Risk On Gauge Shifts With Many Markets At Tipping Points

Last week the equity markets had a remarkable reversal of fortune as the SPY and QQQ moved from breaking down under major institutional support levels such as their 50 moving averages, to rebounding to new all-time highs.

Additionally, the MarketGauge Risk On / Risk Off gauge changed to green, and several major asset classes ended the week with charts in pivotal positions.

The rally in equities began on Tuesday, was fueled on Wednesday with positive GDP news, and continued through lackluster economic data on Friday.

Wednesday’s positive news of the strongest year-over-year quarterly GDP growth in two years is illustrated in the Wall Street Journal’s chart of GDP below.

This news comes a week after another front page article on August 24, 2017 in the Wall Street Journal reported, “For the first time in a decade the world’s major economies are growing in sync… All 45 countries tracked by the Organization for Economic Cooperation and Development (OECD) are on track to grow this year, and 33 of them are poised to accelerate from a year ago…”

As illustrated by the chart to the right this is the first time since 2007 that all 45 countries are growing.

The Market Gauge Big View Risk On / Risk Off Gauge Turns Bullish

As you can see image the image to the right, the gauge has been bearish for at least a month, and this week it turned bullish.

The gauge is a proprietary calculation using many of the relationships our Big View service charts in the “Risk On/Off” section.

While it’s not a buy/sell signal by itself, it has an impressive track record of identifying when to be bullish or bearish on stocks.

If you’re a regular reader of this weekly MarketGauge Market Outlook column, then you you’ve seen via the accompanying video that we’re about to release a new expanded Big View service that enables us (soon you too) to have a ‘top down’ assessment of how bullish or bearish the markets are based on many different indicators and intermarket relationships.

Where Are The Big Trades If Global Growth Accelerates?

This week’s market action and GDP news prompted me to take a look at the key asset classes that might shift or accelerate in their trends if global growth accelerates.

What I found was exciting! Many of the intermarket relationships that are driven by growth, interest rates, inflation, and currencies are at major long-term technical inflection points.

The analysis this week is all based on weekly charts so we can see monthly and quarterly trends, and the insight revealed will guide my big picture view for the balance of 2017, maybe longer!

This week’s Market Outlook, therefore, will not include a video, because I wanted to enable it to be downloaded.
Click here to download this post as a PDF.

Do Stocks Trend Based On Anticipated GDP Trends?

GDP is not an easy (nor recommended) way to anticipate market moves. However, it is helpful to understand the “why” behind major market moves.

The arrows in the chart below suggest that the general market trends coincide with the trend and size of GDP growth when you look out a quarter or two.