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How Long Do Cyclical Bull Markets Last?
by Mark Ungewitter of Charter Trust Company, 11/8/17

Has the S&P 500 gone loco? Or is it behaving normally?

Stock Market "Holy Grail?"
by Mark Ungewitter of Charter Trust Company, 4/18/17

A new study from Research Affiliates finds U.S. equities “currently overvalued but not as much as suggested by the historical averages.”

U.S. Equities vs U.S. Yield Curve
by Mark Ungewitter of Charter Trust Company, 3/9/17

Will rising interest rates crush the bull market in equities? We recently concluded that rising rates are not a deal breaker, as long as earnings accelerate faster than the discount rate. Earnings have kept their end of the bargain so far. But let’s keep thinking.

Political Cycle or Business Cycle?
by Mark Ungewitter of Charter Trust Company, 3/2/17

Is today’s cyclical bull market all about Donald J. Trump, as the financial media insists? Or are other factors at play? We know that a bull market was signaled by classic breadth thrust, well ahead of the November election.

Narratives Gone Wild: Investing in the Post-Election World
by Mark Ungewitter of Charter Trust Company, 1/26/17

Warning. Investment “narratives” may be harmful to your financial health.

Corporate Earnings
by Mark Ungewitter of Charter Trust Company, 1/20/17

Forward P/E ratios are a bit of a joke. Why? Because Wall Street analysts overestimate prospective earnings 80% of the time. Chart 1 shows only six years since 1984 with conservative forecasts, offering objective proof – as if needed – that Wall Street is not your friend.

Bond Opportunity Ahead?
by Mark Ungewitter of Mark Ungewitter Research, 11/18/16

Question: What yield on 30-year Treasury bonds would produce a cyclical bottom comparable to others of the past three decades?

Momentum Study: Hang Seng Index
by Mark Ungewitter of Mark Ungewitter Research, 9/22/16
We recently studied the Hang Seng Index to see whether Coppock reversals from negative territory have worked as well in China as they have in the U.S.

Bearish Seasonals Ahead?
by Mark Ungewitter of Mark Ungewitter Research, 9/1/16
Everyone knows that September is the cruelest month. But will the calendar rule the stock market in 2016? Spoiler alert… Probably not.

Bonds Look Toppy -- 3 Charts
by Mark Ungewitter of Mark Ungewitter Research, 7/5/16
There are always good reasons to buy bonds after a big rally. Today we have the “gravitational pull” of negative interest rates and the frightening prospect of a European banking crisis. But the market is a discounting mechanism, which attempts to look ahead. From a technical perspective, the long bond has qualities of a cyclical top. And after a seventy-year round trip, the secular trend seems nearly exhausted. Is now really a good time to hold bonds?

Must Earnings Lead Price, or Might “P” Lead “E”?
by Mark Ungewitter of Mark Ungewitter Research, 6/8/16
We keep hearing that the market can’t rally unless earnings improve. Reviewing the track record, however, we see that price often leads earnings. (See chart below.) So let’s eliminate another bogus theory. Earnings don’t necessarily lead price. If the market is a reliable discounting mechanism, the opposite should be true.

Fed Watching For Dummies: Credit Spreads Are Driving Monetary Policy
by Mark Ungewitter of Mark Ungewitter Research, 4/5/16
On March 29th, Janet Yellen outlined three factors warranting a new, dovish bias: energy prices, currency dislocations, and global equity turmoil. While all of this makes perfect sense, we think the real driver of FOMC policy is corporate credit. In recent months, the price ratio of Baa-to-Aaa U.S. bonds has deteriorated to levels not seen since June 2010 and July 2012.

Is Gold Entering a New Bull Market?
by Mark Ungewitter of Mark Ungewitter Research, 2/29/16
In my annual outlook, I highlighted several big-picture indicators that might corroborate the next bull market in gold bullion. Here’s another market-based indicator which is likely to provide the next important clue.

The Year Ahead - 2016
by Mark Ungewitter of Charter Trust Company, 12/31/15
In the spirit of year-end prognostication, here's my annual review of long-term trends and behavioral tendencies that are likely to influence key markets in 2016.

