Both long term indicators have turned bearish:
1) The Volatility Trend based indicator turned bearish at the close on December 30, 2015, where the S&P 500 closed at 2063.36.
2) The Stock Trend indicator turned bearish at the close on January 11, 2016, which saw the S&P 500 closing at 1923.67.
When both indicators turn negative, we have a confirmed bearish condition in the stock market. On a tactical basis, positions in stocks will be kept until the market reaches the level it broached on the first bearish signal at 2063.36.
Thursday, January 14, 2016
Thursday, December 31, 2015
Nice Gain on Short Sale - Closing it Out & Going Long at Today's Close (S&P 500 2043.94)
Nice gain shorting the S&P 500 at yesterday's close.
Intermediate indicators remain bearish but we should see a short term bounce. Accordingly, closed the short position & went 100% long position at today's close (S&P 500 2043.94).
Intermediate indicators remain bearish but we should see a short term bounce. Accordingly, closed the short position & went 100% long position at today's close (S&P 500 2043.94).
Wednesday, December 30, 2015
Selling Long, Going Short with 1/2 postition at Today's Close (S&P 500 2063.36)
Secondary indicator turned bearish today. This prompted the following actions:
1)Sold complete SPY long position &
2)Went Short w/1/2 position
Both transactions were done at today's close (S&P 500 2063.36)
1)Sold complete SPY long position &
2)Went Short w/1/2 position
Both transactions were done at today's close (S&P 500 2063.36)
Tuesday, December 29, 2015
Limping into the New Year
Stocks are ending 2015 pretty much how they began it, limping and tired from a bruising year of headline risk, trendless economic data and an ambivalent investing public.
The recovery may be continuing, but nobody much believes in its sustainability as commodity prices collapse, wage stagnation continues and fears of robots and terrorists feature widely in the collective consciousness.
This is actually a good thing.
The slightly elevated volatility and lack of winning asset classes serves as a comforting rebuke to the bubble-callers. Earnings pretty much went nowhere for the S&P 500 – but neither did prices. Small caps and risky bonds fell. Averaging in this year’s flat return for stocks with the robust gains of 2013 and 2014 takes the 3-year and 5-year performance for the asset class more in-line with historical norms.
As of today, S&P gained an above-average 16% for the 3 year period and a perfectly average 10.4% for the 5 year period. In this context, the bull market has not “run on too far, too fast”; rather, its performance is well within what’s to be expected over the long-term.
But there isn’t any great news these days, other than the fact that the Fed got off zero and we didn’t have a crash. So we have that going for us, which is nice…
Short-term traders are watching the price of crude oil to detect tradeable bounce opportunities in the stock market (yes, they are temporarily correlated again) while long-term investors just shrug. A very small handful of macro players got the big picture right – long the dollar, short anything related to global growth or industrial activity. Most of the hotshots, however, did not and are licking their wounds.
But the page turns in a few days, even if the present conditions persist into the New Year.
Everybody loves a clean slate.
The recovery may be continuing, but nobody much believes in its sustainability as commodity prices collapse, wage stagnation continues and fears of robots and terrorists feature widely in the collective consciousness.
This is actually a good thing.
The slightly elevated volatility and lack of winning asset classes serves as a comforting rebuke to the bubble-callers. Earnings pretty much went nowhere for the S&P 500 – but neither did prices. Small caps and risky bonds fell. Averaging in this year’s flat return for stocks with the robust gains of 2013 and 2014 takes the 3-year and 5-year performance for the asset class more in-line with historical norms.
As of today, S&P gained an above-average 16% for the 3 year period and a perfectly average 10.4% for the 5 year period. In this context, the bull market has not “run on too far, too fast”; rather, its performance is well within what’s to be expected over the long-term.
But there isn’t any great news these days, other than the fact that the Fed got off zero and we didn’t have a crash. So we have that going for us, which is nice…
Short-term traders are watching the price of crude oil to detect tradeable bounce opportunities in the stock market (yes, they are temporarily correlated again) while long-term investors just shrug. A very small handful of macro players got the big picture right – long the dollar, short anything related to global growth or industrial activity. Most of the hotshots, however, did not and are licking their wounds.
But the page turns in a few days, even if the present conditions persist into the New Year.
Everybody loves a clean slate.
Wednesday, December 23, 2015
Long Term Indicators Have Turned Positive
Long term indicators (involving volatility trends and moving averages) have turned positive and stock portfolios are fully long as of today's close (S&P 500 at 2064).
