Your Move, Mr. Market

excerpts from this week's report:

This week I am pleased to provide a new weekly market-tracking service based on a very reliable tool – the Moving Averages Principle.

The Moving Averages Principle (MAP) is an excellent guide to determining the state of the mega trend in any one sector, industry, country, region, or stock. MAP minimizes the noise of the market and helps keep our eye on the most important investment ball – the mega trend.

The Moving Averages Scorecard noted in the table on the next page (see report*) applies the MAP and measures the mega trend for each of the ten economic sectors tracked by the S&P 500 in the first grouping. The second grouping applies the MAP to the five size metrics of the market – mega, large, mid, small, and micro. Lastly, the third grouping applies the MAP to selected global markets.

As above table (see report*) shows rather clearly, the mega trends for 15 out of the total of 20 individual sectors, styles, and global markets are bullish. At present, with 75% of the key metrics for the US and global markets on the bullish side of the MAP ledger, the only investment strategy question to answer is tactical. For that, we look at my Expected Return Valuation Model (see report*)..."

Chart Focus: Mortgage Tranches

"The first chart above (see report) is from today’s Wall Street Journal. The second is the S&P 500 over the same period. It is interesting to note how investors chose to ignore the warnings signs as prices deteriorated in early 2007, yet equities moved to all-time highs, which takes me back to the follow excerpt from my August 6, 2007 weekly report:

"Ever so slowly but no less dramatically, investors are coming to appreciate what readers of this newsletter and blog have known for well over a year – risk has been grossly underestimated and correlations among assets are..."

also in this week's report:

* Expected Return Valuation Model
* Model Growth Portfolio
* Investor Sentiment Data
* Chart Focus: Mortgage Tranches
* Sectors and Styles Market Monitor
* Key US Economic Indicators

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