Mid-week trading update: This morning started off well for the bears - until oil prices began to rally. I wrote on the weekend that while my inner investor was constructive on stocks, my inner trader still believed that downside risk remained. Those views are unchanged. Here is where the SPX stands today. The rally was unable...
Recently, Business Insider featured a chart of long-term equity returns based on data from Bob Shiller. The lesson was, the longer your time frame and the more patient you are, equities win. That`s been a lesson taught to generations. Based on this data, equities has become the foundation of any portfolio for anyone building a...
Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model...
Regular readers recognize that my inner investor is bullish on stocks, though my inner trader remains a little leery and expects further market choppiness (see Profit by thinking like Big Money). Despite my longer term bullishness, I tweeted this morning that I had tactically taken a small, underline the word "small", short position in SPX...
I had been meaning to write about this earlier, but I didn`t find the time. Kyle Bass caused a stir last week with his letter to his investors when he wrote that China was on the verge of a major devaluation and financial blow-up (via Valuewalk): Our research suggests that China does not have the...
Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model...
Last year, my Valentine's Day post was about how Facebook analyzed the behavior of who fall in love (see Falling in love, the Facebook version). This year, I thought that I would highlight the price of success for hedge fund managers. I highlight a research paper entitled Limited Attention, Marital Events, and Hedge Funds. Here...
In theory, stock prices should be poised to rally. The SPX is testing a key support zone dating back to October 2014 and it is experiencing positive divergences on the 5 and 14 day RSI. If it did bottom here, the initial target would be the first Fibonacci retracement level at about 1935, with further...
During periods of market turmoil like the one we are experiencing, it's important to keep your eye on the ball and not to get overly distracted. If I had to just had to watch just one thing, it would be how forward 12-month EPS are evolving. That's because Ed Yardeni found that forward EPS is highly...
Model signal summary Ultimate market timing model: Buy equities Trend Model signal: Risk-off Trading model: Bearish (downgrade) The "Ultimate Market Timing Model" is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. The Trend Model is an asset allocation model which applies trend following principles based...
Regular readers will know that I have been relatively constructive about stock prices longer term, though I am bracing for further short-term volatility. However, the level of anxiety among my readers is high and I have had to play a game of whack-a-mole with bearish themes (as an example see Why China won't blow up...
I had a response to my last blog post in which I indicated that the contagion effects from a China slowdown had been contained (see Bottomed, but wait for a re-test of the lows). A reader pointed to comments by Worth Wray worried aloud about the possible catastrophic of a RMB devaluation. While I had initially...
Model signal summary Ultimate market timing model: Buy equities Trend Model signal: Risk-off Trading model: Bullish The "Ultimate Market Timing Model" is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. The Trend Model is an asset allocation model which applies trend following principles based on...
In the past several weeks, I have been seeing rising levels of angst in social media as the stock market tanked. While anxiety is certainly appropriate for traders, this kind of volatility shouldn't be a concern for investors as long as they have a plan. Learning to redefine your objectives Here is what I mean...
I've been giving much thought about the investment philosophy behind the post over at Philosophical Economics about the GTT market timing model. To understand what`s behind his investment philosophy, let`s start back with first principles of equity investing. The equity claim represent the "stub" claim behind debt, or bond financing in a company and therefore...
As Saudi Arabia`s budget has come under pressure from low oil prices, I see that the Kingdom (KSA) has announced a diversification initiative into IT, healthcare and tourism (via CNBC): Saudi Arabia outlined ambitious plans on Monday to move into industries ranging from information technology to health care and tourism, as it sought to convince...
Trend Model signal summary Trend Model signal: Risk-off Trading model: Bullish The Trend Model is an asset allocation model which applies trend following principles based on the inputs of global stock and commodity price. In essence, it seeks to answer the question, "Is the trend in the global economy expansion (bullish) or contraction (bearish)?" My...
The bad news just doesn't stop coming for oil. It all began when Saudi Arabia had turned on the production spigots to counter growing production from American frackers, and now it has to contend with the geopolitical dimensions of the growing power of Russia and Iran in the Middle East. The calls are growing for...
Trend Model signal summary Trend Model signal: Risk-off Trading model: Bullish (upgrade) The Trend Model is an asset allocation model which applies trend following principles based on the inputs of global stock and commodity price. In essence, it seeks to answer the question, "Is the trend in the global economy expansion (bullish) or contraction (bearish)?"...
Dana Lyons recently wrote a terrific piece about the level of complacency in the current bout of stock market weakness. The SPX had fallen over 9% in two weeks, but the VIX Index was barely challenging its December highs and it was nowhere near the highs set during the August/September selloff. He found that past...
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