Again, Everything Matters!
In the same vein that I monitor the markets, from a constant price change perspective within a universe of instruments, when I look at the market′s fundamentals, I want to know everything. I want to dissect every detail in microcosm, so that I can fully assess the top-down environment.
In the same way that I approach each instrument, spread, or ratio from a technical perspective, when I look at the macroeconomic data, I want to slice and dice the data in every way possible, over as many time frames as possible, to get the full picture. Just as things evolve technically, the macroeconomic fundamental backdrop evolves from the bottom-up, with evidence of a potential shift in trend first exhibited in the microdata.
Herein lies the conundrum in approaching the markets with a top-down strategic methodology: analysis, as it applies to macroeconomic trend reversals, appears first at the bottom and evolves upward.
I am always seeking the time frame when the macro-overlay is in sync with the technical overlay and vice versa, particularly when countertrend nuances are synchronized. This occurs when the 3 - month rate of change (ROC) of the U.S. monetary base is moving lower against the continued uptrend in the 12-month ROC, and I note that the 100-day exponential moving average (EXP-MA) in gold has turned lower in the face of a continued climb in the 52-week MA. Then I can say there is synchronicity between these technical and fundamental indicators, ...