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Leadingindicators

Weekly Leading Indicator Panel warns...Reviewing the Weekly charts, especially for the leading indicators, it appears that there is a warning of downside risk imminent. SG10Y bond yield are about to break out. JNK TLT and TIP all have bearish engilfing that covers the previous gap up. Thing is, the coombined US equities chart is somewhat bullish, with a rough bearish harami at the bearish best indication. Even SOXL appears to be bullish somewhat... No action needed, but just an early warning given to set the boundaries yet again... looks like the Christmas Rally just fizzled out.
TVC:SG10Y
by Auguraltrader
What Are Leading Trading Indicators, and How Can You Use ThemWhat Are Leading Trading Indicators, and How Can You Use Them in Trading? Leading indicators are essential tools for traders aiming to analyse market movements. This article explains what leading indicators are, how they work, and their practical application across different asset classes. Read on to discover how tools like RSI, Stochastic Oscillator, On-balance Volume, and Fibonacci retracements can enhance your trading strategy. What Are Leading Technical Indicators? Technical indicators are divided into leading and lagging. Leading indicators in trading are tools used to identify potential price movements before they occur. Lagging indicators confirm trends after they begin, helping traders validate price movements. The difference between leading and lagging indicators is that leading indicators aim to give traders an edge by signalling when a new trend or reversal might be on the horizon while lagging indicators confirm trends after they've developed. Leading trading indicators work by analysing price data to identify patterns or extremes in buying and selling behaviour. For instance, popular leading indicators like the Relative Strength Index (RSI) and the Stochastic Oscillator measure momentum in a market. These indicators help traders spot overbought or oversold conditions, where RSI tracks recent price movements relative to historical performance, while the Stochastic Oscillator compares a security's closing price to its price range over a set period. However, it’s important to note that leading indicators can produce false signals, meaning they may suggest a price move that doesn’t materialise. Because of this, traders often combine them with other technical analysis tools, such as support and resistance levels, or use them alongside lagging indicators to validate the signals they receive. Types of Leading Indicators in Trading Leading indicators are divided into various types, each serving a unique role in analysing potential market movements. Three common types include momentum indicators, oscillators, and volume indicators: - Momentum Indicators: These track the speed or rate of price changes. They are used to assess the strength of a trend and determine potential reversals when the momentum slows. Momentum indicators help traders when an asset is overbought or oversold. - Oscillators: These indicators fluctuate between fixed values (usually 0 and 100) to reflect the market’s current momentum. They help traders pinpoint potential reversals by highlighting when an asset is overbought or oversold. Oscillators are particularly useful in range-bound markets where price movement is confined within support and resistance levels. - Volume Indicators: These focus on the amount of trading activity, rather than price movement. By analysing the flow of volume in or out of an asset, traders can gauge the strength behind price movements. Increasing volume in the direction of a trend often confirms its continuation, while the divergence between volume and price can indicate potential reversals. Below, we’ll take a look at a list of leading indicators. If you’d like to explore these indicators alongside dozens more, head over to FXOpen’s free TickTrader trading platform. Relative Strength Index (RSI) The Relative Strength Index (RSI) is one of the most popular leading indicators examples. RSI is a momentum oscillator that helps traders evaluate the strength of an asset’s price movements. Developed by J. Welles Wilder, it measures the speed and change of price actions over a set period—typically 14 candles—on a scale from 0 to 100. The primary signals RSI produces revolve around overbought and oversold conditions. When the indicator breaks above 70, it suggests that an asset may be overbought, reflecting the potential for a reversal or correction. Conversely, when RSI falls below 30, it signals that an asset may be oversold, which can indicate a potential recovery. These thresholds provide traders with insight into whether the price has moved too far in one direction and is poised for a change. RSI can also highlight trend reversals through divergence. If the price of an asset continues to rise while the RSI drops, it indicates bearish divergence, signalling potential weakening momentum. On the other hand, bullish divergence occurs when the price falls, but the RSI rises, suggesting that the downward trend may be losing strength. Another useful RSI signal is when it crosses the 50-level. In an uptrend, RSI remaining above 50 can confirm momentum, while in a downtrend, staying below 50 reinforces bearish sentiment. However, RSI is not foolproof. During a strong trend, the indicator can signal overbought or oversold for a long while and lead to false signals. This is why it’s often paired with other indicators to confirm signals. Stochastic Oscillator The Stochastic Oscillator is a momentum-based indicator that assesses the relationship between an asset's closing price and its price range over a specific number of periods, typically 14. It consists of two lines: the %K line, the primary line, and the %D line, which is a moving average of %K, providing smoother signals. This oscillator ranges from 0 to 100, with readings above 80 indicating overbought conditions and those below 20 signalling oversold conditions. Traders utilise these signals to determine potential reversals in price. For example, when the oscillator rises above 80 and then drops below it, a potential sell signal is generated. Conversely, when it falls below 20 and climbs back above, it might indicate a buy opportunity. The Stochastic Oscillator also provides crossover signals, where the %K line crosses above or below the %D line. A bullish crossover occurs when %K rises above %D, indicating that upward momentum may be increasing. A bearish crossover happens when %K falls below %D, suggesting that momentum is shifting downward. In addition to overbought/oversold and crossovers, the Stochastic Oscillator can identify divergence, which signals potential trend reversals. A bullish divergence occurs when the price makes a lower low, but the oscillator shows a higher low, indicating a weakening downward momentum. On the other hand, a bearish divergence happens when the price makes a higher high, but the oscillator makes a lower high, suggesting the uptrend might be losing steam. While the Stochastic