Crude Oil: Near Bottom
by Mark Ungewitter of Charter Trust Company, 12/11/15
While the price of oil has tumbled dramatically in recent weeks, its monthly momentum turned positive in October. And since momentum often precedes price, investors should pay close attention to this development.

Bond Rally Ahead?
by Mark Ungewitter of Charter Trust Company, 11/30/15
Are bonds about to rally? Our money flow model, based on hedge fund positioning, suggests lower yields ahead. This seems awkward going into a well advertised Fed tightening. But why argue with the message of the market? "Sell the rumor, buy the news" might easily apply.

Time to Buy Gold?
by Mark Ungewitter of Charter Trust Company, 10/22/15
After a bruising four-year decline, gold is showing nascent signs of strength. But it has not yet triggered a major buy signal.

Commodity Prices vs. Corporate Earnings
by Mark Ungewitter of Charter Trust Company, 8/17/15
Will collapsing commodity prices clobber U.S. earnings? In six out of seven cases since 1970, commodity crashes exceeding 20% year-over-year have corresponded with earnings contractions exceeding 10% year-over-year. The lone exception occurred in 1998 when earnings decelerated to zero growth without actually contracting.

Is Chevron Cheap?
by Mark Ungewitter of Charter Trust Company, 8/6/15
The performance of energy stocks is clearly related to the price of oil. The attached chart, based on thirty years of data, compares the price of Chevron (relative to the broad market) with the inflation-adjusted price of crude oil.

Credit Spreads Do Not Predict The Stock Market
by Mark Ungewitter of Charter Trust Company, 6/15/15
We keep hearing that deteriorating credit spreads are heralding an important stock market top. The chart below, covering nearly a century of market data, does not support this view. While it’s true that credit spreads have widened in 2015, this condition has occurred frequently during healthy bull markets. There are too many false positives to justify a negative outlook based on this indicator.

Moment of Truth For Non-U.S. Markets
by Mark Ungewitter of Charter Trust Company, 5/27/15
The FTSE All World Ex-US index (VEU) is testing multi-year resistance in both dollar and gold terms. (See Chart 1 below.) Dollar-based investors are obviously interested in dollar thresholds, but why monitor relative strength in gold terms? Because gold provides an alternative base “currency” that measures confidence in the institutions of money and credit. A market making higher highs versus gold is exhibiting organic strength independent of local-currency devaluation or unsound credit expansion.

Market Rules to Remember
by Mark Ungewitter of Charter Trust Company, 4/20/15
A few years ago, I participated in a panel discussion at the 50th Annual Contrary Opinion Forum in Vermont. One of my fellow panelists, Walter Deemer of Deemer Technical Research Inc., has been a cornerstone of institutional market strategy since the early 1960’s and is this year’s recipient of the MTA’s prestigious annual award.

U.S. Long Bond: Panic Buying
by Mark Ungewitter of Charter Trust Company, 1/29/15
The demand for long-term Treasury bonds has reached panic proportions. A casual inspection of price history suggests that the rally since December 2013 is too steep, too fast. An alternative measure of intensity, the ratio of 30-year to 10-year bond prices is also flashing red. The price of 30’s relative to 10’s is rising at a pace not seen since the panic of 2008. Can an important top be far ahead?

China Watch: Bull Market Ahead?
by Mark Ungewitter of Charter Trust Company, 1/5/15
Something interesting is happening in China. Financial stocks are surging relative to the broad market. The "hockey stick" liftoff began in late November when the People's Bank of China (PBOC) cut policy rates for the first time since 2012. China is the world's only large economy with room to pursue conventional monetary policy. Further rate cuts are likely as falling energy costs put downward pressure on consumer prices.

Are Energy Stocks Undervalued?
by Mark Ungewitter of Charter Trust Company, 12/15/14
Energy stocks have tumbled along with crude oil. But have they reached the bargain basement? This depends on one’s outlook for the price of crude. The performance of energy stocks relative to the broad market is well correlated with the underlying commodity.

