On My Radar - What The Technical Indicators Are Telling Us
June 20, 2025
By Steve Blumenthal
“The aim is to make money, not to be right.”
— Ned Davis, Co-Founder Ned Davis Research
I’ve been a research subscriber to Ned Davis Research since the mid-1990’s. The firm was founded by Ned Davis and his partner Eddie Mendel with a focus on the macro trends in the global markets. I love their tag line, “See the Signals.”
NDR is a leading independent research firm. Clients include global investment firms, banks, insurance companies, mutual funds, hedge funds, pension and endowment funds, and registered investment advisors. NDR uses the weight of the evidence approach to frame their market insights. Price plays a critical role.
Ned argues that price reflects everything—from fundamentals to investor sentiment. His approach utilizes data-driven, technical models to interpret price movements, emphasizing that following objective price-based indicators (like trends, moving averages, and volume) can help you detect the true direction of markets.
My firm has done a lot of work with NDR that helps us understand the trend and breadth of the markets. We also worked with NDR to recreate a model Ned and the late great Marty Zweig built in the 1980s called the Zweig Bond Model. It, along with MACD indicators, helps us stay on top of the directional trend in interest rates. Up is bad, down is good.
Ned has talked about technical analyst Joseph Granville’s adage that “volume precedes price”, meaning heavy trading volume often signals a forthcoming major move in prices. Ned noted this applies both to market tops and bottoms. One of my favorite indicators is NDR’s Volume Supply vs Volume Demand.
The NDR Volume Supply is the smoothed total volume of declining issues. At the same time, the NDR Volume Demand represents the smoothed total volume of advancing issues, utilizing the Broad Market Equity Series (BMES) All-Cap Volume data.
In summary, price is the ultimate indicator of market dynamics.
Volume confirms price, letting us distinguish real trends from false signals.
Risk management depends on price - exit when price trends (and signals) reverse.
Price ties together all other analytical methods, acting as the final gatekeeper.
Fundamentals matter, but price and technicals often serve as the final arbiter.
It’s important to note that there is NO perfect indicator. Investing is about understanding probabilities: when are they most in your favor and when are they not? The objective is to avoid the significant mistakes that often occur during severe bear markets, which tend to correlate with recessions.
Long-term readers know I’m a big Felix Zulauf fan. My firm is a subscriber to Zulauf Asset Management’s research letter. In my view, Felix is one of the greatest global macro investors of our day. I want to know what he is thinking.
There is a great deal of noise in the press. Of course, there are also good moments, such as interviews with key opinion leaders, including Ray Dalio, Stan Druckenmiller, Jeffrey Gundlach, and Paul Tudor Jones (among others). What I try to do each week in “On My Radar'‘ is to share with you something interesting I believe is timely and important.
Each week, I plot a large set of market indicators in a report I call Trade Signals. Please put on your geek glasses, grab that coffee, and let’s take a look at some technical indicators.
On My Radar:
Housing Starts Fall
Technical Indicator Highlights
Shiller PE and Subsequent 10-year Returns
Trade Signals: Update - June 18, 2025
Personal Note: “Football is Life”
See Important Disclosures at the bottom of this page. Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.
If you like what you are reading, you can subscribe for free.
Housing Starts Fall
Before we get to the charts, I want to touch on housing starts, a sector that has a significant impact on the economy. The latest data, reported this week, is not so good.
U.S. housing starts declined to a five-year low amid rising mortgage rates, weaker demand, and a decline in builder sentiment.
The data shows a clear slowdown:
According to the National Association of Realtors (NAR), existing-home sales dropped to a 4.00 million annualized pace in April 2025, down 0.5% from March and 2% year-over-year. Source
NAR forecasts a modest rebound to 4.3 million in 2025, but that’s down from previous expectations of 4.9 million. Source
Zillow projects 4.14 million existing-home sales this year, reflecting only a 1.9% rise over 2024. Source
Meanwhile, Redfin and other trackers report:
A historic imbalance: as many as 500,000 more sellers than buyers in April. Source
Homes are taking longer to sell: median days on market rose from ~40 days in March 2024 to 54 days in March 2025. Source
Together, these patterns indicate a slowdown in the existing-home sales market.
What’s behind the slowdown?
