The Power of the Pattern would describe a bull trend, based upon a series of higher lows and higher highs.
Using this definition, the broadest of indices in the states, are “breaking 5-year rising trends!” This could break the heart of the bulls.
This 2-pack reflects that these two broad markets are breaking below “Weekly Closing” 5-year bull trends. When long-term trends break, it is common for selling pressure to come forward, regardless of the time of year!
You’ve no doubt heard the phrase “Sell in May and go away!” This popular phrase also references that markets are typically strong from November to May. Below looks at stock index performance and Gold, since November 1st of last year.
We are well aware of seasonal patterns and respect them a great deal. What do we respect more, than seasonal windows? The Power of the Pattern!
Members started pulling back stock market exposure a year ago, due to our 125/5 indicator being triggered, for the first time since 2000. When this indicator sends us a signal, long term stock market performance historically is reduced by 90%, over a 5 to 10-year time frame. We take signals like this seriously and we took action, by lowering long exposure.
What investors need to be most aware of is this; even though markets have been soft this year, “5-year trends are JUST NOW breaking support!” This would suggest that a new round of selling pressure could come forward.
One of our key indicators per whether a portfolio should be designed for the Risk On/Risk Off trade is the Japanese Yen. CBS Market Watch reported yesterday on the pattern of the Yen and its importance. See Article Here.
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