Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Market Outlook 2017 According To Our Proprietary Indicators

Stock-Markets / Financial Markets 2017 Dec 11, 2016 - 03:54 PM GMT

By: InvestingHaven

Stock-Markets

It was quite a volatile year, with a mix of collapses and rallies across markets. Think of gold’s breathtaking rise, crude’s collapse, and copper’s rally. After the summer, gold started collapsing while crude and stocks rallied strongly. With this year’s volatility, it is quite challenging to define a market outlook for 2017. To get a sense of what 2017 will bring, we analyze our proprietary market barometer and our leading market indicator.


The problem with many financial media outlets is that their market outlook sections contain so much and diverse information that it becomes an impossibility it to utilize that info for forecasting. That is why we developed a simple and straightforward methodology based one proprietary market barometer and one leading indicator.
Our proprietary market barometer

First, our market barometer looks at all leading markets, and gives a sense of intermarket dynamics. The point in this is that markets do not move in a vacuum, they move in relation to each other. For instance, early this year, gold rallied strongly as a sign of fear; consequently, crude and stocks tanked. Gold’s rally stalled when stocks started rallying. It is important to look at market trends as a function of each other.

Our market barometer displays the deviation of 7 leading markets from their 200 day moving average (DMA). A market trading above its 200 DMA is bullish and in a long term uptrend, a market below its 200 DMA is bearish and in a downtrend. The key challenge of our market barometer is to identify primary market trends based on how leading markets are moving against each other.

Right now, risk assets are in a bullish mode: stocks, yields, copper and crude are all in a long term uptrend. On the other hand, gold and the Japanese Yen, both fear assets, are in a long term downtrend.

‘Risk on’ market outlook 2017 based on this leading indicator

The market barometer reflects the state of markets at a given point in time. But is it fair to say that the ‘risk on’ trend will continue into the first half of 2017?

To answer that question, we look at our leading indicator: 20 year treasury yields. The next chart makes the point that 20 year yields introduce a new phase in markets (risk on vs risk off) exactly at times when extreme high or low fear levels coincide with peaks and bottoms on its long term chart (see red and green circles on the chart).

Right after the Brexit vote, 20 year yields bottomed, at a time of maximum fear, and most investors were expecting a stock market crash. That was a turning point for risk, and, since then, risk assets started outperforming fear assets. Stock markets broke to all-time highs, copper and crude rallied, while gold sold off.

With our leading indicator suggesting risk is on, we expect this trend to continue into the first part of 2017. As of the summer, our expectation is that stock markets will start correcting, potentially very sharply. Bonds will become attractive at that point, in line with our former bond market outlook, while commodities will certainly not be attractive.

When it comes to gold, it is too hard to make a prediction. If gold continues to behave as a fear asset, we expect gold to turn into a long term uptrend. The challenge with gold is that it has two faces. On the one hand, it is a fear asset. On the other hand, it is an inflation/deflation driven asset. Gold’s prospects always need to be assessed in the context of what other markets are doing. Initially, our gold price forecast remains bearish. We will need to re-evaluate towards the summer of 2017, and make a new call based on intermarket dynamics.

http://investinghaven.com

Analyst Team
The team has +15 years of experience in global markets. Their methodology is unique and effective, yet easy to understand; it is based on chart analysis combined with intermarket / fundamental / sentiment analysis. The work of the team appeared on major financial outlets like FinancialSense, SeekingAlpha, MarketWatch, ...

Copyright © 2016 Investing Haven - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in