The VIX actually ended down a few pennies and the indices were basically flat so XIV was clearly where the action was focused.
Actionable Risk Opportunities, Tactical Musings and Timing Indicators for Investors
Tuesday, June 10, 2014
Bob=0, M3 Robot=1......6.10.14
Today was another example of how much smarter M3 is than my feeble old brain. I mentioned yesterday than although the short term ALERT had crossed the momentum raankings still had XIV in a vested position and that paid off handsomely today as XIV stumbled out of the box and then gradually rose to end the day with a 1.75% gain. Sometimes you just have to play the system and not try to second guess it.
The VIX actually ended down a few pennies and the indices were basically flat so XIV was clearly where the action was focused.
The VIX actually ended down a few pennies and the indices were basically flat so XIV was clearly where the action was focused.
Monday, June 9, 2014
XIV Reverses Midday on ALERT...6.9.14
It was smooth sailing early on with a little red on the Qs but the indicies eventually went all green bringing DIA 170 even closer to reality. The caution was that both VIX and XIV were green....a contrarian divergence of momentum. Then, midday, XIV reversed to the downside and closed in the red with a vengeance (see SPY Trader chart below).
This action caused the M3 ALERT to signal a STOP although our momentum ranking remains intact.
Regular M3 users know its better to be safe than sorry when such ALERT reversals occur as they may harbinger bigger and/or longer drawdown risks. With SPY and DIA kicking RSI2 readings of 99%+ technical bloggers were almost universal in their prediction of a near term downturn. Caveat emptor.
This action caused the M3 ALERT to signal a STOP although our momentum ranking remains intact.
Regular M3 users know its better to be safe than sorry when such ALERT reversals occur as they may harbinger bigger and/or longer drawdown risks. With SPY and DIA kicking RSI2 readings of 99%+ technical bloggers were almost universal in their prediction of a near term downturn. Caveat emptor.
Sunday, June 8, 2014
SPY 200, DIA 170...Just a Blink Away...6.8.14
Friday's action was more of the same bullish low volume melt up.
Employment data looked OK, productivity is on the rise and consumer confidence is riding high.
VIX hit a 14 month low and plunged dramatically on Friday's close.
It's no wonder that XIV has been such a $$ success in the M3 model.
And, although the markets are almost comically overbought there's no indication that the party is about to end. Well, there's the technical support/resistance/PE argument that says the markets should go down. There's the seasonal argument that summer is historically an almost net zero game and there's the herd mentality that says the markets are so high they have to come down.
So far, all these contrarian views have proved costly to short sellers and cash holders.
Do I regret not being 100 % vested in M3 over the past couple weeks? Absolutely! But I'm conservative by nature and divide investment capital into several porfolios such as Small World, Gamma, and M3 in order to mitigate risk exposure in the face of market uncertainty.
That being said, it will be interesting to see what catalyst, if any, gives the bulls a reason to head for the exit gate. For now it looks like smooth sailing to new whole number highs.....which the market loves.
Employment data looked OK, productivity is on the rise and consumer confidence is riding high.
VIX hit a 14 month low and plunged dramatically on Friday's close.
It's no wonder that XIV has been such a $$ success in the M3 model.
And, although the markets are almost comically overbought there's no indication that the party is about to end. Well, there's the technical support/resistance/PE argument that says the markets should go down. There's the seasonal argument that summer is historically an almost net zero game and there's the herd mentality that says the markets are so high they have to come down.
So far, all these contrarian views have proved costly to short sellers and cash holders.
Do I regret not being 100 % vested in M3 over the past couple weeks? Absolutely! But I'm conservative by nature and divide investment capital into several porfolios such as Small World, Gamma, and M3 in order to mitigate risk exposure in the face of market uncertainty.
That being said, it will be interesting to see what catalyst, if any, gives the bulls a reason to head for the exit gate. For now it looks like smooth sailing to new whole number highs.....which the market loves.
Thursday, June 5, 2014
What? Me Worry?...6.5.14
Wall of worry? Not today. New index highs all around and modestly improved volume although the effect of short covering may have contributed to some of the golden glow. Once again XIV blasted off like a missile and booked some impressive gains.
Somehow the M3 SPY Trader just keeps guiding us to the right side of the market and the algorithm has effectively trumped my subjective risk on attitude over the past few days.
Sometimes you just have to follow the signals and believe that a systematic algorithmic trading program will deliver the goods.....this has certainly been the case with M3 this year.
Somehow the M3 SPY Trader just keeps guiding us to the right side of the market and the algorithm has effectively trumped my subjective risk on attitude over the past few days.
Sometimes you just have to follow the signals and believe that a systematic algorithmic trading program will deliver the goods.....this has certainly been the case with M3 this year.
Wednesday, June 4, 2014
The Problem with Non-Trending Markets....6.4.14
Today's action was the inverse of yesterday, with marginal gains and a fundamentally neutral outlook.
That being said, the markets have gone from a clear trending paradigm to a consolidation mode.
Is it difficult to make money in such markets? Well, yes.. You could use options strategies such as covered calls or collars to protect existing positions, collect premium and mitigate potential loss. But with trending momentum fading the safety of cash is always a viable alternative to preserve capital while waiting for the next trend momentum to develop.
That being said, the markets have gone from a clear trending paradigm to a consolidation mode.
Is it difficult to make money in such markets? Well, yes.. You could use options strategies such as covered calls or collars to protect existing positions, collect premium and mitigate potential loss. But with trending momentum fading the safety of cash is always a viable alternative to preserve capital while waiting for the next trend momentum to develop.
Tuesday, June 3, 2014
Slow Turn.....6.3.14
M3 finally went to cash on XIV at the close, after a premature ALERT on the pre-close Friday. XIV, SPY, DIA and QQQ all closed in the red today but in the case of the indices the loss was so tiny as to warrant no statistical significance. We witnessed selective weakness in various stocks but no particular sector sag.
XLU did show strength although, once again, the momentum was not dramatic.
Note the TrendX charts of SPY and XIV in the right hand side panel...these little dashboards of momentum and relative strength have provided valuable signals of impending reversals in the past.
XLU did show strength although, once again, the momentum was not dramatic.
Note the TrendX charts of SPY and XIV in the right hand side panel...these little dashboards of momentum and relative strength have provided valuable signals of impending reversals in the past.
Monday, June 2, 2014
Holding Pattern...6.2.14
Turns out Friday's pre close ALERT was a bit premature as at the close the signal switched back to XIV vested status.
In early going today XIV did take a hit but then slowly worked into a modest green position by the close and M3 currently signals XIV as a vested position.
That being said, volume remains well below "normal" levels and we are now in serious overbought territory. This observation in not unique and more and more blog traffic favors the short side......which means absolutely nothing in terms of forecasting what the markets will do next.
For my own accounts I'm scaling back Longs and adopting a more defensive policy for the time being.
In early going today XIV did take a hit but then slowly worked into a modest green position by the close and M3 currently signals XIV as a vested position.
That being said, volume remains well below "normal" levels and we are now in serious overbought territory. This observation in not unique and more and more blog traffic favors the short side......which means absolutely nothing in terms of forecasting what the markets will do next.
For my own accounts I'm scaling back Longs and adopting a more defensive policy for the time being.
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