Tuesday, August 10, 2010
The Pause that Refreshes? (Summer 2010 Update)
2010 has witnessed increased market volatility and mounting uncertainty as bulls and bears have waged a tug of war regarding the future prospects of corporate earnings and economic growth. Stock markets started the year strongly on expectations of continued robust growth. In April, a number of economic indicators began to flat-line or weaken and fears over Greece’s mounting debt quickly spiraled into a broader concern about sovereign debt in Europe and the sustainability of the European Union as a whole.
After an initially slow response, the EU made a $1 trillion commitment to support troubled member nations and the Euro crisis appeared to stabilize. As July began, markets turned their attention to corporate earnings results and, more importantly, company guidance towards future business conditions and expectations. Results have been better than expected and while there are valid arguments why a “double-dip” recession may occur, there are also reasons why it may not, including low interest rates, low inflation, record corporate earnings and cash flows, and continued growth in the economy albeit at a slower pace.
The economic uncertainty witnessed this year has impacted the equity market. the stock market rally which began in March 2009 has stalled and a more range bound, choppy trading environment has enveloped the equity markets. Historically, stock market performance tends to diminish in the second year of a bull market and in the second year of an economic expansion, both of which we are now in.
While market behavior does not always repeat, it often rhymes. After a period of a strongly trending environment, as we have recently been in, the market often goes through a period of rest and profit-taking. After a period of consolidation, markets more often than not resume the previous trend. Interestingly, the current 2009-2010 market cycle closely mirrors that of 2003-2004. If 2010 continues to mirror the market action of 2004, we may be in a choppy, high volatility environment for a few more months before the potential for a market recovery near the end of the year.
Our portfolios are currently bullishly positioned but we have also made defensive moves at times and are watching several key indicators which may cause further defensive adjustments to future portfolio allocations. Many key technical indicators have turned mixed with the recent market volatility but are still mostly bullish (institutional fund flows, moving averages, market breadth and volume). We continue to monitor these indicators closely and may make tactical adjustments as necessary.
After an initially slow response, the EU made a $1 trillion commitment to support troubled member nations and the Euro crisis appeared to stabilize. As July began, markets turned their attention to corporate earnings results and, more importantly, company guidance towards future business conditions and expectations. Results have been better than expected and while there are valid arguments why a “double-dip” recession may occur, there are also reasons why it may not, including low interest rates, low inflation, record corporate earnings and cash flows, and continued growth in the economy albeit at a slower pace.
The economic uncertainty witnessed this year has impacted the equity market. the stock market rally which began in March 2009 has stalled and a more range bound, choppy trading environment has enveloped the equity markets. Historically, stock market performance tends to diminish in the second year of a bull market and in the second year of an economic expansion, both of which we are now in.
While market behavior does not always repeat, it often rhymes. After a period of a strongly trending environment, as we have recently been in, the market often goes through a period of rest and profit-taking. After a period of consolidation, markets more often than not resume the previous trend. Interestingly, the current 2009-2010 market cycle closely mirrors that of 2003-2004. If 2010 continues to mirror the market action of 2004, we may be in a choppy, high volatility environment for a few more months before the potential for a market recovery near the end of the year.
Our portfolios are currently bullishly positioned but we have also made defensive moves at times and are watching several key indicators which may cause further defensive adjustments to future portfolio allocations. Many key technical indicators have turned mixed with the recent market volatility but are still mostly bullish (institutional fund flows, moving averages, market breadth and volume). We continue to monitor these indicators closely and may make tactical adjustments as necessary.
Tuesday, October 20, 2009
Strong earnings from Apple, Texas Instruments and Caterpillar did not help the market today and we saw about a 1% sell-off across various markets. Our positions in Nasdaq 100 (which was unchanged on the day) and the banking sector considerably outperformed the broader market.
Yahoo came out with earnings after hours which were better than expected. Wednesday brings data on inflation at the consumer level.
Portfolio moves for Tomorrow (Wednesday):
The Dynamic Signal Strategy is 100% long; our position remains in US large cap value and we shifted at the close from Nasdaq 100 to US small cap value.
The Market Rotation Strategy shifts from Nasdaq 100 to US small caps.
The Sector Rotation Strategy moves from banking back into precious metals.
Yahoo came out with earnings after hours which were better than expected. Wednesday brings data on inflation at the consumer level.
Portfolio moves for Tomorrow (Wednesday):
The Dynamic Signal Strategy is 100% long; our position remains in US large cap value and we shifted at the close from Nasdaq 100 to US small cap value.
The Market Rotation Strategy shifts from Nasdaq 100 to US small caps.
The Sector Rotation Strategy moves from banking back into precious metals.
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