Crisis Averted?...03.02.16

Well, maybe...Today was a nice follow through to Tuesday's big jump but those closing bars looked a lot like short covering moves.  Only time will tell.  In the meantime the M6 market spectrum model continues to chug along in both the momentum and mean reversion modes., suggesting that we may be approaching a period of technical "normalcy" when trending models such as M6 tend to do very well. There's still a lot of air between current (overbought) levels and previous highs and the fear of being left behind is never a good reason for vesting money but the current signs are encouraging.

TLT and XLU PONZO Forecasts....03.01.16

As a follow up to yesterday's Ponzo Updates here are the outlooks for TLT and XLU.
Unfortunately, they are in sync with the weakness indicated by the SPY and VIX models.
At this point the outlook is extremely ominous for the bulls.
We may in fact blow through this potential inflection point and get some low volatility consolidation for a bit more time but strictly from a risk modeling viewpoint the trend is down.

Line in the Sand....02.29.16

This week's Ponzo studies for SPY and VIX indicate we are at a most dangerous time. We've been watching the Doom's Day scenario slowly creep up on us and now its here. What's scary is that is virtually all risk iterations the crash scenarios have the lowest error factor. This of course is just one of 5 possible outcomes in the next week but a measure of respect for its implications may be the wise course of action.  Today's painful reversal was not a good omen for the bulls.
By the way...now we have a Saudi crisis to add to the global meltdown.

VDX Updates for SPY, VIX and TLT....02.28.16

This week's updates have neutral levels displayed for equities, volatility and bonds.  That leaves us with only choices going forward...up or down. With earnings behind us the markets will be focused again on geopolitical concerns, chief of which are the threat of Britain's exiting the EU and the danger of Italy once more falling into another debt quagmire.
Current hedge fund positions are increasingly bearish.

M11 Utilities XLU Update.....02.25.16

The M11 XLU top 2 model has proven to be one, if not the best, performing model Mosaic has followed in 2016.  The drawdown metrics continue to be outstanding and even though XLU itself has stalled on several occasions the rotation into the top momentum components has proven a winning strategy.
We're just showing the momentum mode for now but when and if XLU starts to deteriorate then a switch into the mean reversion mode may be prudent and we'll post such developments accordingly.

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Key Reversal Day....02.24.16

SPY plunged right down to our previously stated 190 support level and then promptly reversed from a nervous S3 pivot to finish at R1 ...a 300 point swing.  The M6 is now pointed at QQQ as the best bet (mean reversion mode).  Note the SPY/SH skew is now at the zero line........
Today's action also dramatically highlights the value of trailing stops especially for delta neutral players.
For M1/.M3 owners long term user Little Bill suggests running the M3 MR mode update about 45 minutes after the opening as it often provides an early warning that a trailing stop may be appropriate that day (such was the case today).

Risk Management Still Job #1....02.23.16

Those pesky Brits are threatening to bail from the EU and it rattled the overseas markets overnight and now the US markets in lockstep which are crumbling badly into the close.
A quick check of the M6 model with the beta neutral portfolio shows a distinct divergence in the momentum and mean reversion modes with the current skew favoring the short side (SH).