We are at the point in this aging economic cycle where good news is not necessarily good news for investors — especially if it might place upward pressure on interest rates, cautions Jim Stack, value expert, money manager and editor of InvesTech Research.

Since the first discount rate hike over two years ago, the Federal Reserve has raised interest rates 8 times. And the Federal Funds Futures reveals a 76% probability of another rate hike at the FOMC meeting in December.

Short-term rates are now well above 2% and the 2-year Treasury yield is close to 3%. Savers are finally starting to feel good again. At the same time, however, longer-term interest rates are also creeping upward. The 10-year Treasury Bond yield is hitting the highest level in over 7 years. And pressures suggest this upward path is not ending anytime soon.

Meanwhile, the Federal Reserve’s own Yield Spread Model, which tracks the differential between short-term and long-term rates, is on a somewhat ominous course that has preceded bear markets and recessions in the past.

One of the most valuable tools in our technical arsenal is our Negative Leadership Composite (NLC). Inherently, it measures the absence of downside or bearish leadership at the start of bull markets or new bull market legs. And more importantly today, it monitors the unexpected increase in downside leadership [*2 – Distribution] that could lead into a serious sell-off or bear market.

There are times even during an extended bull market that it may turn negative and signal a sudden increase in downside leadership. This new downturn in Distribution was sudden and swift. It sliced right through the threshold that we consider to have a potentially ominous long-term risk. We can find no underlying cause other than the tightening monetary policy and deteriorating housing outlook.

While every deep negative reading in our Negative Leadership Composite does not necessarily signal or confirm a bear market, we are treating this as a serious signal, and prior to the recent sharp plunge, we reduced our investment allocation to 67% invested (and 33% in short-term Treasuries or a mooney market fund).

So as the Wall Street cauldron continues to simmer and stew, there are a number of anecdotal analytical tidbits that you might find both enlightening and useful:

1. While the outcome of the mid-term election and control of Congress is uncertain, the stock market is unlikely to be a determining factor.

2. If you are thinking about selling a home, then now is definitely a good time to do it — but do it quickly. Don’t procrastinate by hoping you will get a higher price next summer.

3. If you are thinking about buying a home, then it might be more prudent to take your time to wait and watch for a better deal. Chances are that home prices will get much more attractive in the year ahead. Even in real estate, there is no last train leaving the station, and great buying opportunities always come around again.

4. As an investor, Fed policy is no longer on your side. Each incremental rate increase is having an effect  and to a vulnerable stock market that seems ultra-sensitive to interest rates, another hike in mid-December just might turn out to be The Nightmare Before Christmas.

5. Also as a conservative investor, remember that each incremental rate hike means you are getting a better return on your cash reserve.

6. It is often better to invest against the crowd, rather than with them. The American Association of Individual Investors (AAII) shows that individual investors have 70% of their assets allocated to stocks — a level that is exceeded less than 5% of the time after excluding the late Tech Bubble years of 1998-2000.

7. Macroeconomic evidence remains surprisingly strong and resilient, including today’s release of the Leading Economic Index — which increased for the twelfth consecutive month. But the stock market always leads the economy by 6-12 months, and the warning message from our Negative Leadership Composite should not be ignored.

History never repeats itself in exact form or fashion. But economic cycles often resemble each other, and the pressures that are developing today are similar to those we saw in 2007 and were present near past cyclical peaks in the stock market.

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