The 3-mo Hi-Lo Index of the S&P500 is above last week s level and at 9.25% (last week 7.80%) and is in the market since 5/25/2017.

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1 July 2, 217 Business Cycle Index The BCI at 225. is above last week s upward revised 224.7, but for this Business Cycle remains below the previous high as indicated by the BCIp at However, the 6-month smoothed annualized growth BCIg at 14.6 is below last week s No recession is signaled. July 21, 217 Market Signals Summary: The MAC-US model is invested. Also invested is the 3-mo Hi-Lo Index of the S&P5. The monthly updated S&P5 Coppock indicator is also invested. The MAC-AU is also invested. The recession indicators COMP and im-bcig do not signal a recession. The bond market model avoids high beta (long) bonds, and the downward trend in the yield curve continues. Both the gold and silver Coppock models are invested, and the im-gold Timer is in cash since 6/26/217. Stock-markets: The MAC-US model generated a buy-signal 4/5/216 and thus is invested in the stock-markets. The sell-spread (red graph) is above last week s level and has to fall below zero to signal a sell. The 3-mo Hi-Lo Index of the S&P5 is above last week s level and at 9.25% (last week 7.8%) and is in the market since 5/25/217. The MAC-AU model is invested in the markets after it generated a buy signal on March 21, 216. The sell-spread is below last week s level and has to fall below zero to signal a sell. This model and its application is described in MAC-Australia: A Moving Average Crossover System for Superannuation Asset Allocations. Recession: Figure 3 shows the COMP above last week s revised level. No recession is indicated. COMP can be used for stock market exit timing as discussed in this article The Use of Recession Indicators in Stock Market Timing.

2 Figure 3.1 shows the recession indicator im-bcig which is down from last week s level. An imminent recession is not signaled. Please also refer to the BCI page The Forward Rate Ratio between the 2-year and 1-year U.S. Treasury yields (FRR2-1) is near the previous week s level and far away from signalling a recession. A downward trend of the FRR2-1 has set in. A description of this indicator can be found here. July 21, 217 Bond-market: The BVR-model avoids high beta bonds (long-bonds) and also intermediate duration bonds. The Bond Value Ratio is shown in Fig 4. The BVR is near last week s level. According to the model, only when BVR turns upward after having been lower than the lower offset-line should one consider long bonds again. The Yield Curve: The yield curve model indicates the trend of the 1-year and 2-year Treasuries yield spread. Figure 5 charts (i1 i2) showing that the flattening trend, for now, may be broken. A buy FLAT signal was generated on 2/8/217. FLAT and STPP are ETNs; STPP profits from a steepening yield curve and FLAT increases in value when the yield curve flattens. This model confirms the direction of the BVR. Gold: The modified Coppock Gold indicator shown in Fig 6. This model generated a new buy signal early November 216 and is invested in gold. This indicator is described in Is it Time to Buy Gold Again? Wait for the buy signal. The im GOLD-TIMER Rev-1 is again invested in gold since 7/1/217. Silver: The modified Coppock Silver indicator shown in Fig 7. This model generated a new buy signal late November 216 and is invested in silver. This indicator is described in Silver Better Than Gold: A Modified Coppock Indicator for Silver.

3 Monthly Updates July 7, 217 Unemployment The unemployment rate recession model (article link), has been updated with the May UER of 4.4%. Based on the historic patterns of the unemployment rate indicators prior to recessions one can reasonably conclude that the U.S. economy is not likely to go into recession anytime soon. The growth rate UERg is at minus 12.28% (last month minus 11.29%) and EMA spread of the UER is at minus 27% (last month minus.31%). Here is the link to the full update. The Dynamic Linearly Detrended Enhanced Aggregate Spread: The updated level of this indicator, -95bps, confirms the January 2, 217 signal. Based on past history a recession could start at the earliest in October 217, but not later than May 219. The average lead time to previous recessions provided by DAGS was 15 months which would indicate a recession start for April 218. Coppock Indicator for the S&P5 The Coppock indicator for the S&P5 entered the market end May 217. This model is in stocks. This indicator is described here. CAPE-Cycle-ID Fig 9a depicts the CAPE-Cycle-ID and the year-on-year rate-of-change of the Shiller CAPE. A model using this indicator invests in the market when the Cycle-ID is +2 or, and when the Cycle-ID equals -2 the model is in cash. This indicator is described here. Trade Weighted USD The rise of the TW$ value seems to be halted for now and is possible trending downwards. TIAA Real Estate Account The 1-year rolling return for the end of last month is 3.98%. A sell signal is not imminent.

4 1/1/ 1/1/1 1/1/2 1/1/3 1/1/4 1/1/5 1/1/6 1/1/7 1/1/8 1/1/9 1/1/1 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 BCIg : the growth of BCI and 6 is added to it BCI : the Business Cycle Index and S&P5/1 BCIp : The BCI in off-peak-mode im's Business Cycle Index (BCI) Date BCIp BCI BCIg 6/ / / / / BCIp, BCI and BCIg updated to July 2, 217 On past performance, BCIp = 1 can be interpreted as an average one year "time-tolive" to a recession BCIp On past performance, when BCIp moved from above to below 25 a recession followed, on average, 2 weeks later 5 day average of S&P BCI 4 14 BCIg On past performance, when BCIg moved from above to below zero a recession followed, on average, 11 weeks later

