Trend Analysis – week 1, March 2020.

Published on March 8, 2020.

With fast moving markets, a quick update of current trends. Our trend model:

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

After the sell-off end of February, the markets saw a turbulent first week of March. Weekly sell signals are recorded on all major indices, except for the Nasdaq 100 and the Shangai Composite, which are still holding their uptrend above the 200 day moving average.

markettrendtiming
S&P 500 – SPXdownhold (sell)
Nasdaq100 – NDXuphold
Russell 2000 – RUTdownsell
Germany – DAXdownsell
UK – FTSE100downsell
Europe – Eurostoxx50 – ESTX50downsell
Japan – Nikkeidownsell
China – Shanghai Compositeuphold
HK – Hang Sengdownsell

Stock market to watch: S&P 500 – SPX

SPX bounced and retested its 40 week moving average. The weekly close below is bearish and a sell signal very close.

SPX 40 week moving average retest
SPX 40 week moving average retest

Global bond markets

Long-term US Treasury bonds are going parabolic now. As I have pointed out with REITs a few weeks ago, such moves are normally not sustainable and are followed at least by some mean reversion. Let’s see how bonds react when the stock market starts to calm down.

Euro corporate bonds are right at their 40 week moving averages, very close to a new downtrend.

TLT going parabolic - March 8, 2020.
TLT going parabolic – March 8, 2020.
markettrend timing
US 10 year GOVT bonds (IEF)uphold
ishares Investment Grade Corp Bond ETF (LQD)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 (sell)
ishares Inflation Link Govt Bond (IBC1)uphold

Bond ETF to watch: VECP

The Vanguard VECP EUR Corporate Bond ETF bounced and managed to close above its 40 week moving average again. However, watch out for a weekly sell signal if we see further weakness in the coming week.

VECP Vanguard EUR Corporate Bond - March 8, 2020.
VECP Vanguard EUR Corporate Bond – March 8, 2020.

Commodities & Metals

Commodities took a hit again last week, heading sharply lower. WTI Crude Oil closed the week at 41.50 USD, its lowest weekly close since August 2016. Silver managed to reverse and is holding above its 40 week moving average for now.

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

Precious metal to watch: Silver

No weekly sell signal has been generated in Silver yet.

Silver weekly chart - March 8, 2020.
Silver weekly chart – March 8, 2020.

Forex & Crypto Markets

The Euro shot up above its 40 week moving average against the US-Dollar last week and is ripe for weekly buy signal. BTCUSD has recorded a weekly sell signal by a tiny margin.

market trend timing
EURUSDuphold (buy)
GBPUSDuphold
USDCADupbuy
AUDUSDdownhold
BTCUSDdownsell (hold)
ETHUSDuphold
XRPUSDdownhold

Currency pair to watch: EURUSD

The Euro showed a strong move up last week and a weekly buy signal is highly likely in the coming week.

EURUSD weekly chart - March 8, 2020.
EURUSD weekly chart – March 8, 2020.

Crypto asset to watch: Bitcoin

BTCUSD has been hovering around its 40 week moving average for a while – first on a failed buy, now on a sell signal by a very tiny margin. So technically the downside seems more likely right now. However, with Bitcoins’ volatility this can go either way fast for a bigger move. Interesting position from a reward-to-risk perspective, whether you prefer the downside or the upside.

BTCUSD not really decided yet - up or down?
BTCUSD weekly chart – March 8, 2020.

Real Estate (REITs)

Whereas US REITs (VNQ) bounced back from the lows a bit, European REITs are basically sitting at their lows from February 28, right above the 40 week moving average.

market trend action
US – VNQdownhold
Europe – XDERuphold

REIT to watch: VNQ

VNQ bounced back from the lows last week and hasn’t recorded a weekly buy signal yet, but it is highly likely next week, if there is no significant price increase above the 40 week average.

VNQ weekly chart - March 8, 2020.
VNQ weekly chart – March 8, 2020.

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