Volatility vs Oscillators
The Model: The KP Trend Model continues Green, full exposure to US equities. From the Trading Room: Internals have continued to weaken following price, where the major market indices all ended lower this week. Weakness in the Internals is a concern, especially when as currently, it’s coinciding with a sharp increase in volatility as noted in the CBOE Volatility Indexes that this week reached high levels not seen since October\November 2023. Concern (fear) and anxiety are rising. Volatility speaks to investor worry and often, poorly timed investment decisions. The effect volatility...
Read MoreStill Worried About Breadth
The Trend Model. Both elements of our trend modeling process remain Green. Full policy exposure to US equities. From the Trading Room. Healthy equity markets are often said to be “broad,” meaning that most stocks are participating in the upward trend. As market advances mature, they are often described as “narrowing,” — fewer issues participating. Narrowing conditions often precede important tops. Accordingly, we monitor market breadth in various ways to remain vigilant for upcoming changes in the trend models. This week, we present a two-year chart depicting the...
Read MoreDivergences vs Momentum
The Model: The KP Trend Model continues Green, full exposure to US equities. From the Trading Room: The divergences we’ve been noting between the price performance of major indexes and our technical studies have become an ongoing concern for us. Certainly, all of is early since the indices remain their near all-time highs. For example, the KP Long-Term Model has been Green for more than a year, and the KP Intermediate-Term Model has been Green since last...
Read MoreGreen, With a Few Footnotes
The Model. Our KP Trend Model remains Green, suggesting maximum policy exposure US equities. From the Trading Room. Over many decades, technical analysts have noted that important market tops tend to be preceded by a “thinning” of participation — a technical phenomenon where prices of the major indices — dominated by a small number of very large stocks — continue marching upward while many other more average stocks struggle to participate. For example, a recent comparison of the Nasdaq Industrial Index ($INDS) and the S&P 500 ($SPX): This kind of...
Read MorePossible Momentum Pause
The Model. The KP Trend Model continues Green, full exposure to US equities. From the Trading Room. Last week, we saw signs of a potential slowdown or pause in momentum, both with price and with the internal data. This slowdown is evident in the chart of the Intermediate-Term Model below. Our Tactical Exposure Study also Illustrates the pause by descending below its red neutral line and shifting to a ‘Plus 2’ status, which we read as ‘modestly oversold in the context of the advancing market trend.’ Assuming that the uptrend remains intact, the study suggests a...
Read MoreMaturing Bull
The Model. The KP Trend Model remains Green. Full policy exposure to US equities. From the Trading Room. The KP Trend Model has two two elements: A price-based long-term trend study that changes direction less than once a year — it is currently positive by a considerable margin: We pair this study with the more sensitive (5.2 trades/year) KP-1 Model (below) which is based entirely on internal, non-price data. Since the underlying concept is completely different, this study has shown itself to be synergistic with the Long-Term Model. In combination, both produce a better...
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