Market Timing – Page 4 – Harlyn Research LLP

The Calm Before the Storm

Thursday, March 7th, 2019

Concerns over US earnings, China slowdown, Euro banks

Before the ECB’s announcement today, nothing very important had happened in financial markets for several weeks. We get nervous when it’s this quiet, so we prepared a list of issues to worry about. They range from the benign, like a melt-up in risk assets caused by a sell-off in US Treasuries to the borderline catastrophic, like a Eurozone banking crisis. Our main point is that the current directionless environment is likely to end in the near future. Whether investors believe in any, or all, of the scenarios listed below is up to them.

Filed under: Categories: China, Elections, Eurozone Crisis, Financials, Market Timing, United States

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Markets at a Crossroads

Wednesday, February 20th, 2019

US Industrials may give us a sign

We detect signs that the rally in global equities is losing momentum, but we could be wrong, so we are going to do nothing for the next week or two. There are signs of recovering risk appetite in EM Equities and in credit, but not in equity sector selection. Our global equity vs fixed income model is at a critical chart-point and we will look to US Industrials to provide confirmation of that message, whatever it is, whenever it comes.

Filed under: Categories: Defensives, Global Equities, Harlyn's Process, Market Timing

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Alternatives to Santa

Thursday, November 8th, 2018

How not to chase the Christmas rally

Investors should feel free to trade a Christmas rally in equities, provided they can identify when to take profit. Our US sector model is firmly in de-risking mode, which means that an extended rally is unlikely. Investors can profit from this correction by adding exposure to EM Equities, buying either an index ETF or selecting from our list of preferred countries.

Filed under: Categories: Emerging Markets, Equities, Market Timing, Seasonality, United States

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Lagging sectors and regions

Wednesday, May 30th, 2018

What does an underweight in both really mean?

This week we look at which equity sectors have historically been rated underweight when their region is also rated underweight. Causation is much harder to establish than for overweight sectors in overweight regions. The main lesson is that sector selection may not compensate for being in the wrong region in a bull market or the wrong asset class in a bear market.

Filed under: Categories: Market Timing, Rotation, Sector Strategy

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No Yellow Flags

Thursday, October 26th, 2017

Sector dynamics of early bear markets

A large rise in excess volatility (equity volatility minus bond volatility) is a good indicator of the onset of a bear market in the US and elsewhere. It also works at the sector level for those sectors which peak early, before the dynamics of contagion take over. Every bear market is different, but there are similarities in the early phases. Apart from Telecom, which is a very small sector, there are no warning signs at the US sector level at the moment.

Filed under: Categories: Bear Markets, Market Timing, Sector Strategy

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The Probability of Loss

Wednesday, September 6th, 2017

US investors don’t need to sell US Equities

US investors are being bailed out of a tight situation by the weaker dollar. The chances of losing money on their overseas equity positions are much lower than they are in domestic fixed income. The same is true for domestic equities. They can afford to do nothing, but euro-based investors face a much tougher choice.

Filed under: Categories: FX rates, Global Equities, Market Timing, United States

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Winter Is Coming

Wednesday, August 23rd, 2017

But it will be very mild to start with

We fully expect a correction in US and global equities at some stage during the Autumn, but unless two or more of our risk-scenarios crystallize at the same time, we don’t think it will be more than 10%. There is too much residual momentum, especially outside the USA, and even after a correction, realised volatility will be below its long-run average.

Filed under: Categories: Correction, Geo-Political Risk, Market Timing

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Self-Help in Emerging Markets

Wednesday, March 1st, 2017

Use local investors as your guide

It’s time to look at EM Equities again. Our view is that international investors should be selective and go for countries which are capable of self-help, like India, but not Russia. That means working with the preferences and opinions of local investors, not against them.

Filed under: Categories: Emerging Markets, Market Timing

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