Trend Analysis March 1, 2020

Published on March 1, 2020.

Two months of 2020 are in and this year had an intense start. Let’s see where we are in our trend analysis. The trend assessment below is based on the simple binary metric:

up trend = price > 40 week average (SMA 40)
down trend = price < SMA 40

The market timing status is characterized by another simple metric:

buy = recent 4-week-Exponential Moving Average (EMA 4) cross above SMA 40 (within the last 2 weeks)
sell = recent EMA 4 cross below SMA 40 (within the last 2 weeks)
hold = wait for next buy or sell signal

Global stock markets

Stock markets around the globe broke down sharply from their highs over the last two weeks and are mostly below their 40 week or 200 day moving averages now. The Coronavirus panic was the trigger. We pointed out underlying relative weakness in some markets in our Mid-February report, which has resolved to the downside for now, with new downtrends across major indices. Weekly sell signals are recorded on the FTSE100 and again the Hang Seng Index, which has been trendless for a while. The Nasdaq 100 is the last man standing, still holding its uptrend above the 200 day moving average.

markettrendtiming
S&P 500 – SPXdownhold
Nasdaq100 – NDXuphold
Russell 2000 – RUTdownhold
Germany – DAXdownhold
UK – FTSE100downsell
Europe – Eurostoxx50 – ESTX50downhold
Japan – Nikkeidownhold
China – Shanghai Compositedownhold
HK – Hang Sengdownsell

Stock market to watch: S&P 500 – SPX

The SPX closed below its 40 week average and is in downtrend mode right now. So far no weekly sell signal has been triggered so next week will be crucial – as in all global stock markets, which are in a more or less similar situation.

SPX weekly chart - Mar 1, 2020.
SPX weekly chart – Mar 1, 2020.

Global bond markets

Global souvereign bonds are in even stronger uptrends than two weeks ago, acting as safe haven right now. Corporate bonds not so much, flirting with a new downtrend.

markettrend timing
US 10 year GOVT bonds (IEF)uphold
US 20 year+ GOVT bonds (TLT)uphold
Vanguard Eurozone ETF (VETY)uphold
US Treasury bonds ETF (VUTY)uphold
BIV Vanguard Intermediate Term bonds ETF (BIV)uphold
Vanguard Emerging Markets bonds ETF (VDET)uphold
Vanguard Extended Duration bonds ETF (EDV)uphold
Vanguard Euro Corporate bonds (VECP)uphold
ishares Inflation Link Govt Bond (IBC1)uphold

Bond ETF to watch: VECP

The Vanguard VECP EUR Corporate Bond ETF closed the week right at its 40 week moving average after a deep look below during the week. Watch out for a break next week and a potential weekly sell signal.

VECP weekly chart - March 1, 2020.
VECP weekly chart – March 1, 2020.

Commodities & Metals

Commodities accelerated their downtrends with Silver joining the crowd.

market trend timing
Invesco DB Commodities Index (DBC)downhold
Crude OILdownhold
GOLDuphold
SILVERdownhold
COPPERdownhold

Precious metal to watch: Silver

Silver got caught in the liquidation mania end of February and closed the month below its 40 week moving average for a new downtrend. A weekly sell signal is close but not realized yet.

Silver weekly chart - March 1, 2020.
Silver weekly chart – March 1, 2020.

Forex & Crypto Markets

No fundamental changes in major currencies but the Euro is bouncing back a bit (see below). In Crypto land, Bitcoin and XRP reversed down whereas Ethereum is holding its uptrend.

market trend timing
EURUSDdownhold
GBPUSDuphold
USDCADupbuy
AUDUSDdownhold
BTCUSDdownhold (sell)
ETHUSDuphold
XRPUSDdownhold

Currency pair to watch: EURUSD

The Euro bounced back from the lows near 1.08 quite strongly, trying to test the 40 week moving average again. Watch out for a potential new uptrend and weekly buy signal above 1.11 in the coming weeks.

EURUSD weekly chart – March 1, 2020.

Crypto asset to watch: Bitcoin

BTCUSD is back down below its 40 week moving average. No sell signal has been generated yet. Watch out for a potential weekly sell signal. A buying opportunity is also in the cards if the sell signal does not materialize.

BTCUSD weekly chart - March 1, 2020.
BTCUSD weekly chart – March 1, 2020.

Real Estate (REITs)

Both US REITs (VNQ) and European REITs broke down sharply at the end of February along with the stock market. Whereas VNQ is on downtrend already, XDER is sitting close its 40 week moving average.

market trend action
US – VNQdownhold
Europe – XDERuphold

REIT to watch: VNQ

VNQ is in a technical downtrend, no weekly sell signal has been recorded yet.

VNQ weekly chart - March 1, 2020.
VNQ weekly chart – March 1, 2020.

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