Oscillator can be powerful in range-bound markets, it can be prone to false signals in trending markets. On-Balance Volume (OBV) On-Balance Volume (OBV) is an indicator that tracks the flow of trading volume to assess whether buying or selling pressure is dominating the market. It was introduced by Joseph Granville in 1963, and its primary concept is that volume precedes price movements. This makes OBV a useful tool for analysing potential trend reversals. While the absolute value of OBV is not crucial, its direction over time provides insight into the market’s underlying sentiment. OBV offers several key signals: - Trend Direction: A rising OBV supports an upward price trend, indicating strong buying pressure, while a falling OBV reflects a downtrend with selling pressure. - Divergence: Traders use OBV to identify a divergence between price and volume. If the price is making new highs while OBV is falling, it suggests a weakening trend, potentially signalling a reversal. Conversely, rising OBV with falling prices can hint at a potential bullish reversal. - Breakouts: OBV can also be used to spot potential breakouts. For instance, if OBV rises while prices are range-bound, it may indicate an upcoming upward breakout. However, like any indicator, OBV has limitations. It can produce false signals in choppy markets and is used alongside other technical tools, such as Moving Averages or support and resistance levels, to improve reliability. Fibonacci Retracement Fibonacci retracements are a technical analysis tool that helps traders pinpoint potential support and resistance levels during price fluctuations. The tool is based on the Fibonacci sequence, a series of numbers that produce key ratios like 23.6%, 38.2%, 61.8%, and 78.6%. These percentages represent levels where the price of an asset might retrace before continuing its trend. Traders apply Fibonacci retracement by selecting two extreme points on a price chart, such as a recent high and low. The tool then plots horizontal lines at the Fibonacci levels, indicating possible areas where the price might pause or reverse. For example, in an uptrend, a price pullback to the 38.2% level could signal a buying opportunity if the trend is likely to resume. Fibonacci retracements are often used in conjunction with other indicators, such as the MACD or RSI, to confirm signals and enhance reliability. While they provide valuable insight into potential turning points, it's crucial to remember that these levels aren't guarantees—prices may not always behave as expected at these points, especially in volatile markets. How Traders Use Leading Indicators in Practice Traders use leading indicators to gain insights into potential price movements before they occur, helping them position themselves early in a trend. Here’s how leading indicators are typically applied: - Identifying Overbought or Oversold Conditions: Indicators like RSI or Stochastic Oscillator are used to spot extreme price levels. When these indicators signal that a market is overbought or oversold, traders analyse the situation for potential trend reversals. - Combining Indicators for Confirmation: It’s common to pair multiple leading indicators to strengthen signals. For example, a trader might use both the RSI and OBV to confirm momentum shifts and avoid acting on false signals. - Spotting Divergences: Traders look for divergence between an indicator and price action. For instance, if prices are rising, but the indicator is falling, it can suggest weakening momentum, signalling a potential downward reversal. - Clear Entry and Exit Points: Leading indicators often provide clear entry and exit points. For instance, the Stochastic Oscillator signals a bearish reversal and entry point when it crosses back below 80, with traders typically exiting the trade when the indicator crosses above 20. Likewise, Fibonacci retracements can provide precise levels where a trend might stall or reverse. Potential Risks and Limitations of Leading Indicators for Trading While leading indicators offer valuable insights into potential price movements, they come with risks and limitations. - False Signals: One of the biggest challenges is that leading indicators can generate false signals, especially in volatile markets. For instance, an indicator might signal a reversal, but the price continues in its original direction, leading traders to take positions prematurely​. - Limited Accuracy in Trending Markets: It’s common that in strong trends, such indicators remain overbought or oversold for extended periods, causing traders to misinterpret momentum. - Overreliance on One Indicator: No single indicator is foolproof. Relying heavily on one without considering other factors can lead to poor decisions. Traders need to combine leading indicators with other tools like support/resistance levels or trendlines to validate signals​. - Lagging in Fast-Moving Markets: Even though they are called "leading" indicators, they can sometimes lag in rapidly changing markets. By the time a signal is generated, the opportunity may have already passed​. The Bottom Line Whether trading forex, commodities, or the stock market, leading indicators offer valuable insights to help traders anticipate potential price movements. By combining these tools with a solid strategy, traders can better navigate market conditions. To start implementing these insights across more than 700 markets, consider opening an FXOpen account and take advantage of our high-speed, low-cost trading conditions. FAQ What Are the Leading Indicators in Trading? Leading indicators are technical analysis tools used to determine potential price movements before they happen. Traders use them to anticipate market shifts, such as reversals or breakouts, by analysing price momentum or trends. Common examples include the Relative Strength Index (RSI), Stochastic Oscillator, and Fibonacci retracement levels. What Are the Three Types of Leading Indicators? The three main types of leading indicators for trading are momentum indicators (e.g., Momentum (MOM) indicator), oscillators (e.g., Stochastic), and volume indicators (e.g., On-Balance Volume). These tools help determine market direction by assessing price action or trading volume. Is RSI a Leading Indicator? Yes, RSI (Relative Strength Index) is a leading indicator. Considered one of the potentially best leading indicators for day trading, it measures momentum by comparing recent gains and losses, helping traders spot overbought or oversold conditions before potential reversals. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
4
Market Leading Indicators - suggests DOWNThis is my most summarized panel of leading indicators which I use to assist in the determination of market projections, over and above technical indicators. The SG10Y is about to break out The JNK bonds are breaking down Both TIPS and TLT have already broken down the uptrend support (bearish trend now) The SOXL (semicon ETF) and the combined US Equities are just about to keel over. Leads have turned down or are at the turning point. Heads up!
