now.

4. Composite Washout Model - Neutral

After increasing to as high as 30%, the composite washout model signal count declined to 0% with the expiration of all open signals. However, a new percentage of issues at a 21-day low divergence signal was triggered on 5/2/22, increasing the signal count to 10%.

5. Composite Thrust Model - Neutral

I will be monitoring the thrust model for a buy signal. The signal count decreased to 20%, with the expiration of the percent above the 10-day average reversal signal.  

6. Composite Confirmation Model - Neutral

The composite confirmation model signal count remains low. Once the current correction ends, I would watch this model as the signal count should increase as the recovery develops. The CCM typically lags during a rally as the components are big-picture algorithms that take more time to trigger.

7. Composite Master New Bull Market Model - Neutral

The composite master-bull-market model signal count remains low. Once the current correction ends, I would watch this model as the signal count should increase as the recovery develops.

Risk-Off Composite Model - Neutral

The risk-off composite model is an excellent secondary tool for managing market exposure with the TCTM Risk Warning Model. Please click on the following link for a note on the model. Click here.

After triggering a risk-off signal in December, the composite count has fallen to zero with the expiration of all alerts.