CapitalTime

Articles on investing and capital management, with a quantitative focus.

Market Turning Bullish?

2022-12-02

My market timing algorithm gave a Buy signal on November 18, which is the first new signal in ten months. I'm a bit surprised to see this bullish trend detection, since my algorithm did not respond to any of the previous rallies in 2022.

Why did my algorithm respond to this particular rally? I looked back at technical indicators to find out why.

According to the moving averages that I monitor, this rally has more global participation than in August. The August rally was prominent in the US, but other regions (EAFE and Emerging) did not participate so much. For example, IEMG did not come anywhere close to its 200 day moving average. Currently, however, Canada and the EAFE have gone above their 200 day moving averages, and Emerging is awfully close to that level too.

My algorithm looks at all of these markets. For example, a lone rally in just QQQ would be disregarded, whereas a simultaneous rally across multiple world regions would be interpreted as bullish. Currently, we seem to be experiencing the latter.

— Jem Berkes