CME_MINI:ES1!Short
by Auguraltrader
RECESSION ALERT | Total Vehicle Sales Data Print DelayedWith last months revision of 818,000 jobs, it is probably safe to conclude that other data points have also been incorrectly reported (manipulated for political purposes). Total Vehicle Sales for the month of August 2024 were supposed to be published today. As of 8:45 PM EST, the data STILL has not been released.. HUH?? Total vehicle sales are a leading economic indicator. I’m guessing the numbers are bad.. really bad. In Germany, the economic powerhouse of Europe, vehicle sales collapsed in August (in August 2024). The absence of today's scheduled print is a choice. Someone decided that Total Vehicle Sales (for the month of August 2024) would not be released as scheduled. In addition to illustrating the obvious failures of the current US political administration, this is also a strong indicator that Tesla ( the entire green new scam ) is on the verge of bankruptcy. I will explain this in more detail later.
FRED:TOTALSA
by ChiefMacro
2
ISM Indices vs. GDP YoY% - Leading Economic IndicatorsBoth ISM Manufacturing Index and Non-Manufacturing Index vs. GDP YoY% for the US economy. ISM Manufacturing: Yellow ISM Non-Manufacturing: Blue GDP YoY%: Green/Red ISM Manufacturing currently signaling contraction with a level below 50 and the momentum seems lower. Non-Manufacturing Index is likely to follow the same path although currently signaling growth, but less than before. GDP YoY% could potentially experience a slow-down within the next 6 Months to a Year. The FED has being somewhat more Dovish on the latest speech, as they're seeing a negative outcome in keeping Interest Rates higher for much longer.
ECONOMICS:USBCOI
by Kels
ISM Manufacturing New Order IndexMacro Monday (6) United States ISM Manufacturing New Order Index - ECONOMICS:USMNO This week I have honed in on the Institute of Supply Management Manufacturing New Orders Index (ISM New Orders Index) as it is the largest component of the headline Purchaser Managers Index(PMI) making up 30% of that index. I also make the case below for how it can act as leading indicator of demand by way of trend projection. The ISM New Orders Index is an indicator of U.S. economic activity based on a survey of more than 300 purchasing managers at manufacturing firms advising if orders have increased, decreased or stayed the same. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates the expansion in the manufacturing sector which is interpreted as a positive indicator of economic growth. A reading below 50 indicates a contraction in the manufacturing sector which suggests a slowing economy. According to Investopedia "ISM data is considered to be a leading indicator of economic trends. Not only does the ISM Manufacturing Index report information on the prior two months, it outlines long-term trends that have been building over time based on prevailing economic conditions". The ISM reports are released on the first business day of each month for the month that has previously closed. Thus, they are some of the earliest indicators of current economic activity that investors and business people get regularly. ISM New orders provide an indication of current consumer demand. Utilizing a chart of New Orders readings we can attempt to understand the trend of consumer demand forward. ISM New Orders could be considered an additional gauge of consumer sentiment because if businesses are reporting increases in orders month over month, this demonstrates consumers have the consistently had the resources and the desire to spend. If this continues over months a trend can form and we can capture this direction on a chart. To support the ISM predictive argument I include a chart that illustrates a correlation between the ISM Manufacturing New Orders Index and the University of Michigan Consumer Sentiment Index, the latter of which is considered one of thee leading indicators for predicting future consumer spending/demand. This will be posted in the comments. According to the University of Michigan, the Consumer Sentiment Surveys "have proven to be an accurate indicator of the future course of the national economy." Based on the above correlation I postulate that we can use the ISM New Orders Index as an additional leading/predictive indicator to establish what direction consumer demand is trending. The ISM New Orders Chart Focusing on the ISM Manufacturing New Orders Index Chart you can see that a breach below the sub 50 level can act as a leading or affirming indicator of a slowing economy, lowering consumer demand/sentiment and ultimately recession. Orange Zone Historically If we enter into the orange area and stay there for greater than 7 months it has resulted in a recession every time except for 1966 and 1995 (8 out of 10 times). Some analysts have recognised and compared the similarities of the current period to the 1995/96 period. The similarities are evident on this chart with two touches or bounces from the red zone which appears to be happening at present. The August and September ISM New Orders reading will ultimately tell us if this will play out similar to 1995/96 or not. We know what to expect if it doesn’t. Red Zone Anytime we have entered into the red zone we have confirmed a recession. Its key to realise that recessions are typically assigned 8 months after they have started and this could mean we are already in one... Interestingly we have toe dipped into the red zone twice, in Feb and May 2023 however I do not see this as a definitive move into the red zone, I see these as bounces from this level as noted above. Moment of Truth for ISM New Orders What is clear from looking at the chart is that we are at a critical juncture as we have been 13 months in the orange zone which is a historic first. The coming months readings for August (released Sept) and September (released Oct) will be vitally important for providing an indication of the direction of the economy. A drop down into the red zone and you know what to expect. A rise out of the orange area and above the 50 level would be positive however we have been rejected from areas above 50 in the past (see red lines on chart). I have included some rough fractals from periods in the past (arrows in grey) where we were previously rejected from the 52 and 54 level only to be dumped back into the red and into recession. It’s great that we are aware of these potential false flags so that we don’t get ahead of ourselves. It’s important to note that these fractal examples from 1980, 1990 & 1967 are not projections, just observations from past readings on what may be possible. It only highlights that we need to be cautious, even if we rise above the 50 level, we can be rejected into recession from the 52 and the 54 level. This is why we need help from other charts and indicators to help gauge the likelihood of a continuation higher or rejection lower. Here on Macro Mondays we have been and will continue to build a portfolio of leading market charts/indicators that you can check for free on my Trading View and see how they are all progressing. These charts will include trigger events and will be updated as matters progress. The charts can help inform you of the direction of the economy, the market and help you anticipate or time any potential looming recession. Some prior charts and their indications to date (all linked under this article); Concerning Charts: o Macro Monday 2 – The 2/10 year Treasury Spread FRED:T10Y2Y : The current yield curve inversion on the 2/10 year Treasury Spread historically provided an advance warning of recession/capitulation in 2000, 2007 & 2020 however it provided us a wide 6 - 22 month window of time from the time the yield curve made its first definitive turn back up to the 0% level. September will be month 6 of that 6 – 22 month window and thus we are clearly entering dangerous territory. o Macro Monday 6 – ISM Manufacturing New Orders Index ECONOMICS:USMNO : Its clear from our chart shared today that the ISM New Orders Index is also entering into dangerous territory having been below the sub 