Tuesday , June 2 2020
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Tag Archives: Free Posts

Don’t count on a V-shaped recovery

The covid-19 coronavirus outbreak is a human tragedy, just like Ebola, MERS, and SARS. For investors, it has an economic impact. Even before the outbreak, world merchandise trade volume had been falling. New data is likely to show that the outbreak disrupted global supply chains sufficiently to further depress global trade. The market consensus initially expected the effects of the virus to top out in mid or late February, and they consequently penciled in a V-shaped recovery. As China...

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Why this time is (sort of) different

Mid-week market update: Some elements of the market have recently taken on a definitive risk-off tone, such as yesterday’s upside breakout in gold that was achieved in spite of a similar upside breakout in the USD Index.     That has to be equity bearish, right? Well…this time is (sort of) different.   Macro headwinds […]To access this content, you must be a subscriber.

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How to trade a frothy momentum market

Preface: Explaining our market timing modelsWe maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the 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 Asset Allocation Model is an asset allocation model which applies trend following principles based on the inputs of global stock and...

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The guerrilla war against the PBOC

The enemy advances, we retreatIn the wake of the news of the coronavirus infection, the Chinese leadership went into overdrive and made it a Draghi-like “whatever it takes” moment to prevent panic and stabilize markets. When the stock markets opened after the Lunar New Year break, the authorities prohibited short sales, directed large shareholders not to sell their holdings, and the PBOC turned on their firehose of liquidity to support the stock market. Those steps largely succeeded....

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Why the market is rallying on fear – Yes, Fear!

Mid-week market update: What should investors do when faced with competing narratives and historical studies with opposite conclusions? The major market indices made another all-time high today. Ryan Detrick pointed out that ATHs tend to be bullish. That’s because of the price momentum effect that is in force which propels stock prices to new highs.  On the other hand, SentimenTrader observed last week that the market has flashed another series of Hindenburg Omens. Subsequent to that...

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ESG challenges to energy investing

I received a ton of comments from my post three weeks ago on the energy sector (see Energy: Value opportunity, or value trap?). I engaged in multiple long email discussions with several readers on different aspects of that post. This is a follow-up to the publication address two main issues that were raised: The impact of the solar cycle hypothesis on the Earth’s climate, and as a bullish catalyst for the energy sector How to investing in energy stocks in the new ESG era. To briefly recap,...

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Where’s the sentiment reset?

Preface: Explaining our market timing modelsWe maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the 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 Asset Allocation Model is an asset allocation model which applies trend following principles based on the inputs of global stock and...

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Is the melt-up back?

What should investors make of the market’s recent air pocket and subsequent recovery? John Autthers, writing at Bloomberg, proposed an analytical framework where investors view the coronavirus outbreak mainly as a China problem. The MSCI World with China exposure (blue line) has been far more volatile than the MSCI World Index (white line). The companies with high China exposure have tanked in response to the virus scare and dramatically underperformed global stocks.  While global...

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An animal spirits revival?

Mid-week market update: The animal spirits are back. Just look at the price action in Tesla.  In this environment, it is no surprise that the stock market is embarking on a test of the old highs.  Lines in the sand I had set out one line in the sand (see A key test: The Zero Hedge bottom?) of the market might react to news. Notwithstanding the Iowa caucus debacle, in which the results are not fully known yet two days after the event, the market is rallying in the face of news of more...

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A key test: The Zero Hedge bottom?

The website Zero Hedge has built a successful franchise on the internet highlighting bearish and market crash narratives with a series of half-truths, misinformation, and conspiracy theories. A recent screenshot of Zero Hedge headlines gives you an idea of their editorial bias.  In other words, it occupies the supermarket tabloid niche of financial news. A recent Buzzfeed story revealed that Zero Hedge, which had 670,000 followers, was permanently banned from Twitter for violating its...

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