BEAR MARKET - CONFIRMATION
Those of you who follow our updates will know that we have been concerned about the prospects for the global equity markets since August 2014. Clearly, markets may give warning signs but despite this, they can still rise. However, by August 2015 we thought that our Indicators were signalling that a bear market was imminent. We have set out our briefings to give you an understanding of how in our minds the evidence has built up.
BEAR MARKET UPDATE : Posted 25th January 2016
Our updates are a bit like London buses, nothing for a period and then several arrive at once. In our briefing on the 19th January, we were looking for a bounce and it just maybe that we have one now. Whatever plays out; we are at an important juncture. Using technical analysis, we have had a weekly “spike” last week on all virtually all equity markets, which without going into too much detail, means in this case equity markets plunged down but rejected that move down and closed higher. Weekly data is important to us especially in this context because weekly spike owns often mean the end of a move for a period. Previous down spikes occurred in October 2014 and August 2015 and these called an end to those moves down for a period, although there were attempts by the markets to break these lows. Therefore, we would not be surprised to see the lows made last week hold for a while and these levels are roughly at 5600 on the Ftse 100 and 1812 on the S&P 500. If these spike lows are exceeded in the next couple of weeks then markets are in serious trouble. However, based on these spikes, we are reasonably relaxed that markets will edge higher for the time being, although there will be some volatility.
BEAR MARKET UPDATE : Posted 19th January 2016
It has been a torrid start to 2016 (in the US, the worst since 1932) and at the moment, markets look oversold and in some circumstances are hitting support. We have been expecting a bounce for a period now but none has appeared. Much of the market moves have been brought about by the decline in the oil price, which again is deeply oversold. When the rally arrives we will treat it with suspicion and look to see if it gives rise to any optimism. The important thing to remember is that our monthly Indicator, although unreliable as a timing mechanism, indicates that pressure is to the downside. Typically a "sell" signal on the monthly Indicator lasts 18 months and because the FTSE 100 generated its negative reading in August 2014, it would indicate this move is nearing an end.
However the FTSE 100 generated the signal earliest of all the global markets, probably due to its exposure to mining stocks. Most other markets issued a monthly sell signal in the period between May and August 2015. Given we believe in commonality and that markets tend to move together, this would seem to indicate that downward pressure on global equity markets could last until February 2017.
Whether this is the case or not, only time will tell and this is not a prophecy. Rest assured should our Indicators turn bullish we will inform you immediately.
THE BEAR MARKET IS BACK : Posted 15th October 2015
Are you prepared for 2008 again? Are your clients’ portfolios protected? In recent weeks, we have seen global stock markets tumble. Many will see this as a correction within an on-going bull market. Many will see this as an opportunity to buy at lower levels and be convinced central banks will be in a position to ride to the rescue again by supplying yet more liquidity.
However, we think those hopes will be dashed because we believe we are in the initial phase of a new bear market.
You may ask why we believe a bear market is here. Quite simply we have our own proprietary technical indicator, which is known as “The Barmac Indicator.” This ascertains whether the market is in a bullish or bearish phase. Our Indicator helped us avoid the falls in the bear markets in 2000-2003 and 2007-2009. We have back tested it against every bear market since 1929 and it has called them correctly along with the subsequent recovery.
Recently it has issued a bear signal across most global equity markets. This is why we are issuing this alert.
Please download our full briefing here
BEAR MARKET CONFIRMATION : Posted 2nd October 2015
Further to our 21st September update we can now issue a Barmac bear market warning because we are satisfied that our Indicator based on the FTSE 250 has crossed into negative territory. We do not make a call as big as this lightly.
We have had warning signs on our various technical indicators for a considerable time therefore and accordingly we have treated the markets with some caution. Indeed this is borne out by the performance of The Castleton Growth Fund – see link below.
It is difficult to say how far the markets could fall from here, but we think this could be particularly torrid given it may be that investors, instead of losing faith in commercial and retail banks, will lose patience and faith in Central Banks. Nearer term, we are waiting for a rally and it will be interesting to see how far this carries markets. One thing that is particularly interesting is that few are calling a bear market and that makes us more confident in our call.
Please download our full briefing here
BEAR MARKET? - UPDATE : Posted 21st September 2015
This bulletin should be read in conjunction with our update of 27th August 2015: BEAR MARKET? - OUR ANALYSIS (see below). One by one, our technical signals are flashing warning signs although our Indicator has not called a bear market yet. As our investors are aware, we have been increasingly cautious in line with our Indicators becoming weaker. Since the 27th August, things have moved further in the direction of a bear market. What is deeply worrying is that a yearly moving average has crossed the weighted yearly moving average, which normally calls for a prolonged move down. The “cross-over” is rare and always coincides with a bear market.
The following markets have experienced this “cross”: FTSE 100 Hang Seng S&P 500 Dow Jones Industrial Average. Other markets are also not far from this “cross-over” although a number such as the TechMark 100, NASDAQ, and FTSE 250 remain in a comparatively healthy position with a “cross” someway off. As a result of this, we are exercising extreme caution and will provide other updates as and when necessary.
Please download our full briefing here
BEAR MARKET? - OUR ANALYSIS : Posted 27th August 2015
Here is an update on our analysis regarding global equity markets. Devotees of Barmac will remember that we have accurately predicted the bear markets of 2000 - 2003 and 2007 -2009 and this is in response to their enquiries.
As many are aware, we issued a note in August 2014 that the monthly Barmac Indicator had issued a “sell” signal on the FTSE 100 but the monthly Indicator on this index is notoriously bad for timing purposes. Indeed, in the bear market of 2000 - 2003 the signal first occurred on the FTSE 100 in August 1999 after which the market rallied over 10%. In the bear market of 2007 - 2009, the FTSE 100 rallied nearly 10% after the signal was generated in July 2007. However, once issued our Indicator calls for a correction of at least 15% and we have back tested this on US data to 1929 and found it is unerringly accurate.
IMPORTANT NOTES: Remember that past performance is not a reliable indicator of future results. The value of an investment and any income from it can go down as well as up and may also decrease or increase as a result of changes in exchange rates between currencies. Current tax levels and reliefs are liable to change. Investors may not get back the full amount originally invested. Performance is not representative of actual returns and does not take into account any charges levied. Source of data: Sharescope and other sources believed to be reliable. This document has been compiled, approved and distributed by Barmac Asset Management Limited. This document is provided for information purposes only and does not constitute investment advice or considered as an offer to sell an investment or a solicitation of an offer to buy an investment. Whilst all reasonable care has been taken to ensure that the information contained in this document is true and not misleading at the time of publication, Barmac Asset Management Limited make no representation as to the accuracy or completeness. No reliance may be placed, for any purpose, on the information and opinions contained therein. Barmac Asset Management Limited accepts no liability whatsoever for any direct and/or consequential loss arising from use of this document or its content. Any forward looking statements contained within this document are based largely on expectation and are subject to a number of risks. These risks include, but are not limited to, risks and uncertainties associated with economic, political and market factors affecting trading volumes and securities prices.