50 level and in the orange zone for 13 months. This has never happened before without a recession, bar a lessor 12 month timeframe in the orange zone in 1995/96. The ISM Manufacturing New Orders readings for August and September will be vital indicators for the direction of the economy. o Macro Monday 4 – Global Net Liquidity Vs S&P 500 NYSE:GNL : We shared this chart on the 3rd July as an advance warning of an imminent and expected pull back in the $SPX500. A negative divergence was evident on the chart as Global Net liquidity was decreasing for 6 months from Jan – July 2023 and the S&P 500 increased over the same period. Please review the chart press play and see how accurate this call has been. GNL is currently signalling at minimum a continued correction over the months of Aug and Sept. Side Note: I am very aware of the Halloween effect in which markets rally into the months of October – December thus a pull back in Aug/Sept could end up being short term with a surge in the markets in October. The ISM reading for August (released in Sept) and September (released October) should help us gauge what outcome is more likely. Any increase/decrease in GNL will also offer insight over those months. Aside from this we should be aware of any Fiscal Stimulus that is announced as this would likely have a significant impact. I hope to cover Fiscal Stimulus in coming Macro Mondays, it’s a work in progress. Charts Demonstrating Strength: o Macro Monday 1 - Dow Jones Transportation Index ( DJ:DJT ): The transportation sector acts as a leading indicator as it is further up the value chain ahead of the final products being sold by companies in Dow Jones Industrial Average $DJI. It is similar to ISM Manufacturing New orders in this regard, ahead of or at point of sale execution. When the Dow Jones Industrial Average TVC:DJI is climbing higher while the DJT is falling (Negative Divergence), it can be a signal of economic weakness ahead, this occurred prior to March 2020 capitulation, making this a very valuable tool to have in our arsenal. - In our chart recently shared a positive weekly MACD cross gave us a heads up that price might break through strong resistance levels, which it in fact did. If we can make the prior resistance level support and bounce off the support, price could stretch to all-time highs at which point we can reassess. o Macro Monday 3 – SPDR Homebuilder Index AMEX:XHB : The Chart can be used as a leading indicator for the US housing market as the stocks in the XHB comprise of companies that provide the materials and products to build new houses and renovate homes. These products are higher up the supply chain and sold before construction commences or during. In the past the XHB chart provided a significant advance 12 month+ warning of the 2007 Great Financial Crisis which is illustrated in red on that chart. - Since sharing the chart price appears to be on course to testing its all time high and has a bullish MACD Cross on the monthly. This could also be a double top however historic positive MACD Cross performance suggests we have higher to go. Its looking positive. o Macro Monday 5 – Arca Major Markets Index (XMI): The XMI has proven itself as a leading indicator as it provided an advanced 9 month warning of the follow up recession/capitulation price action that initiated in Sept 2000 on the S&P 500. - Since we shared this chart it has broken above its all time highs and is currently resting on support. A bounce higher here would be confirmation of the uptrend, however this could be a false breakout which would be confirmed if we lost the support. This chart will be important to watch for the August – September period also, again highlighting just how important these 2 months are. Conclusion Its clear from all of the above charts that the price and readings for the months of August and September 2023 will be critical to determining the potentiality of a recession / market capitulation or for letting us know will there be continuation of climbing the wall of worry. Its clear that we are at an inflection point over the next 60 days. Based solely on the charts shared to date the fact that the DJT, XMI and XHB are still leaning bullish, I remain long term long until these charts break down or the GNL and ISM Manufacturing Index confirms to the downside. That does not mean that we can’t get a 10% ,15% or 20% pullback in the S&P over the next 60 days, this would not surprise me, however based on some of the charts I have shared previously I think it is probably that this will be a temporary pull back. This leans me towards thinking that if there is a hard landing, it will come later in 2024 or even 2025. If that view changes and the above positive charts pull back, ill be the first to let you know. Stay Nimble folks, August and September are decision time. PUKA
ECONOMICS:USMNO
by PukaCharts
2
Understanding Initial Jobless Claims as a Market IndicatorIntroduction In the complex and multifaceted world of economic indicators, initial jobless claims hold a special place. As a measure of the number of individuals filing for unemployment benefits for the first time, this statistic offers a real-time glimpse into the health of the labor market, which in turn is a vital component of the overall economic landscape. This article delves into how initial jobless claims function as an indicator and their impact on the financial markets. Understanding Initial Jobless Claims Initial jobless claims refer to claims filed by individuals seeking to receive unemployment benefits after losing their job. These are reported weekly by the U.S. Department of Labor, providing a timely snapshot of labor market conditions. A lower number of claims typically signifies a strong job market, suggesting that fewer people are losing their jobs. Conversely, an increase in claims can indicate a weakening labor market, often a precursor to broader economic downturns. Initial Jobless Claims as an Economic Indicator Health of the Labor Market: The primary significance of initial jobless claims is its reflection of the labor market's health. A steady, low number of claims often correlates with job growth and declining unemployment rates, indicating a robust economy. Leading Indicator for the Economy: As a leading economic indicator, jobless claims can provide early signals about the direction of the economy. Spikes in claims can forewarn of economic contraction, while consistent decreases might indicate economic expansion. Consumer Spending: Since employment directly affects consumer income, initial jobless claims can also indirectly signal changes in consumer spending, a major driver of economic growth. Impact on Financial Markets Market Sentiment: Traders and investors closely watch initial jobless claims to gauge market sentiment. Fluctuations in these numbers can lead to immediate reactions in the stock, bond, and forex markets. Monetary Policy Implications: Central banks, like the Federal Reserve, consider labor market conditions when setting monetary policy. Rising jobless claims can lead to a more dovish policy stance (like lowering interest rates), while decreasing claims might justify tightening policies. Sector-Specific Implications: Certain sectors are more sensitive to changes in jobless claims. For instance, a rise in claims can negatively impact consumer discretionary stocks but might be favorable for defensive sectors like utilities or healthcare. Analyzing the Data Understanding initial jobless claims requires context. Seasonal factors, temporary layoffs, and unique economic events (like a pandemic) can skew data. Analysts often look at the four-week moving average to smooth out weekly volatilities for a clearer trend. Conclusion In conclusion, initial jobless claims serve as a crucial barometer for the economy and financial markets. Investors, policy makers, and economists alike monitor these figures for insights into labor market trends and the broader economic picture. As with any indicator, it's essential to consider jobless claims in conjunction with other data to fully understand the economic landscape.
