• Bond model signals continue to signal ‘sell’.
• Two flips in FTSE-100 signals create a net ‘buy’ signal.
• Over the past three months, the best-performing bond model has been the one-month lookback for Bunds (3.3%), for equities it has been the twelve-month lookback for the FTSE-100 (2.4%).
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- Bond model signals continue to signal ‘sell’.
- Two flips in FTSE-100 signals create a net ‘buy’ signal.
- Over the past three months, the best-performing bond model has been the one-month lookback for Bunds (3.3%), for equities it has been the twelve-month lookback for the FTSE-100 (2.4%).
Markets continue to be in flux. The most recent US labour report was robust enough to suggest the Fed could start taper next month, while strong Canadian employment data adds to the case for the Bank of Canada to hike. Energy prices continue to rise, which is adding to stagflationary concerns. Meanwhile the risk of a breach of US debt ceiling was delayed not averted, with a likely vote in December. With investors focused on oil prices and central bank hikes, Canadian markets have become a central focus. On this backdrop, bonds signal ‘sell’, and the FTSE-100 flips net ‘buy’.
Latest Signals
No changes, bond models continue to signal ‘sell’ for the second week running (Table 1). This leaves bond markets net ‘sell’ (Chart 1).
Two changes in equity models, the FTSE-100 one- and three-month lookback models flip from ‘sell’ to ‘buy (Table 1). All other signals remain. The S&P500 is net ‘buy’, whilst the Nikkei and DAX are net ‘sell’ (Chart 1).
Best Performing Models
Looking at the performance of the best models over the past three months, we find the following:
- Bonds: the best-performing bond model is the one-month lookback for German Bunds. It has delivered 3.3% returns and is currently signalling a ‘sell’ signal (Table 1, Chart 2).
- Equities: the best-performing equity model has been the twelve-month lookback for the FTSE. It has delivered 2.4% returns and is currently giving ‘buy’ signals (Table 1, Chart 3).
*The basic strategy is to use returns (lookback windows) to give buy/sell signals. So, if the US stocks are up over the past 3 months, you buy, otherwise you sell (note I use excess returns).