Key factors include:
High mortgage rates (~6.8–7%) are suppressing demand. A jump from 3% to 6% adds about 34% to monthly payments. Source
Affordability challenges: even though home prices have slowed, they remain elevated (median ~$414k in April 2025). Source
Rising inventory: active listings jumped ~27.5% year-over-year. Source
Economic uncertainty, including inflation, tariffs, and the Fed's policy, has further dampened buying activity. Source
Why housing matters to the economy:
Although housing directly represents around 4% of GDP, its economic significance runs deeper -
Wealth effects: Home values influence consumer spending. A slump in housing dampens household wealth, particularly for those who are selling.
Job impacts: The housing sector supports a diverse range of jobs, including construction, real estate, lending, and remodeling. A slowdown stresses employment in these areas.
Financial markets & banking: Home sales generate mortgage borrowing and refinancing. Reduced activity can decrease bank revenue and tighten lending conditions.
Leading indicator: Housing often signals broader economic trends. A prolonged slump can signal slowing consumer demand, potential softening, or increased recession risks. Source
Fed policy implications: If housing stalls significantly, the Fed might respond with rate cuts or interventions (e.g., bond or mortgage-backed securities purchases). Souce
In summary:
Existing-home sales are decelerating, hovering well below pre-pandemic norms.
Rising mortgage rates, persistent affordability pressure, and growing inventory are key headwinds.
Slow housing affects the economy through its impact on wealth, employment, banking activity, local tax collections, and policy decisions.
The Fed is watching. While inflationary pressures are on their mind, as you’ll see in the Trade Signals section below, a deeper slump could lead to monetary easing later this year. I still consider recession risk in 2025 to be more than 50%.
Technical Indicator Highlights
I mentioned Felix Zulauf earlier. My summary of his current thinking, as I see it, follows (please know his views are subject to change):
A roller coaster-like market with big swings both up and down, with the potential for significant dislocation in 2027/2028. He calls it “The Granddaddy Bear” market.
Felix turned bullish on equities when the S&P 500 dropped below 5,000. He sees the potential for a rally to new highs—maybe even the 7,000 area.
The current rally from the recent lows may be losing momentum. A pullback into a slowing economy is probable, but Felix believes the cyclical bull market move is not yet finished.
Recession risk in the second half of the year, which he expects will be met with more liquidity from the Fed and legislators. That would be bullish for risk assets.
Back in early April, Felix estimated a 40% probability of Scenario 1: Bottom Soon, a 40% probability of Scenario 2: Panic Sell-Off, Recession and A Second Decline, and a 20% probability of Scenario 3: 1930 all over again. We got number 1.
Felix’s views resonate with me, and please note that I’m sharing this for discussion purposes only and not providing specific advice for you. There is a great deal at stake geopolitically that is poised to shift. We could wake up to a horrific event or the potential for greater peace in the Middle East. No one knows. The markets seem to be pricing in the latter. Our opinions are subject to change as the macro landscape changes.
The Stock Market, Bond Market, and the Dollar
Here are what I believe are the key macro indicators to watch - Investor Sentiment, Market Breadth, The S&P 500 Index (Stocks), The 10-year Treasury Yield (Bonds), and the Dollar:
The S&P 500 Index (Stock Market)
Investor Sentiment (looking for extreme optimism or extreme pessimism): The current reading is neutral
Market Breadth (looking for direction): The current reading is bullish, but lower since last week and nearing a neutral reading
S&P 500 Index Weekly MACD: The current reading is bullish.
Notable - S&P 500 Index: Investor sentiment is neutral, Market Breadth is positive but weakening, and the S&P 500 Index Weekly MACD remains bullish (last signal 5-17-25).
The green arrow pointing to the 5,700 area indicates a significant gap to the upside. Gaps tend to be filled, which means a correction back towards the support line is probable (not guaranteed).
Source: Stockcharts.com, CMG Capital Management Group, Inc.
10-year Treasury Yield Weekly MACD: The current reading is bearish. Signaling higher interest rates, which is bearish for bond prices. The yield on the 10-year has been hovering around 4.40%. Note the red and green signals in the lower section of the chart. Red signals a trend change to higher interest rates, while green indicates a trend change to lower interest rates.
