The relatively elevated levels indicate a bias towards put volume downside protection or direction bet. Government Receipts and Outlays. The ISM PMI is a diffusion index based on surveyed purchasing managers in the manufacturing industry. VX V Oct We also got fresh data on the unemployment rate last week.




Macro: Last week's ISM PMI data beat expectations and the unemployment rate is below its long-term average. In a previous article, I outlined both the purpose and construction of the Simple Stock Model. Nidex reading for a quick run-down if you're new to the model; otherwise, you can skip down to "Technicals" for the updated data. Investors are constantly exposed to sound bites and data points presented without any proper context.

You might have read an article about how stocks have historically bounced when sentiment has reached a negative extreme. Or that you should be out of the market if it's trading below its day moving average. Additionally, at the end of this article, I showcase a composite model that incorporates all of the indicators I use, so your view can be comprehensive, as opposed to having tunnel vision on only one indicator.

Each article is broken down into four main sections: technicals, sentiment, rates and macro. Each section includes a number of different indicators. For each indicator, there's a "filter rule" for when to be out of the market. Let's dive into an example graph. Datio graphs are from Simple Stock Model. The above data is from Yahoo Finance. The graph shows the price momentum indicator within the technicals section.

The bottom portion plots the momentum metric over time and the top portion plots the historical performance of following the filter rule. For each indicator, new data each weekend is used to generate a long SPY or cash position for the next week. For the above momentum example, SPY's dividend-adjusted close as of Friday is the main input.

Using this, I calculate the month total return. For each indicator on this site except for the macro dataI take a four-week average of the main indicator input. So, for this example, I'm taking the four-week average of month total return momentum. To reduce false positives and whipsaws when an indicator is bouncing slightly above or below its filter rule. There's nothing special about a four-week average. You could use two or eight weeks and reach similar results.

Data is compiled as of Friday's close. Buying or selling decisions occur on Monday's close. I do this, as opposed to making trades at Monday's open, simply because I had a more reliable data source for dividend-adjusted close data. It's also important to reflect realistic transaction costs. Commissions and spreads are lower now, but considering SPY started inI chose to use these above-average numbers. Now you understand the methodology behind the model. Each week, I'll cover a handful of indicators, especially those that have changed positioning imdex the past week.

Let's get started with some technicals. Most people dismiss the saying "sell in May and go away. February is within the historically best six months of the year for the market. If Monday falls between November 1 and April 30, my filter rule says to be in the market. Data is from Yahoo Finance. That works, but you get whipsawed with a lot of false signals.

That's why I use a 4-week average of SPY's distance relative to its day moving average. It's a bit slower on catching big moves but signals fewer false positives. Data is from the CBOE. My preferred measure of the index a four-week average has rarely been this high. Data is from the National Association of Active Investment Managers. The difference between the interest rate of a high yield NYSEARCA: HYG bond and a Treasury of comparable maturity is called a high-yield spread.

The narrower the spread, the more optimistic investors are about the probability of risky U. When investors grow more uncertain, they will demand a higher rate on high-yield bonds and cause spreads to widen. High-yield spreads have imploded since last February, reach low levels not seen for years. Data is from the St. Louis Federal Reserve Economic Database. The TED spread is frequently cited as a measure ihdex credit risk in the overall economy.

The spread reflects the difference between two short-term interest rates: 3-month USD Pkt and the 3-month U. Treasury yield NYSEARCA: BIL. LIBOR reflects the rate at cboe options total put call ratio index yahoo banks borrow between each ootions on an unsecured basis. The perceived risk in the banking sector grows tptal the spread between LIBOR and T-bills widens out. The TED spread is below my cut-off filter of 0.

The ISM PMI is a diffusion index based on surveyed purchasing managers in the manufacturing industry. It's a leading indicator of economic health. A PMI reading above 50 indicates expansion in the manufacturing sector, below 50 indicates contraction. We just got new PMI data last week, and at Data is from the Institute of Supply Management. We also got fresh data on the unemployment rate last week. The unemployment rate is the percentage of the total workforce that is unemployed and actively seeking employment during the previous month.

It is a lagging economic indicator, but a persistently rising unemployment rate indicates a weak labor market and thus cboe options total put call ratio index yahoo weak consumer spending. The current unemployment rate is 4. That wraps up the weekly update on some of the individual indicators. Now for the composite model. Think of each indicator as a building block that helps form cbe overall opinion.

One study might say current sentiment has historically been bullish on stocks. That's just one data point in isolation. I'm interested in a bigger-picture view with more context. A picture that also factors in what's going on with macro data, interest rates, etc. The composite model does just that. Here's how it works: Each indicator is given a score of 1 or 0 depending on its current reading relative to its filter rule. The table below summarizes data from all the previous sections and assigns a 1 or 0 to yaoho indicator based on its current reading.

All 22 indicators are averaged to form the composite score. If the rario score is greater than 0. There's nothing special about 0. I could have used a higher filter pkt like 0. The chart below plots each individual category average score and the overall composite score. So where do we stand? Technical data is super strong. Sentiment does give me some hesitation. The macro environment looks good. Last week's ISM PMI print beat expectations. Industrial production, retail sales, and housing prices have all risen over the past year.

Overall, the composite model is long. This is because the composite score is 0. I hope this article can help you out in your own investing endeavors. Do let me know in the comments below if you have any questions! I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than csll Seeking Alpha. I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: The author does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked in this article or incorporated herein.

This article is provided for guidance and information purposes cboe options total put call ratio index yahoo. Investments involve risk are not guaranteed. This article is not intended to provide investment, tax, or legal advice. Performance shown for each indicator is of a simulated hypothetical model. Performance is simulated and hypothetical and was not realized in an actual investment account. Performance includes reinvestment of all dividends. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Rates: High yields spreads are at multi-year yahop and the TED spread hasn't moved in months. Macro: Last week's ISM PMI data beat expectations and the unemployment rate is below its long-term average. How the Model Works Each article is broken down into four main sections: technicals, sentiment, rates and macro. Disagree with this article? Follow Movement Capital and get email alerts.




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