Thoughts
1 am: High yield spreads continue to narrow. A medium-long term bullish sign for the stock market.
High yield spreads continue to trend downwards.
This is a medium-long term bullish sign for the stock market and suggests that the stock market will continue to trend higher in the medium-long term. Bond market participants are smarter than stock market participants, which is why the bond market is a leading indicator for the stock market. Historically, high yield spreads widen (trends higher) before bull markets top.
1 am: Unit profits are down: this equities bull market doesn’t have a lot of years left.
Corporate unit profits have been trending downwards since the end of 2014.
This IS NOT a timing indicator for predicting the end of bull markets. Sometimes unit profits will fall a year or two before recessions and bear markets begin. Sometimes unit profits will fall for half a decade before bear markets begin. But this does tell us that 2014/2015 marked the halfway point for this economic expansion and bull market.
This indicator suggests that this equities bull market doesn’t have many years left. By the Medium-Long Term Model‘s estimates, mid-2019 is the most likely top.
1 am: Japanese stock market breakout!
The Japanese stock market has broken out of a big consolidation.
Historically, these breakouts are neither consistently bullish nor consistently bearish for the Japanese stock market.
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