The State of the Markets:
To review, my first report each week is intended to take a big-picture, macro view of the overall market environment. The idea is to start the week with what we hope will be a solid understanding of what "is" happening in the market (as opposed to what you think "should" be taking place).
The primary reason I continue to do this exercise week after week, month after month, year after year is simple. If I can continuously identify what is actually going on in Ms. Market's game (and I can keep my ego checked at the door), then I shouldn't be surprised when the market environment changes. Remember, the business of investing isn't about "being right." No, it's about "getting it mostly right, most of the time."
The key here is that nobody should give a hoot about what I "think" is going to happen next. Heck, I shouldn't even care about trying to determine what stocks or bonds will do next. In my view, the game is about making sure my portfolios are positioned appropriately for the current environment.
So, the natural question as we enter the fourth trading week of the year is, how do we best define the current macro environment?
In attempting to answer this question, it is very easy to fall into the trap of making predictions. And this is the reason that I rely on the indicator boards displayed in this report each week. So, let's run through them and see what we come up with from an overall "message" standpoint.
Starting with the Primary Cycle board, which is designed to identify the dominant trend (i.e. bull vs. bear), my favorite big-picture models are in pretty good shape. And since there is ...