ECONOMICS:USIJCEducation
by AlgoAlpha
Shipping is a strong indicator!Shipping can be used a leading indicator to gauge where the market as a whole is going. Just like the XHB the home building chart, I don't trade this. I only use it a guide to get a into the drivers of the market. If shipping is up, then the markets will follow, is building up, so too will the market. As we can see, shipping made a low last year in September and has made higher highs since then. we now just wait and watch the indicators for bullish crosses that seem to be building upward. A Stochastic cross above the 20 on this 3 week chart is what we are looking for and is considered bullish. Same with the MacD, we are looking for the beige line to cross the purple line. Once these happen on the three week we will then change to the monthly and look for the same. The moving average I'm using is the CM_Ultimate_MA . Price action moving above this line and turning it green is a very positive move as well. Once again to be clear, we have an up trend in the shipping, if it continues then the recession is likely over and the markets will move along with it. It will be even more likely on the monthly confirmation of price action and indicators. I will link the XHB home builders chart I did last year down below. Best regards in 23 WeAreSat0shi
SPARKS:SHIPPINGLong
by WeAreSat0shi
7
High Returns, Low Risk: Unveiling a Winning Investment StrategyI am pleased to introduce a robust long-term strategy that seamlessly combines performance with an enticing risk profile. This strategy involves strategically investing in ETFs indexed on the S&P 500 and ETFs backed by physical gold. Let's delve into the rationale behind selecting these two assets: S&P 500: 1. Automatic Diversification: Instant exposure to a diverse array of companies, mitigating the risk associated with the individual performance of a single stock. 2. Low Costs: ETF management fees are typically low, facilitating cost-effective diversification. 3. Liquidity: Traded on the stock exchange, S&P 500 ETFs offer high liquidity, enabling seamless buying or selling of shares. 4. Historical Performance: The S&P 500 has demonstrated consistent long-term growth, making it an appealing indicator for investors seeking sustained growth. 5. Ease of Access: Accessible to all investors, even those with modest investment amounts, requiring only a brokerage account. 6. Simple Tracking: The S&P 500 index simplifies market tracking, eliminating the need to monitor numerous stocks individually. 7. Dividends: Companies included often pay dividends, providing an additional income stream. 8. Long-Term Strategy: Ideal for investors pursuing a long-term approach, S&P 500 ETFs are pivotal for gradual wealth building. 9. Geographical Diversification: Investing in an S&P 500 ETF offers not just sectoral but also geographical diversification. Despite the U.S. base, many included companies have a global presence, contributing to international portfolio diversification. Moreover, Warren Buffett's 2008 bet, where he wagered $1 million on the passive S&P 500 index fund outperforming active fund managers over a decade, underscores the difficulty even seasoned financial experts face in surpassing the market's long-term return. This further strengthens the notion that choosing an S&P 500-linked ETF can be a prudent and effective investment strategy. Investment in Physical Gold ETFs: 1. Exposure to Physical Gold: Designed to reflect the price of physically held gold, providing direct exposure without the need for physical acquisition, storage, or insurance. 2. Liquidity: Traded on the stock exchange, physical gold ETFs offer high liquidity, allowing investors to buy or sell shares at prevailing market prices. 3. Diversification: Gold's unique reaction to market dynamics makes it a valuable diversification asset, potentially reducing overall portfolio risk. 4. Lower Costs: Compared to physically buying gold, investing in physical gold ETFs proves more cost-effective in terms of transaction costs, storage, and insurance. ETF management fees are also relatively low. 5. Transparency: Managers regularly publish reports detailing the gold quantity held, ensuring transparency about underlying assets. 6. Accessibility: Physical gold ETFs offer easy market access without the need for physical possession, appealing to investors avoiding gold storage and security management. 7. Gold-backed ETFs: These ETFs physically hold gold as the underlying asset, with investors often having the option to convert their shares into physical gold. After extensive research and backtesting across diverse ETFs covering various asset classes, including bonds, real estate, commodities, and stocks of financially stable companies, my findings notably highlight a standout option during times of crisis: physical gold ETFs. The strategy hinges on leading indicators, powerful economic tools. Leading Indicators: Leading indicators, or forward indicators, are crucial tools in economics and finance for anticipating future trends. In contrast to lagging indicators, which confirm existing trends, leading indicators provide early signals, aiding informed decision-making based on anticipated economic developments. Key characteristics include: Trend Anticipation: Early insight into upcoming changes in economic activity, facilitating preparedness for market developments. Responsiveness: Quick reactions to economic changes, sometimes preceding other indicators. Correlation with the Economy: Association with specific aspects of the economy, such as industrial production, consumer spending, or investments. Examples include: • Housing Starts: Providing early indications of the real estate market and construction investments. • Net New Orders for Durable Goods: Indicating business investment intentions and insights into the manufacturing sector's health. • US Stock Prices: Considered a leading indicator reflecting investor expectations. • Consumer Confidence: Measuring consumer perceptions and influencing consumer spending. • Purchasing Managers' Confidence and Factory Directors: Offering insights into production plans and future economic trends. • Interest Rate Spread: Indicating economic expectations and influencing borrowing and investment decisions. Returning to the strategy, I leverage entry points calculated by a meticulously developed strategy incorporating leading indicators applied