Source: StockCharts.com, CMG Capital Management Group, Inc.
Dollar Weekly MACD: The current reading is bearish. This is concerning from an inflation perspective. A declining U.S. dollar generally has these implications:
Stocks: Often helps large-cap multinationals, as their overseas earnings translate into more dollars. It can also boost commodity and export-driven sectors.
Bonds: Can be negative for U.S. bonds, especially Treasuries, as foreign investors may demand higher yields to offset currency losses.
Gold: Typically positive. Gold is priced in dollars, so as the dollar weakens, gold often rises as investors seek a store of value.
In short, a weaker dollar is good for gold, mixed for stocks (but helps exporters), and puts pressure on bonds.
The break below 100 (red line) is significant, as foreign investors appear to be selling U.S. investments and repatriating that money.
Source: StockCharts.com, CMG Capital Management Group, Inc.
Valuations and Subsequent 10-year Returns
Various valuation metrics can help investors determine when an investment opportunity is most suitable. Waiting requires extreme patience and the ability to act at the right time. That is what this valuation section is about. To help you identify, set targets, and act.
The current Shiller PE places the PE in the most expensive decile, “Decile 1.” While this tells us very little about what the market will do in the short term, it tells us a great deal about the probable 10-year annualized returns over the coming decade.
Chart 1 is the current Shiller PE Ratio (red dot, right-hand side of the chart). It also plots the history dating back more than 150 years.
Chart 2 shows the actual best, worst, and average subsequent 10-year total returns by decile. Note the “We are here” red arrow and the “We’d be better off here” green arrow.
Summary:
The Current Shiller PE = 36.55
S&P 500 Index Total 10-year Annualized Return by Decile = Decile 1 (Most Expensive)
Decile 1: S&P 500 Index Total 10-year Annualized Return = 1.3% Average (Worst was –1.8%, Best was +3.6%)
Chart 1 – Shiller PE Ratio
Chart 2: S&P 500 Index Total 10-year Annualized Returns by Decile
Finally, I have a “Market Summary” that I plot each week, which helps me stay disciplined. Green is bullish, Red is bearish, and Orange is nearing a signal change.
You’ll see Median PE in the “Fundamental’s” section. It suggests the Median Fair Value in the S&P 500 Index to be 4,109. It will take a recession to get us there.
Source: CMG Capital Management Group, Inc.
TRADE SIGNALS SUBSCRIPTION ACKNOWLEDGEMENT / IMPORTANT DISCLOSURES
Not a recommendation for you to buy or sell any security. For information purposes only. Outlook and viewpoints are subject to change at a moment's notice. This material is for discussion purposes and does not give you specific advice. Please discuss needs, goals, time horizons, and risk tolerances with your advisor.
Trade Signals: Update - June 18, 2025
“Stay on top of the current market trends with Trade Signals.”
“Extreme patience combined with extreme decisiveness. You may call that our investment process. Yes, it’s that simple.”
– Charlie Munger
Market Commentary:
The Fed met this week. Verdict - on hold. To get a feel for Jerome Powell’s thinking, my friend Peter Boockvar reshared key bullet points from Bloomberg News in his Boock Report this week:
POWELL: WANT TO SEE SOME TARIFF EFFECTS ON INF. BEFORE JUDGING
POWELL: LABOR MARKET ISN'T CRYING OUT FOR A RATE CUT
POWELL: GOING TO LEARN MORE ABOUT TARIFFS OVER SUMMER
POWELL: PASS THROUGH OF TARIFFS TO CONSUMER IS UNCERTAIN
POWELL: CAN'T ASSUME TARIFF INFLATION HIT WILL JUST BE ONE-TIME
POWELL: SIZE, AMOUNT, AND DURATION OF TARIFFS ARE HIGHLY UNCERTAIN
POWELL: BEGINNING TO SEE SOME TARIFF EFFECTS, EXPECT MORE
POWELL: MANY COMPANIES EXPECT TO PASS ON TARIFF COSTS
POWELL: TAKES TIME FOR TARIFFS TO WORK THROUGH TO END CONSUMER
POWELL: TARIFF EFFECTS ON INFLATION COULD BE MORE PERSISTENT
POWELL: INCREASES IN TARIFFS LIKELY TO BOOST PRICES
Source: Boock Report, Bloomberg News
Bottom line: The uncertainty of the tariff's impact on inflation is likely to keep the Fed on hold over the summer months.
