Market Monitor Newsletter Overview - AAIILA.org

1© 2018 - Robert Bernstein

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Market Monitor Newsletter Overview

Los Angeles Chapter AAII – Strategic Investing Group

Presented by Rob Bernstein, President RGB Capital Group LLC

June 2, 2018

This document is provided for educational purposes only. It does not constitute an offer to sell or a solicitation to buy a security, and is not an offer to provide any specific investment advice. Past performance is not indicative of future results. Changes in equities markets, interest rates, exchange rates, economic conditions, political conditions and other factors may influence future performance.

Contact Information: Rob Bernstein RGB Capital Group LLC858-367-5200rob@rgbcapitalgroup.com

2© 2018 - Robert Bernstein

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Market Monitor Newsletter

The Market Monitor newsletter is intended for individual investors with a desire to manage the conflicting goals of managing risk and earning a fair return by providing a unique perspective of general market conditions.

Originally developed for the attendees of the San Diego Chapter of AAII – Risk Management Special Interest Group with the goal of providing frequent updates on overall market conditions.

NOT designed to provide any specific investment recommendations.

First published in October 2017.

Written in the evening of the second Wednesday of the month and distributed on Thursday morning. The schedule is subject to change.

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Top Down Approach

Economic (Business) Cycle

Market Breadth

a) Long-Term

b) Short-Term

The Junk Bond Indicator

Major Indices

Market Watch List

a) Bond/Income Funds

b) Commodities

c) Equity Sectors

d) Foreign Groups

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Section 1: Economic (Business) Cycle

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Economic (Business) Cycle

Is the economy expanding or contracting?

Is the rate of growth increasing or decreasing? Is the rate of growth considered by be inflationary?

Is the Federal Reserve trying to stimulate or slow the economy?

Are corporate profits likely to increase or decrease in the near term?

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Economic (Business) Cycle

The economic cycle is defined as alternating periods of expansion and recession.

The purpose of reviewing the economic cycle is to provide a guide to the macro-economic environment.

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Economic (Business) CycleImpact on Different Asset Classes

Stage I – Bonds Bottomo Bullish for bondso Bearish for stockso Bearish for commodities

Stage II – Stocks Bottomo Bullish for bondso Bullish for stockso Bearish for commodities

Stage V – Stocks Topo Bearish for bondso Bearish for Stockso Bullish for commodities

Stage VI – Commodities Topo Bearish for bondso Bearish for stockso Bearish for commodities

Stage III – Commodities Bottomo Bullish for bondso Bullish for stockso Bullish for commodities

Stage IV – Bond Prices Topo Bearish for bondso Bullish for stockso Bullish for commodities

Source: Michael Price

Analysis based on a model defined by Martin Pring in The All Season Investor.

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Market Breadth

How much of the market is participating in an advance? Is the market advance broad or narrow? Are all boats rising?

How much of the market is participating in a decline? Is the market decline broad or narrow?

Are divergences (bullish or bearish) forming that may provide clues to future market action?

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Market Breadth

Market Breadth is a technical analysis technique used to gauge the future direction of the market with something other than price. Examples include volume, advancing/declining issues, and new highs/lows.

Comparing market breadth indicators with the underlining index (price) may identify strength or weakness that is not apparent in the index.

Market breadth can provide clues to both the short-term (tactical) or longer-term (strategic) market environment.

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Section 2: Long-Term Market Breadth

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Market BreadthLong-Term Market Breadth

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Section 3: Short-Term Market Breadth

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Market BreadthShort-Term Market Breadth

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Section 4: Junk Bond Indicator

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Junk Bond Indicator

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Junk Bond Indicator

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Section 5: Major Indices

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Major Indices

What is the trend of the market? Are the major indices in agreement with respect to the trend?

Does the market have a capitalization bias (large vs. mid vs. small)?

Does the market have a growth or value bias?

What do other technical indicators tell us about the overall trend of the market?

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Major Indices

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Market Watch List

What sectors are out performing / under performing?

What is the relative performance of different sectors?

Are certain sectors gaining momentum?

What sectors have underperformed that may be poised for outperformance in the future?

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Market Watch List

Components of the Market Watch List are created by Rob Bernstein for recipients of the Market Monitor. These groupings are not published to the general public.

Bond / Income Groups are an equally weighted average of 10 large mutual funds representing that group, with the exception of the Preferred Securities group which is an equal weighted average of five preferred securities mutual funds.

Commodity, Equity and Foreign Groups – each group is an equally weighted average of ETFs and tradable mutual funds that represent that category. The number of ETFs/mutual funds in each group varies.

You cannot invest directly in one of these groups.

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Overview

The introductory page (page 1) is the last page I write. This is an opportunity to summarize the current market environment and share my thoughts with readers.

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Overview

At the bottom of the first page is a Summary Assessment:

a) Intended to provide readers a quick snapshot of the overall market environment.

b) Legend:

+ Positive

- Negative

? Questionable

Market Monitor 5/10/18

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If you are interested in receiving the Market Monitor newsletter, please complete one of the forms to be added to the distribution list.

Rob Bernstein ● 858-367-5200 ● rob@rgbcapitalgroup.com