to the SPY chart. The achieved performance of 3496% since 1993, with 15 closed trades, significantly surpasses a buy-and-hold position yielding 1654% in performance. Notably, the maximum drawdown is 5.44%, a stark contrast to the over 50% drawdown seen in an investment in the S&P 500. Upon the indicators signaling the end of the long position, I close my SPY positions and transition to positions in physical gold ETFs. In our example, choosing the GLD ETF yields a performance of 173%, adding to our total performance. While the maximum drawdown, considering the addition of the investment in physical gold ETFs, is 17.65%, slightly higher than the drawdown on the strategy applied to the SPY, it remains impressive for such a prolonged period. Now, if we conduct the backtest since 2007: SPY : performance of 751 %, max drawdown of 4.02 % GLD : Performance of 153 % Since 2015: SPY : performance of 131 % GLD : Performance of 37 % Disclaimer: The information shared is for educational purposes only and is not financial advice. Investing involves risks, and past performance is not indicative of future results. Consult with a qualified financial advisor before making investment decisions. The author is not liable for any financial losses incurred.
AMEX:SPYEducation
by Julien_Eche
6
ISM New Orders vs Consumer SentimentISM New Orders Vs Michigan Consumer Sentiment index ISM New orders provide an indication of current consumer demand. Utilising a chart of New Orders readings we can attempt to understand the trend of consumer demand forward. ISM New Orders could be considered an additional gauge of consumer sentiment because if businesses are reporting increases in orders month over month, this demonstrates consumers have the consistently had the resources and the desire to spend. If this continues over months a trend can form and we can capture this direction on a chart. To support the ISM predictive argument I include a chart that illustrates a correlation between the ISM Manufacturing New Orders Index and the University of Michigan Consumer Sentiment Index, the latter of which is considered one of thee leading indicators for predicting future consumer spending/demand. This will be posted in the comments. According to Investopedia "ISM data is considered to be a leading indicator of economic trends. Not only does the ISM Manufacturing Index report information on the prior two months, it outlines long-term trends that have been building over time based on prevailing economic conditions". According to the University of Michigan, the Consumer Sentiment Surveys "have proven to be an accurate indicator of the future course of the national economy." Based on the above correlation I postulate that we can use the ISM New Orders Index as an additional leading/predictive indicator to establish what direction consumer demand is trending. Something we can keep an eye on and something that will factor in this weeks MACRO MONDAY Edition which i will post immediately after this PUKA
ECONOMICS:USMNO
by PukaCharts
LEI clear Recession warning: What it means for Bitcoin?The LEI (Leading Economic Indicators) has a great track record of predicting recessions. While a recession has been much anticipated for many months... now the data is coming in to actually support the possibility. What does this mean for Bitcoin? The two most important data points we have (because we don't actually have a major recession to draw upon in Bitcoin's lifetime) is the COVID crash and March 9th this year... the "banking crisis" FUD. When COVID fears hit the markets Bitcoin responded like a risk asset. It lost over -60% of its USD value from the high of 2020 to that point. As the "Banking Crisis" hit markets last month so too did Bitcoin fall over -20%. What this suggests is that when recession fears grow and become realized... Bitcoin will drop as a risk asset. The future of it though (in both cases) is V-shaped. So fear not. But also ignore not. Be thinking about buying opportunities.
BITFINEX:BTCUSDShort
by norok
2
2023 Market Projections: Leading Indicators and AnalysisTVC:US10Y The recent market response to data on CPI , PPI, and the selloff in the bond market, coupled with hints from the Fed about potentially raising rates towards 5% to 5.25%, provide important insights into where the markets could be heading in the coming weeks. Looking at the weekly chart of the 10-year Treasury yield, we can see a massive rising wedge pattern with a bull flag inside the wedge . The break out of the bull flag last week has a target of 5% to 5.25%, which aligns with the Fed's projected peak policy and the top of the wedge in the chart. There are some bullish signs in this chart, a hidden bullish divergence on the weekly with both the RSI and MACD , indicating a bullish continuation of the trend. Additionally, there is a bullish divergence on the daily chart , as shared a few days ago. These signals increase the likelihood of a bullish move in the 10-year yield, and if this plays out as projected, it could lead to high selling pressure in markets, including the stock market and crypto. Higher yields can reduce the profitability and spending power of companies and individuals, and make stocks and cryptocurrencies less attractive as investment options. It's important to keep a close eye on the bond market and monitor any potential impacts on other markets. This could mark the final leg down or a bottoming process in the current bear market, with the last leg down typically being a massive one. In the coming weeks, there may be a triple bearish divergence that develops on the 10-year yield, which could signal a nearby bottom in bonds. The stock market is expected to follow suit weeks later. It's worth noting that this analysis is based on confluence and projections around recent developments, leading indicators, and technical analysis projection methods. However, there are no confirmations on many aspects of it yet, and there is always a degree of unpredictability in financial markets. Therefore, it's important to acknowledge the uncertainties and potential risks involved in making projections based on technical analysis . It's also important to emphasize that this is not financial advice, and readers should always do their own research (DYOR) before making any investment decisions. Seeking professional financial advice before making significant investment decisions is also highly recommended.
