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Near-term choppiness but the long-term cycle backdrop remains bullish - I continue to expect equity markets to remain in a choppy range near-term but would encourage readers to not lose sight of the bullish long-term cycle backdrop. Our market indicators, tracking 2-4 year moves, continue to build to the upside from deeply oversold levels and are unlikely to show evidence of peaking until well into 2021 and likely not until 2022. For reference, the average 4-year cycle return, during secular bull markets, is 100-110%. Obviously, there is no guarantee this will develop, but if history is any guide, then a rally to S&P 4400-4600 (+25-30%) is not unreasonable before a cycle peak develops. In addition, the relative performance of the S&P 500 versus one of the most widely tracked bond indices, the Barclay’s Aggregate Bond Index, recently broke above its 2018-2020 trading range. I view this event as a long-term bullish technical signal that is likely to impact passive and active fund flows well into 2021. Trend following CTA accounts are just one example of the type of funds that will allocate more capital to equities away at the expense of funds.

Bullish: Advance-decline lines for the S&P and NYSE are making new cycle highs. While I expect equity markets to remain ch...

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