10 January 2018: The peak?

More and more analysts are getting bullish about the US (and global) stock markets. A good sign? Well, history has shown that this is usually the beginning of the end of the bull market. In many cases, an avalanche of positive analyst reports coincided with the peak of the markets. Are we getting closer to similar crossroads in the markets? The low levels of interest rates and inflation appear to be an odd couple in the equation. On the other hand, how much more can the economy grow and how much optimism about future economic growth is justified? And what about stock prices: they are at a high level, but from a historic perspective they do not seem to be dangerously high. All in all, under the assumption that a black swan is not currently taking off to ruin the party in the near future, it does not feel like the markets are about to reach their absolute peak. After the strong rise of stock prices of the last 15 months, we might be reaching a local maximum in the upcoming weeks. But it is likely that after a (short) period of cooling down, the bull market will continue and the march to the absolute peak will continue.

white-chapel-logo-smallThe major US stock indices finished at fresh records yesterday, with the S&P 500 and NASDAQ registering a sixth straight gain for 2018. The Dow gained 0.41%, the S&P 500 added 0.13% and the NASDAQ recorded a modest gain: +0.09%. Volatility came off its low levels, however, with the VIX closing above 10 points for the first time in six sessions (+5%). UVXY ETFs followed suit and added more than 2%. XIV ETNs lost 1%.
Danny Daredevil recovered partly from the losses he ran into at the beginning of this year. His RSS closed at -10.5%. Adventurous Anny is still holding a cash position. Her RSS remained unchanged at 23%. Solid Suzy and Lazy Larry had to take a small loss. Their RSS dropped to 114%. They are still 6% up for the quarter, however.
None of our models gave a trading signal at the end of yesterday’s session.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

-10.50%

-12.24%

-12.24%

-5%

Adventurous Anny Cash 6 March 2017

22.91%

0.00%

0.00%

27%

Solid Suzy XIV 6 March 2017

113.71%

6.00%

6.00%

145%

Lazy Larry
XIV 6 March 2017

113.71%

6.00%

6.00%

145%

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

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For René, it’s one of those days again.
Participating in a business meeting in Brussels is okay for him.
But it is getting there that is the hardest part…