Global Investing: Are Foreign Stocks Attractive?
by Mark Ungewitter of Charter Trust Company, 11/14/14
One of todays most glaring inter-market divergences is the relative performance of US versus non-US equities. For dollar-based investors, non-US stocks have underperformed US stocks by a whopping 40% over the past five years. But are foreign stocks attractive at current prices? And if so, how much of my portfolio should I allocate abroad?

Euro Banks: Stressed Out?
by Mark Ungewitter of Charter Trust Company, 10/28/14
Are unhealthy European banks dragging the market down? Not according to behavioral evidence. European financial stocks have generated relative strength versus broad Europe since mid July, indicating that banking woes are not the root cause of the recent correction.

What If We Crash?
by Mark Ungewitter of Charter Trust Company, 10/14/14
US equities are deeply oversold by many measures, and are likely to bottom here. But what if we crash? While market crashes are impossible to predict, its wise to be prepared for the occasional plunge from deeply oversold territory.

The Most Important Chart in the World
by Mark Ungewitter of Charter Trust Company, 10/6/14
One of todays most glaring inter-market divergences is the relative performance of US versus non-US equities. For dollar-based investors, non-US stocks have underperformed US stocks by an astounding 40% over the past five years.

Gold Bullion Dont Jump the Gun
by Mark Ungewitter of Charter Trust Company, 8/1/14
The job of a trend follower is to identify long-term trends as early as possible and ride them as long as possible. After a 39% decline since September 2011, we suspect that gold has become undervalued versus stocks, bonds and cash. Its long-term trend, however, remains unhealthy or neutral at best.

Dealing With Red-Hot Markets
by Mark Ungewitter of Charter Trust Company, 7/9/14
This summer the streets are sizzling… and so is the stock market. To the chagrin of value investors, US equities have not experienced a normal correction since May 2013. But what is “normal” and what is “hot”? This article discusses a behavioral measure of market extremity, the put/call ratio, and offers some basic advice for dealing with the current environment.

Is Low Volatility Signaling a Market Top?
by Mark Ungewitter of Charter Trust Company, 6/11/14
We keep hearing that today’s near-record-low volatility is signaling an imminent market top. To test this proposition, we examined implied volatility back to 1986 using the VXO index. (VXO behaves similarly to VIX, with the advantage of a longer track record.)

Put/Call Study: Equity Correction Ahead?
by Mark Ungewitter of Charter Trust Company, 4/16/14
Equity put/call ratios provide an interesting lens on greed and fear. The chart below presents the S&P 500 since January 2000, flagging 5-day put/call ratios in excess of one standard deviation versus the long-term average of 63%. Readings below 53% have occurred during powerful rallies and near interim tops. Readings above 73% have occurred during fearful sell-offs and near interim bottoms. Fearful readings have occurred at least once annually since 2001 with the latest example in April 2013.

Chinese Banking: ?Red Alert?
by Mark Ungewitter of Charter Trust Company, 3/3/14
Has China averted a financial crisis? Not according to behavioral evidence.

Gold Momentum Study
by Mark Ungewitter of Charter Trust Company, 2/3/14
The Coppock curve is a price momentum indicator designed by Edwin Coppock in the 1960s to detect major equity bottoms while minimizing the risk of subsequent reversal. I recently applied this indicator to gold bullion, a beaten-up market which has fallen nearly 40% from its peak in August 2011.

The Year Ahead - 2014
by Mark Ungewitter of Charter Trust Company, 1/9/14
In the spirit of year-end prognostication, heres my annual review of secular trends and historic behaviors that are likely to influence key markets in 2014.

Will Apple Follow the Microsoft Script?
by Mark Ungewitter of Charter Trust Company, 12/13/13
Back in July, we used technical analysis to anticipate a "head & shoulders" bottom in AAPL. Now that the minimum price objective of $550 has been achieved, we ask a deeper question: What does market behavior have to say about AAPLs longer-term prospects?

Japanese Equities: Room to Run
by Mark Ungewitter of Charter Trust Company, 12/2/13
From a behavioral perspective, Japanese equities are showing some very positive signs.