About Trade Signals
Trade Signals is a paid subscription service that posts the daily, weekly, and monthly trends in the markets. It is free for CMG clients.
TRADE SIGNALS SUBSCRIPTION ACKNOWLEDGEMENT / IMPORTANT DISCLOSURES
The views expressed herein are solely those of Steve Blumenthal as of the date of this report and are subject to change without notice. Not a recommendation to buy or sell any security.
Please note that the information provided is not recommended for buying or selling any security and is provided for discussion purposes only. Current viewpoints are subject to change. Please note that the information provided is not recommended for buying or selling any security and is provided for discussion purposes only.
Personal Note: “Football is Life”
“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice, and most of all, love of what you are doing or learning to do."
— Pelé
Great genetics helps, too. You can’t teach speed and quickness. But perhaps most important is the right mindset—fail, fix, fail, fix— it takes love for what you are doing to persevere.
Susan and I are heading to Lincoln Financial Field to watch Chelsea play CR Flamengo this afternoon.
CR Flamengo, officially Clube de Regatas do Flamengo, is one of Brazil’s most iconic and beloved soccer clubs. Founded in 1895 in Rio de Janeiro (originally as a rowing club), Flamengo is now a powerhouse in Brazilian and South American football, with millions of passionate fans known as the "Nação Rubro-Negra" (Red-and-Black Nation).
Flamengo is known for a flair-filled attacking style, a deep-rooted cultural identity, and producing or attracting legendary talent, including Zico, often referred to as the "White Pelé". (I hope I can say that, please know that I am color blind when it comes to race… loving all good people).
In America, we don’t fully understand the intense passion that much of the world has for the beautiful game of soccer (football). If you watched the Ted Lasso series, you’ll remember the infectiously optimistic Dani Rojas saying, “Football is life!”
When I researched Flamengo, I came across a heartwarming story about a player named Gerson. He is a midfielder who played a crucial role in their 2019 Copa Libertadores triumph, South America’s most prestigious club football tournament, similar to Europe’s UEFA Champions League.
Gerson grew up in a modest neighborhood, and his father, Marcão, was a former player who never got the spotlight. Gerson was just a boy when he promised his dad he’d one day make it big and win a major title for him.
In 2019, after Flamengo's dramatic 2-1 win in the Libertadores final (two goals in the final minutes), Gerson found his father in the stands, ran over in tears, and said:
"Pai, é para você. Nós conseguimos."
(Dad, this is for you. We did it.)
The moment was captured on video and widely shared in Brazil, reminding fans not only of the power of perseverance but also of the deeply personal dreams behind the game.
Flamengo is more than just a football club. It's a symbol of Rio, representing working-class pride, resilience, and joy.
Chelsea finished fourth in the Premier League this season, qualifying for next year's UEFA Champions League with a 1-0 win over Nottingham Forest in the last game of the season. I’m a big Cole Palmer fan.
Susan and I have no skin in the game. We are rooting for an exciting game.
Hope you have some fun plans in your near future.
With kind regards,
Steve
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Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
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Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management. Author of Forbes Book: On My Radar, Navigating Stock Market Cycles.
Follow Steve on X @SBlumenthalCMG and LinkedIn.
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This document is prepared by CMG Capital Management Group, Inc. (“CMG”) and is circulated for informational and educational purposes only. There is no consideration given to the specific investment needs, objectives, or tolerances of any of the recipients. Additionally, CMG’s actual investment positions may, and often will, vary from its conclusions discussed herein based on any number of factors, such as client investment restrictions, portfolio rebalancing, and transaction costs, among others. Recipients should consult their own advisors, including tax advisors, before making any investment decision. This material is for informational and educational purposes only and is not an offer to sell or the solicitation of an offer to buy the securities or other instruments mentioned. This material does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors which are necessary considerations before making any investment decision. Investors should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, where appropriate, seek professional advice, including legal, tax, accounting, investment, or other advice. The views expressed herein are solely those of Steve Blumenthal as of the date of this report and are subject to change without notice.
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