TVC:US10Y
by ahmad_alibrahim
Leading Indicators - PPI (PPIACO) vs. Unemployment (UNRATE) I wanted to highlight how the peak (downward move) in the Producer Price Index (PPIACO) typically corresponds with the trough (upward move) in the Unemployment Rate (UNRATE) (inverse correlation), as a period of Recession takes hold on the economy, & the financial markets. I also wanted to compare the above correlation with cycle tops in WTI Crude Oil (WTISPLC) , & also with respect to the OECD Leading Indicators (USALOLITONOSTSAM) — as this helps to pinpoint some of the historic baseline(s) for predicting the peak &/or trough in the business vs. market (financial) cycles. Here is the key for the attached chart(s): Top Chart Black Line (Unemployment Rate - UNRATE): *Black Vertical Dotted Line* = Recession Timing Trough Blue Line (Producer Price Index - PPIACO): *Blue Vertical Dotted Line* = Recession Timing Peak Orange Line (WTI Spot Crude - WTISPLC): *Orange Vertical Dotted Line* = Recession Timing Peak Red Shaded Areas (Recession): Indicator via @chrism665 Bottom Chart OECD Leading Indicators (USALOLITONOSTSAM): *Black Dashed Line* = Pre-Recession Indicator Peak Green Horizontal Dotted Line = Expansion Baseline (100) Orange Horizontal Dotted Line = Current Reading (98.62) Red Horizontal Dotted Line = Danger Zone (<97) Red Shaded Areas (Recession): Indicator via @chrism665 Looking at the larger picture of both charts, you can see that typically in previous periods of Recession you would see this flow of the signals (first to peak/trough, last to peak/trough): Peak - OECD Leading Indicators (USALOLITONOSTSAM) Trough - Unemployment Rate (UNRATE) *Peak - Producer Price Index (PPIACO)* *Peak - WTI Spot Crude (WTISPLC)* *Note* - As you can see PPIACO & WTISPLC are very closely correlated as demand peaks out, you then see a shift downward in WTISPLC as this is a signal of the topping of economic growth. Now let's dive close-up into each time period of recession, as we can see some linkages/similarities in the 1991, 2001, & 2009 recessions vs. the what is (likely) a 23' recession, depending how the economic , markets , & financial data plays out this upcoming year — potentially into 24'. 1991 Recession Timeline Peak - OECD Leading Indicators (USALOLITONOSTSAM): July 1987 Trough - Unemployment Rate (UNRATE): Mar. 1989 Peak - Producer Price Index (PPIACO): Oct. 1990 Peak - WTI Spot Crude (WTISPLC): Nov. 1990 2001 Recession Timeline Peak - OECD Leading Indicators (USALOLITONOSTSAM): Jan. 2000 Trough - Unemployment Rate (UNRATE): Apr. 2000 Peak - WTI Spot Crude (WTISPLC): Nov. 2000 Peak - Producer Price Index (PPIACO): Jan. 2001 2009 Recession Timeline Trough - Unemployment Rate (UNRATE): May 2007 Peak - OECD Leading Indicators (USALOLITONOSTSAM): June 2007 Peak - WTI Spot Crude (WTISPLC): June 2008 Peak - Producer Price Index (PPIACO): July 2008 2023(24) Recession Estimated? Peak - OECD Leading Indicators (USALOLITONOSTSAM): May 2021 Peak - Producer Price Index (PPIACO): June 2022 Peak - WTI Spot Crude (WTISPLC): June 2022 Trough - Unemployment Rate (UNRATE): Sept. 2022 What do you think about this macro analysis? Have we potentially been in a recession in 22' — or are we moving closer to higher unemployment (UNRATE) in 23' as the macro/market conditions worsen, & the Federal Reserve's tighter monetary conditions (liquidity & credit) take their toll on the economy? Let me know what you think in the comments below! 👇🏼
FRED:UNRATEShort
by kylemusserco
OECD Leading Indicator vs. Market Cycles - Updated 122022 Today's post is inspired by the work of @CMT_Association here on @TradingView, and is designed to give some insight into financial market vs. business cycle timing: We will be comparing various assets to the Organization for Economic Co-operation and Development (OECD) Composite Leading Indicator (USALOLITONOSTSAM) for the 🇺🇸. Keep in mind that readings above 100 (green dotted line) suggest economic expansion to come while readings below 100 suggests broader economic weakness, and likely economic recession based on history. Given the the index is currently trading below 100 , and possibly continuing to fall — what does this mean for the economic outlook going forward, specifically as it compares to S&P 500 (SPY ES1! SPX), DXY (U.S. Dollar), Federal Reserve Fed Funds Rate (FEDFUNDS), 2/10 Yield Curve Inversion (US02Y US10Y), U.S. Inflation Rate YoY (USIRYY), U.S. Unemployment Rate (UNRATE), Crude Oil (CL1! USOIL), Lumber Futures (LBS1!), Gold (GOLD), Silver (SILVER), U.S. Mortgage Rates (USALOLITONOSTSAM), and possible timing of the financial market(s) recovery? Let's have a look at some of the charts as they highlight that real economic weakness is likely into H1/23', paired with the potential beginning of a financial asset recovery as the business cycle works through its bottoming process. Chart Key for Composite Leading Indicator (USALOLITONOSTSAM): 📊🗝 Green Dotted Line (Horizontal): >100 = Economic Expansion Orange Dotted Line (Horizontal): Current Reading Red Dotted Line (Horizontal): Historic Danger Zone Black Dashed Lines (Vertical): Pre-Recession OECD Leading Indicator Peak If you want a copy of this chart, here is the link to make a copy: 📊👇🏼 www.tradingview.com S&P 500 SPX 1991-Present (Black Line) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): S&P 500 SPX 2006-2017 (Black Line) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): S&P 500 SPX 2016-Present (Black Line) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): U.S. Dollar DXY (Black Line) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): US02Y Treasury (Black Link) vs. Federal Reserve Fed Funds Rate FEDFUNDS (Blue Line) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): US02Y/US10Y Yield Curve Inversion (Baseline >0%, <0% Curve