Earnings Preview
by Mark Ungewitter of Charter Trust Company, 10/7/13
Theres an old saying on Wall Street: The market never discounts the same thing twice. With government-shutdown and debt-ceiling theatrics becoming an annual ritual, perhaps theres something else behind the recent loss of market momentum.

Japanese Equities: Is the Bear Market Over?
by Mark Ungewitter of Charter Trust Company, 9/25/13
Japanese equities have spent the last twenty-four years in a secular bear market defined by lower lows and lower highs in market price. There is now hope that a new Prime Minister, and a new brand of economics, will reverse this multi-decade trend.

Emerging Markets: Time to Buy?
by Mark Ungewitter of Charter Trust Company, 9/17/13
Emerging markets have performed dismally over the past three years. The bellwether MSCI index has moved essentially sideways over that period while losing a whopping 40% of its value relative to the S&P 500. After such a severe underperformance, the sector is now beginning to show signs of improvement.

Don't Buy Gold Below the 300-Day Moving Average
by Mark Ungewitter of Charter Trust Company, 8/29/13
Though gold bullion appears to have made a cyclical bottom, its long-term trend remains highly damaged. From a behavioral perspective, the price of gold must surpass its 300-day moving average (currently near $1560) to prove that a secular bull market remains intact. Long-term investors should recognize that the breakdown of April 2013 raised serious questions that have yet to be resolved.

US Equities: Secular Bull Market?
by Mark Ungewitter of Charter Trust Company, 8/24/13
The Dow’s 10-year moving average currently near 11,500 provides one measure of risk in today’s uncertain environment. Though impossible to predict, a reversion to (or through) this long-term average would be entirely normal from a behavioral perspective.

Quantitative Easing: Is it Working?
by Mark Ungewitter of Charter Trust Company, 8/12/13
In September 2012, the FOMC announced a third round of quantitative easing intended to reduce long-term interest rates. Since then, the New York Fed has purchased about $700 billion of mortgage-backed securities. But a funny thing happened on the way to lower interest rates. During the QE3 period, the benchmark 10-year US Treasury yield has risen by a full percentage point. The targeted 30-year mortgage rate has also risen by about 100bps.

AAPL: Head & Shoulders Bottom?
by Mark Ungewitter of Charter Trust Company, 7/29/13
Is AAPL about to establish a positive trend? A move above $470 on heightened volume would complete a classic Head & Shoulders reversal pattern.

Are Earnings Set to Disappoint?
by Mark Ungewitter of Charter Trust Company, 7/17/13
With earnings season upon us, it’s time to review market valuation from a trailing and forward perspective. Based on S&P’s forward operating earnings out to 2014, the market is reasonably valued at 13.6x. But this requires sharp EPS projections as detailed below.

Stocks v. Bonds: What Happens When Prices Decouple?
by Mark Ungewitter of Charter Trust Company, 7/10/13
Are today’s falling bond prices a sign of confidence in economic growth and earnings power? Or might higher bond yields derail the current equity bull market? While the answer is far from clear, history teaches us to be cautious when bond prices decline sharply during an extended equity rally.

Cyclical Bond Reversion on Track
by Mark Ungewitter of Charter Trust Company, 6/21/13
The evolving bond-market reversion, which I have explored here and here, is on track to produce yields of 4.0% on 30-year Treasury bonds and 3.0% on 10-year Treasury notes. (See charts 1 & 2 below.) This would constitute a normal process which has occurred time after time in recent decades, even in the post-ZIRP environment.

Is “Tapering” or Tightening Historically Frightening?
by Mark Ungewitter of Charter Trust Company, 6/13/13
How will the stock market respond to an eventual reduction of monetary stimulus? In the past, the equity market has shown mixed results during the initial stages of Fed tightening cycles.

26 Years of Wealth Effect: Equity Valuation in the Greenspan/Bernanke Era
by Mark Ungewitter of Charter Trust Company, 6/5/13
I recently observed that P/E multiples are becoming stretched versus historic experience. Historically rich valuations, however, should be viewed in context of todays highly supportive monetary environment.
Results 1–50 of 56 found.