OFFICIALLY BEARISH, BUT ...
[Latest Global Dollar Liquidity Measure: +14.8% annual growth rate; latest Endogenous Liquidity Index: -29.3%]
The verdict is known: by the slightest of margins, the interest rate data published by the Federal Reserve has pushed my trusted, long-term model for risky assets into bearish territory (*). Consequently, I find myself in a "sell the rallies" mood. A couple of caveats: the margin is so slight, that the most probable scenario, IMHO, is a protracted range-trading environment rather than an outright bear market. (By the way, this is what I had forecast in early July, with good results in terms of the Dow and the Nasdaq, but definitly not in terms of the S&P500).
Second caveat: Credit Default Swaps have become the norm in terms of credit spreads analysis; in other words: models that rely on Moody's spreads may be a thing of the past. We'll see.
(*) The "model" adds the rate of change of the inverse of the Moody's Baa spread to the rate of change of the Global Dollar Liquidity Measure. Until this morning, the last sign was a "buy", flashed out in January 2003.