Inverted = Trouble in Markets) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): U.S. Inflation Rate YoY (USIRYY) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): Unemployment Rate (UNRATE) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): Crude Oil USOIL CL1! (Black Link) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): Lumber LBS1! (Black Link) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): GOLD (Black Link) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): SILVER (Black Link) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): U.S. Mortgage Rates (Black Link) vs. OECD Composite Leading Indicator (USALOLITONOSTSAM): Here is the updated release schedule for the OECD Composite Leading Indicator (USALOLITONOSTSAM) for 2023: 🗓 data.oecd.org Learn more about the OECD Composite Leading Indicator (USALOLITONOSTSAM) using the link below: 💡 data.oecd.org What is your takeaway(s) from these charts? 👇🏼
TVC:US10Y
by kylemusserco
Simple comparison between TIP and SPY - ominous lookingA simple comparison between TIP and SPY line charts. Had always known that TIP is one of the leading indicator for the S&P500 index (and ETF is SPY). Previous heads up shown with the lag denoted by the white boxes. Key takeaway here is that TIP had went past the last low, and is pushing down lower, while the SPY is hovering and IF it is to keep the co-related relationship, it does suggest a lower low for the SPY! A similar time previously occured in September 2018; and twice in 2022 - January & March So... how do you think this September-October would turn out?
AMEX:TIP
by Auguraltrader
5
Yield curve inversion cyclesUS10Y treasury yield minus US02Y treasury yield is an accurate predictor of impending economic recession. Here we compare the 10 Aug 2022 yield curve inversion low point to the low points in 2007 and 2000 that pre-dated the Great Recession and Dot Com stock market crashes. While a small inversion (below 0) does not always pre-date a recession, inversions as low as the current 10 Aug 2022 always have. Even more interesting is when you zoom in to the daily chart. Here we see the 10Y - 2Y moving back towards 0 from 10 Aug 2022 through 22 Aug 2022, even as stocks have begun to decline since release of the Fed minutes and recent commentary from Fed officials about the importance of continuing with additional rate hikes based on current inflation data.
TVC:US10Y
by theagileagent
5
Nasdaq a leading indicator of Dow Jones, S&P and RussellHow to use related markets to complement each other? Definitely you can apply this technique to other related markets. In this tutorial, I am seeing Nasdaq as a leading indicator for the rest may likely to follow. i) Nasdaq bear trend was nicely formed, but not yet for the Dow Jones, S&P and Russell. ii) Nasdaq in the short-term has also a confirmation for a rebound, and I believe the rest of the indices likely to follow subsequently. Discussion: • Drawing primary and secondary trendline • Nasdaq has broken above, the rest should catch-up, why? Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. Feel free to leave any comments below, I love to exchange ideas with you.
CME_MINI:RTY1!
by konhow
18
RUSSELL 2000 respecting FIB levels; ABC may reach 1500 vol zone.The smallcaps Russell 2000 futures RTY1! (also the IWM etf), a leading market indicator like the transports, may complete an A=C correction ending in the volume profile zone near 1500. (IWM seems to be consolidating in tranches of 200…ex…230, 210, 190, now @ 170 & maybe 150 around 4Q2022.) This will complete the final wave 5 of C-wave. As you can see in this weekly chart, Russell 2000 respects impt FIB levels. 2100 zone is Fib 0.236, 1900 is Fib 0.383, the current 1700 zone is Fib 0.50 & the projected 1500 bottom zone will be Fib 0.618, the most likely zone for a reversal. THE BULLISH CASE: if Russell 2000 holds the 1700 zone, the bounce will be very quick due to the 2 LOW VOLUME zones. The target will be 2100 with some consolidation near the 1900 zone. Not trading advice
CME_MINI:RTY1!
by xtremerider8
Leading Indicators are very BearishThe JNK ETF is heading further down with a big bearish Marubozu that is the YTD low -> Bearish for equities. The IWM ETF is also heading further down for a lower low with a bearish Marubozu engulfing -> Bearish for equities The DJT ETF ended on a recent low too -> Bearish for equities The VALUG has a bearish candle for more downside -> Bearish for equities The TIPS ETF bearish marubozu ending on a YTD low-> Bearish for equities The TLT ETF is diving -> no flight to safety, just selling. The VIX is coiling -> bearish outlook for equities, more volatility incoming when it spikes! The HG1! copper futures ended on a strong low for the week, and will be attacking support. Expect failure. Overall, very Bearish bias on equities for the next couple of weeks, and at least until the VIX spikes very hard before retracing (it is only coiling now...)
AMEX:JNKShort
by Auguraltrader
10 Yr T-note $TNX Break-out$TNX has broken out of its long-standing 35 year descending channel, first time breaking out above 50 EMA and pushinf towards 100 EMA since 1994. The descending channel includes both the dot.com and housing bubbles without breaking above the 50 EMA. Given add'l rate hikes on the table and bloated CB balance sheets, extreme supply of money in the markets, overnight reverse repo in the trillions... there's an incredibly long way to go walking back unfettered money printing, unless the Fed gives up and lets inflation run unabated. Either way, TNX isn't done climbing. Expecting a bear market rally to bring it back for a 50 EMA retest is reasonable and normal; however, the broader macroenvironment is unhealthy and there's more room for these yields to run this year.
TVC:TNXLong
by R0MM3LL