Sorry I am late seeing your request for information on the Zweig model. The Monetary Model includes: (1) Fed models, which tracks increases or decreases to the the discount rate (or federal funds rate). Increases are bad; decreases are good. For a succession of decreases, the model gets more bullish. The Fed model also tracks changes in bank reserve requirements; this does not happen very often. Again increases are bad and decreases are good. (2) Prime Rate Indicator, which treats increases or decreases similarly; (3) The consumer installment debt indicatorl is bullish if the year over year consumer installment debt increase stays below a certain threshold.
The Supermodel combines the monetary model with a simple trend indicator.
I never liked Zweig's trend indicator (which he suggested for the amateur investor) because it is tracks a very short time scale. He did this to protect his readers from holding stocks for too long when a bear market had started. I developed my own trend indicators and report the one that captures a time scale of around 9 months. Thus I only try to capture longer-term trends, so that I am not trading too frequently.
Hope that this helps. I again regret not including the effect of quantitative tightening, which is happening now and which became significant around September 2018, as near as I can tell. How to interpret that requires another posting. I believe that it will go on until the Fed starts worrying about a slowing economy.
I believe that the current market decline and volatility is the market's attempt to discount the failure of the 2017 tax cut to pay for itself rather than to increase the deficit by significant percentage. The Fed is doing what it has always done to maintain a stable economy and, over the last 80 years, has developed an appropriate methodology to do that. An explanation of this is yet another long post.
We are getting closer to a significant inversion in the yield curve. Oddly, the current drop in the stock market is analogous to what happened in 1937.
Well, someone else is clamoring for the computer, so I will stop for now.
Meanwhile, Good luck.
Tex
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Posted by: mrweyl@hotmail.com
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