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.
|S&P 500 – SPX||down||hold|
|Nasdaq100 – NDX||up||hold|
|Russell 2000 – RUT||down||hold|
|Germany – DAX||down||hold|
|UK – FTSE100||down||sell|
|Europe – Eurostoxx50 – ESTX50||down||hold|
|Japan – Nikkei||down||hold|
|China – Shanghai Composite||down||hold|
|HK – Hang Seng||down||sell|
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.
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.
|US 10 year GOVT bonds (IEF)||up||hold|
|US 20 year+ GOVT bonds (TLT)||up||hold|
|Vanguard Eurozone ETF (VETY)||up||hold|
|US Treasury bonds ETF (VUTY)||up||hold|
|BIV Vanguard Intermediate Term bonds ETF (BIV)||up||hold|
|Vanguard Emerging Markets bonds ETF (VDET)||up||hold|
|Vanguard Extended Duration bonds ETF (EDV)||up||hold|
|Vanguard Euro Corporate bonds (VECP)||up||hold|
|ishares Inflation Link Govt Bond (IBC1)||up||hold|
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.
Commodities & Metals
Commodities accelerated their downtrends with Silver joining the crowd.
|Invesco DB Commodities Index (DBC)||down||hold|
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.
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.
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.
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.
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.
|US – VNQ||down||hold|
|Europe – XDER||up||hold|
REIT to watch: VNQ
VNQ is in a technical downtrend, no weekly sell signal has been recorded yet.