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"Severe Correction Or Cyclical Bear" Ahead: Leuthold Major Trend Index Turns Negative

Tyler Durden's picture




 

Courtesy of The Leuthold Group,

Based on data for the week ended August 7th, the Major Trend Index dropped to a NEGATIVE reading of 0.90, led by declines in both the Attitudinal and Momentum/Breadth/Divergence work. The topping action evident in the MTI and other disciplines is consistent with either a severe correction, or a cyclical bear in the near future. We’ve therefore cut net equity exposure in both the Leuthold Core and Leuthold Global Funds to 38%, down from 48% in late July, and 61-62% in late June. A further reduction is possible in the days ahead.

Sentiment has clearly cooled off from the ebullience seen throughout 2014 and early this year, and some analysts contend there’s a new “wall of worry” for the stock market to climb (concerns over China’s market air pocket, crude’s retest of March lows, and the weak quarterly earnings season now in progress). But the MTI’s Attitudinal category staged a sharp drop last week, reflecting bearish flips in three models tracking investor preferences between stocks and bonds.

The Momentum/Breadth/Divergence category also recorded a small loss on the week, reflecting further weakness in market breadth and small losses in the chart scores. Yet the net reading for this category is still positive at +92; the weakness to date has largely been concentrated in “anticipatory” indicator groupings related to momentum, breadth, and industry leadership. We obviously prefer acting on this type of evidence rather than waiting for formal bear signals from indicators based on the major indexes, but the markets don’t always afford us that opportunity.

The Supply/Demand category carries the smallest potential weight of the five categories but can be an important swing factor at major turning points. The current category reading is a bearish –93, reflecting evidence of increasing institutional selling across three measures.

 

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Wed, 08/12/2015 - 17:34 | 6420053 JC-BI
JC-BI's picture

That's what happens when a select few greedy banksters hijack the financial institutions of a country. Everything gets corrupted to satisfy their greed and ambition.

https://biblicisminstitute.wordpress.com/2015/07/28/how-the-ashkenazi-je...

Wed, 08/12/2015 - 17:40 | 6420079 Hype Alert
Hype Alert's picture

All this correction is imminent bs is based on pre-2009 thinking.  The FED went down the rabbit hole and can't get out.

Wed, 08/12/2015 - 18:04 | 6420149 johngaltfla
johngaltfla's picture

The tick held around -1157. The PPT worked hard today but long term technical indicators still scream: "FUCKED"

Watch AAPL rally then fail at 117-119 and the SOX get socked on Friday after a thin faux rally tomorrow.

Gold's head fake will be short lived but when it does start to surge, it will look just like 2008-2010 but at much higher levels.

Wed, 08/12/2015 - 18:16 | 6420186 Hype Alert
Hype Alert's picture

Wait until the FED delays "liftoff" and watch the stock market.  Then we can wait until the FED releases a new QE or what ever they want to call it then. 

 

What I'd like to see is somebody apply all this charting to Weimar's stock market or Zimbabwe's and predict the correction that never came.  Before 2009 it made a lot more sense, but we can't time travel and not do what the FED did.  If they go ahead and raise rates, I might have to change my mind, not that it will matter after that train wreck.

Wed, 08/12/2015 - 18:30 | 6420216 Hype Alert
Hype Alert's picture

Here's a wild what-if.  Before cocktails too.

 

What if China bought our market today after the drop knowing the FED would now have to delay "liftoff"?  The FED is too "invested" in the stock market at this point to let the last six years go up in a puff of smoke.

Wed, 08/12/2015 - 17:35 | 6420063 Fukushima Fricassee
Fukushima Fricassee's picture

If the fucking FED does not own every share yet they will soon.

Wed, 08/12/2015 - 17:43 | 6420088 Winston Churchill
Winston Churchill's picture

Which is the whole point of the debt fiat game.

Long term thinking.

Wed, 08/12/2015 - 18:32 | 6420224 venturen
venturen's picture

we owe the debt and the criminal bankers own the assets! Thank you FED!

Wed, 08/12/2015 - 17:47 | 6420103 buzzsaw99
buzzsaw99's picture

there is no market

Wed, 08/12/2015 - 18:02 | 6420142 Row Well Number 41
Row Well Number 41's picture

It's a muppet abbitoir.

#41

Wed, 08/12/2015 - 18:11 | 6420162 Onlygold1
Onlygold1's picture

Send in The clowns

better yet send in MOOR CLOWNS

Wed, 08/12/2015 - 18:13 | 6420180 Chuck Knoblauch
Chuck Knoblauch's picture

Does any of this baloney stick?

Wed, 08/12/2015 - 18:24 | 6420200 Legioona
Legioona's picture

Googled "Cyclical bear" but was disappointed not to find an image. williambanzai7 or someone?

Wed, 08/12/2015 - 19:31 | 6420345 Jumbotron
Jumbotron's picture

I don't know.  I found them ALL over the intertubes.

https://images.duckduckgo.com/iu/?u=http%3A%2F%2Ftse2.mm.bing.net%2Fth%3...

Wed, 08/12/2015 - 18:31 | 6420219 venturen
venturen's picture

ot they could just print more criminal trillions for themselves!

Wed, 08/12/2015 - 18:47 | 6420260 ZippyDooDah
ZippyDooDah's picture

What does the Skynet Index say?

Wed, 08/12/2015 - 20:33 | 6420539 swass
swass's picture

I met Steve Leuthold years ago. Many people never heard  of him, but he is very well respected and I love his indicators. I really suggest people pay attention to his funds and indicators.

Wed, 08/12/2015 - 22:22 | 6420895 redd_green
redd_green's picture

Ahh, yes, of course the Leuthold index.  Ahh, hmm.  

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