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Technical Security Analyst Association of San Francisco Saturday January 15, 2011 Presented by: Tom Kopas, Martin Pring, and Joe Turner www.pringturner.com Financial Market Update The Secular and Cyclical Outlook for Stocks, Bonds, and Commodities
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19-years/ 69% decline/ 6 recessions 19-years/ 67% decline/ 4 recessions 16-years/ 62% decline/ 4 recessions 10-years/ 34% decline/ 2 recessions ? ? Secular Trend Stocks
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Halfway Through Secular Bear 2016-2020 Completed Secular Bear Target Area
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U.S. Stock Prices (Inflation Adjusted) U.S. Commodity Prices Commodity Oscillator 1 2 3 4 (72/240)
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1901 1929 1966 2000 15 6 7 2 3 4 1 5 6 7 2 3 4 1 5 2 3 4 1 2 3 4
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Key Points: Secular Trend for Stocks Long Periods of Alternating Good and Bad Performance Secular Trends Change at Extreme Valuation Levels Currently Halfway through our 4 th Secular Bear Market Be Aware of Commodity Secular Bull Market Capitalize on Cyclical Stock Market Opportunities Understanding Secular Environment is Key to Success
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Presented by Setting the Scene for the Very Long-term Trend of Commodities and Bond Yields Martin J. Pring www.pringturnercapital.com
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US Commodity Prices US Commodity Prices 1840-2010 www.pringturnercapital.com 22 23 19 12 33 13 18 22 8 Average bull=19-years Average bear=21-years Current bull is 8-years old.
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US Commodity Prices US Commodity Prices 1840-2010 www.pringturnercapital.com Price Oscillator (60/360) Danger level in 330-360 zone.
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CRB Spot Raw Industrials Pring Turner Commodity Barometer CRB Spot Raw Industrials versus the Commodity Barometer www.pringturnercapital.com 100% reading in December
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CRB Spot Raw Industrials Global Economy A long way from a zero crossover. CRB Spot Raw Industrials versus the Global Economy www.pringturnercapital.com Largest decline when bullish.
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CRB Spot Raw Industrials Commodity Diffusion Indicator (24/9) Still rising but fully stretched.
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30-years 29-years 21-years 40-years 21-years Average=25-years Average=30-years US Govt Bond Yields US Government Bond Yields 1860-2010
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US Govt Bond Yields (20-30-year) 240-month (20-year) ROC US Government Bond Yields 1865-2010 www.pringturnercapital.com Line is around 4.6%. 96-month MA
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US Govt Bond Yields (20-30-year) 240-month (20-year) ROC Trendline and MA at 4.6%. US Government Bond Yields 1865-2010 www.pringturnercapital.com Green plot when yield is above 96-month MA.
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US Government Bond Prices Pring Turner Bond Barometer US Government Bond Prices versus the Bond Barometer www.pringturnercapital.com 35% reading in December.
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Master Yield Long-term Momentum Master Yield versus Long-term Momentum 1958-2010 www.pringturnercapital.com Another buy signal?
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Growth Indicator 3-Month Commercial Paper Yield Green highlight shows when Growth Indicator is above +20%. Indicator ticking up again.
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3-month Commercial Paper Yield Turning? Loans All Banks/Governments KST (Ratio)
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US Commodity Prices Government Bond Yields 6-years 4-years 8-years 6-years Commodity versus Bond Prices 1855-2010
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Inflation/Deflation Ratio KST Bullish Inflation/Deflation Ratio 1961-2010
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Commodity/Bond Ratio Early stage of the secular bull market. Commodity/Bond ratio 1860-2010 www.pringturnercapital.com Price Oscillator (60/360) Breakout
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Commodity/Bond Ratio A double break would be highly significant. Government 20-30-year Yield Commodity/Bond ratio versus Government Bond Yields www.pringturnercapital.com Leading the way
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Pring Turner Capital Group www.pringturner.com 25 The Stock Market is Fear and Greed Superimposed Over the Business Cycle Joe D. Turner
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The Random Noise of Economic News!
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Money Supply Commodities Bond Prices Stock Prices Economy ?
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Pring Turner Investment Approach We are Here Shortest: 10 Months Longest: 120 Months Shortest: 6 Months Longest: 65 Months Secular Bull Market 15.5% In a Recession Secular Bear Market 31.7% In a Recession
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The Rest of the World is Growing Faster… … Creating Global Inflation
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4 to 5 YEARS Bonds Stocks Inflation Sensitive
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Utilities Food Producers U.S. Treasuries Banks Technology Consumer Discretionary Technology Transports Oil Drillers Diversified Metals Energy Oil DrillersU.S. Treasuries Diversified Metals Healthcare
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ClassSecularCyclicalTactics StocksBearBull Use Business Cycle to Tactically Allocate Assets Inflation Themes are in Secular Bull Resourced Based, Foreign-Emerging Markets Quality with International Exposure Income Producers BondsBear?Bear Review and Reconsider Risks Lower Bond Allocation Reduce Bond Maturities Set up Short-term Bond Ladder Hedge Bonds with Inflation Sensitive Securities Inflation Sensitive Assets Bull Favor Natural Resource Companies Emerging Market Theme, Global Resource Demand Precious Metal Exposure Resource Based Countries Canadian Royalty Trusts Pring Turner Capital Group Tactics to Protect and Grow Your Wealth Secular Trend at Critical Juncture
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Markets are Linked in a Logical, Rational, Sequential Relationship For over 150 Years, Markets have Tracked Business Cycle Sequences During Secular Bear Markets Economy in Recession More Often Pring Turner Organizes the Business Cycle into 6 stages Currently in Stage 4 Good for Stocks and Inflation Sensitive Securities Bad for Bonds Business Cycle Drives Profitable Asset Allocation Decisions Key Points: Investing Around the Business Cycle
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Presented by Seasonal and Cyclic Outlook for 2011 Martin J. Pring www.pringturnercapital.com
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Decennial versus Third Year of Presidential Cycle
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Decennial Cycle Secular bulls All decades Secular bears Weakness into mid-”2”-year.
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Current US Secular Bear Market vs The Average of Three Previous Bears Average of three previous secular bear markets. Bear trend since 2000 Mid-twelfth year
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+17% +10% +7% Mid-August-Oct July-November Mid-August-Oct
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Year 11 of Secular Bear Years Ending in “1” 1900-2010 Years Ending in “1” 1900-2010 Secular Bears Years Ending in “1” Secular Bears Prez 3 -7% -5% -13% -18% Sept-Oct Mid-April-Dec Early-April-Dec
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Cyclical Equity Indicators
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S&P Composite /Commodity Prices 8 10 3 120-month (10-year) ROC
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S&P Composite Topping? Shiller P/E 18-ROC
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S&P Composite KST Dividend Yield (Inverted) S&P Composite & KST Dividend Yield 1890-1960
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S&P Composite Stalling from a high risk area. KST Dividend Yield (Inverted) S&P Composite & KST Dividend Yield 1960-2010
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S&P Composite Pring Turner Stock Barometer S&P Composite versus the Stock Barometer www.pringturnercapital.com Barometer is bullish.
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S&P Composite Int KST Con Staple RS line. Int KST S&P.
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Pring Turner Capital Group www.pringturner.com 47 Thanks for Listening… Please Visit our website www.pringturner.com to sign up and receive our latest research.www.pringturner.com
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