State of the markets – mid-February

Published on February 15, 2020.

Time for a quick mid-month analysis of current market trends. As usual the trend assessment below is based on a 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

Major stock markets closed the week at new All-Time-Highs on February 14, namely the S&P500, the Nasdaq100 and the DAX. It is noteworthy though that the broader market in the US shows relative weakness, with the Russell 2000 still below its August 2018 high. In Europe the FTSE100 in the UK is relatively weak, almost flirting with a break of its 40 week moving average.

markettrendtiming
S&P 500 – SPXuphold
Nasdaq100 – NDXuphold
Russell 2000 – RUTuphold
Germany – DAXuphold
UK – FTSE100uphold
Europe – Eurostoxx50 – ESTX50uphold
Japan – Nikkeiuphold
China – Shanghai Compositeuphold
HK – Hang Senguphold

Stock market to watch: Hong Kong

The Hang Seng Index reversed its downtrend – there was no sell signal active so there is also no new buy signal. However, price is very close to its 40-week moving average, which is generally not the worst spot to initiate new positions (long or short) from a reward-to-risk-perspective.

Hang Seng Index, February 15, 2020.
Hang Seng Index, February 15, 2020.

Global bond markets

Global fixed income markets are in strong uptrends.

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: VUTY

Vanguard VUTY US Treasury Bonds closed the week at new highs after a playbook-bounce from the 40 week-moving average – the trend is your reliable friend since April 2018 in this case.

VUTY US Treasury Bonds, February 15, 2020.
VUTY weekly chart – February 15, 2020.

Commodities & Metals

Commodities are still in downtrends except for Precious metals, which are in long-term uptrends.

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

Metal to watch: Copper

Copper held at the 2.50 support for now and is bouncing back a bit. Another strong week or two would be required for a reversal of the trend.

Copper weekly chart - February 15, 2020.
Copper weekly chart, February 15, 2020.

Forex & Crypto Markets

The Euro is very weak and closed at new 3-year-low, also further weakness in AUD and CAD against the US-Dollar. The British Pound is holding up quite well against the strengthening Dollar so far. Bitcoin and Etherum trend is up with weekly buy signals triggered.

market trend timing
EURUSDdownhold
GBPUSDuphold
USDCADupbuy
AUDUSDdownhold
BTCUSDupbuy
ETHUSDupbuy
XRPUSDuphold (buy)

Currency pair to watch: USDCAD

USDCAD entered a new uptrend along with a weekly buy signal. The trend is still vulnerable, being close to the 40 week moving average.

USDCAD weekly chart, February 15, 2020.
USDCAD weekly chart, February 15, 2020.

Crypto asset to watch: XRP

XRPUSD is moving above its 40 week moving average for the first time since May 2019. A new trend buy signal (EMA 4 > SMA 40) has not been generated yet but we are very close to it.

XRPUSD - February 15, 2020.
XRPUSD weekly chart – February 15, 2020.

Real Estate (REITs)

Both US REITs (VNQ) and European REITs broke out to new highs last week, almost going parabolic right now.

market trend action
US – VNQuphold
Europe – XDERuphold

REIT to watch: XDER

XDER has been in a remarkably steep advance since September 2019, which accelerated last week.

XDER European REITs weekly chart
XDER weekly chart, February 15, 2020.

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