5 1/1/1 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 S&P 5 Spread Please note: Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money using this model. Figure 2: Buy and Sell signals for S&P from the modified golden-cross MAC-System 26 recession S&P5 updated to 7/2/ buy signal sell signal buy-spread= 34d EMA - 2d EMA* sell-spread= 4d MA - 2d MA 4 22 zero last buy spread= 15.4 last sell spread= MAC rev xlsm

6 1/1/9 1/1/1 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 Australia All Ordinairies Index Spread Fig 2.1: Buy and Sell signals for the Australia All Ordinaries Index from the MAC-AU System Please note: Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money using this model. updated to Jul last sell spread= Sell Spread Buy Spread Australia All Ordinaries Index MAC Australia.xlsm

7 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 Sell 4/21/215 Buy 11/23/215 Sell 12/17/215 Buy 3/23/216 Buy 12/14/216 Buy 5/14/217 S&P 5 3-mo Hi-Lo Index & SMA:4 % Fig mo Hi-Lo Index of the S&P5 & 4-day SMA of Index 2,5 updated to 7/2/217 last SMA:4= 9.25% 6 2,4 2,3 2,2 2, , 1,9 1,8 1,7 1, ,5-2 1,4 1,3 1, ,1 1, S&P 5 Value SMA:4 Trigger= 5. Sell 9/27/216 Sell 5/12/

8 COMP 8 Fig. 3: COMP Leading Indicator of US Economy COMP level on 6/3/17 = COMP level on 7/7/17 = 22.9 COMP level on 7/14/17 = COMP level on 7/21/17 = 23. recession COMP last COMP level recession trigger Note: Some of the levels of COMP may differ from previous releases due to revisions of COMP's components. 6 4 current level of COMP= recession trigger line COMP.xlsm

9 im-bcig 5 4 Fig 3.1: im-bcig level on 6/3/17 = level on 7/7/17 = level on 7/14/17 = level on 7/21/17 = recession im-bcig end level recession trigger 3 current level recession trigger -2 BCIg has exceeded the current level 27.27% of the time from 1969 to present. -3 BCIg Toni.xlsm

10 Jan-68 Jan-7 Jan-72 Jan-74 Jan-76 Jan-78 Jan-8 Jan-82 Jan-84 Jan-86 Jan-88 Jan-9 Jan-92 Jan-94 Jan-96 Jan-98 Jan- Jan-2 Jan-4 Jan-6 Jan-8 Jan-1 Jan-12 Jan-14 Jan-16 Jan-18 S&P5 (left axis, log scale) FRR2-1 (right axis, normal scale) Figure 3.2: Forward Rate Ratio FRR2-1 - leads to Recessions 1 1 FRR2-1 is the ratio of the rate at which one can lock in borrowing for the eight year period starting two years from now, and the ten-year rate itself. The FRR2-1 is indicative of the slope of the yield curve between the two-year and the ten-year note yields; a FRR2-1 greater than 1. indicates a positively sloped yield curve (ten-year note yields are higher than two-year note yields); a FRR2-1 less than 1. indicates an inversion of the yield curve (two-year note yields are higher than ten-year note yields). The last seven recessions were all preceded by a FRR2-1 less than 1. updated to 7/2/217 EMA of FRR2-1 = S&P5 1.4 smoothed Forward Rate Ratio im-fig FRR2-1.xlsm Page 1

11 1/1/5 1/1/6 1/1/7 1/1/8 1/1/9 1/1/1 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 BVR Note: Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money using this model. Figure 4: Bond Value Ratio (BVR) from 25 to upper offset limit +.1 lower offset limit -.1 Model updated to: 7/2/217 BVR = 6.3 Limit lines recalibrated on 2/1/215 upper switch point: sell high beta bond fund, buy low beta bond fund BVR at all-time high 6. upper offset limit line 5.8 BVR best-fit line Aug-1986 to Jan-215 R-squared =.992 BVR 5.6 lower switch point: sell low beta bond fund, buy high beta bond fund 5.4 lower offset limit line BVR recalibrated.xlsm fig4bvr6-14

12 1/1/1 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 i1 - i2 Note: Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money using this model. Figure 5: i1 - i2 Updated to..7/2/ buy FLAT buy STPP buy STPP i1-i2 3. EMA (i1-i2) buy FLAT buy FLAT (i1 - i2) the difference btw. 1 - & 2 yr T-note yields has a negative slope, meaning (i1 - i2) is becoming smaller. 1.5 (i1 - i2) has a positive slope, meaning (i1 - i2) is becoming bigger Yield Curve.xlsm 9-15

13 Gold Price $/oz Coppock indicator 2 19 Figure 6: Modified Coppock Indicator for Gold updated to 7/21/217 period in gold buy signals yoy RRC% stdev gold price 12 coppock indicator line= New Buy Signal $ COPPOCK GOLD for updates.xlsm

14 Previous Sell Signal: 6/26/217 Last Buy Signal: 7/1/217 LONDON GOLD (PM FIX) Growth of $1 invested 1/2/1999 in Gold as per im Gold-Timer 25 Fig. 6.1a im GOLD-TIMER - Rev 1 Updated to: 7/2/217 1, Invested Gold London PM Return

15 Silver Price $/oz Coppock indicator Figure 7: Modified Coppock Indicator for Silver updated to 7/21/217 New Buy Signal period in silver buy signals yoy RRC% stdev 2 silver price coppock indicator 16 line= $