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Archives for August 2015

Market Commentary And Strategy Update

Posted on 08.24.15 |

CMG Capital Management Group CEO Steve Blumenthal on theStreet about high yield bondsBy Stephen Blumenthal, CEO, CMG Capital Management Group

We’ve been talking about the overvalued and aged cyclical bull market each week in Trade Signals and On My Radar for quite some time. Given the last three days of selling pressure – the word “crash” comes to mind. We’ve seen this before yet it doesn’t make the scare any less scary for your clients.

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Categories: Uncategorized

Equity Market Risk Elevated

Posted on 08.20.15 |

CMG Capital Management Group Equity Risk BarometerI’m moving up the level of equity risk due to several factors: One is a change in signal on volume demand vs. volume supply.  Selling pressure is dominating buying demand, which is a concern in a period of low liquidity. Valuations remain stretched and the cyclical bull market is aged.

Trend evidence is positive but deteriorating.  Sentiment is in the Extreme Pessimism zone which is historically bullish for equities.  I lean towards giving upside the benefit of the doubt; however, I recommend to stay hedged on your equity exposure and include a number of other risk streams (such as liquid alternatives – which I define as anything other than traditional stock and bond buy-and-hold) in your portfolio(s).

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Categories: Uncategorized

Blumenthal on High Yield in Barron’s

Posted on 08.19.15 |

Barron's logoCMG Capital Management Group CEO Steve Blumenthal talks to Barron’s “Income Investing” columnist Amey Stone about high yield bonds. Excerpt below from the  Barron’s story Pain in High Yield Worsens:

Steve Blumenthal, CEO of CMG Capital Management Group, runs a tactical strategy that moves in and out of high yield based mainly on price momentum. He has largely been out of high yield since July. He thinks that demand for junk bonds could increase now that yields are above 7%. He will get back in when the index starts to move higher.

“You have to be very nimble with high yield exposure today,” Blumenthal told Barron’s.

Categories: Uncategorized

Trend is Your Friend in High Yield

Posted on 08.19.15 |

There are a number of ways to look at high yield bonds.  For years, I trade with the view that “the trend is your friend.”

One of the charts that I look at frequently is below.  It looks at small cap stocks (they are highly correlated with high yield bond funds and HY ETFs).

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Categories: Uncategorized

Trade Signals: Overall Trend Weakening But Bullish

Posted on 08.13.15 |

CMG Capital Management Group Equity Market Risk Barometer August 12, 2015I believe China’s surprise Yuan devaluation keeps the Fed on hold.  Raising rates will further strengthen the dollar.  A stronger dollar may ultimately be our greatest market risk – triggering crisis in the $9 trillion EM U.S. dollar denominated debt.

While the US economy looks ok, the global economy is at or near recession.  We are in a debt driven deflationary spiral.  So as market stress intensifies we collectively hope and pray for Fed support.  Watch for Fed signaling that September is off the table.  All about that Fed – until it’s not.

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Categories: Uncategorized

China Currency Move Stirring Global Risk

Posted on 08.12.15 |

China’s Currency Move Causing Major Market Indigestion – Dow Testing December 2014 Low

$INDU chart
Nearing an important test of its Feb and December lows.  Concerning is what technicians call the “death cross” where the 50 day moving average line (dotted purple) crosses below the 200 day moving average line (dark blue).

The cyclical bull market move is aged, overvalued and starting to show signs a cyclical bear period may be near.

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Categories: Uncategorized

Eurozone Crisis Will Get Worse Says Mauldin

Posted on 08.12.15 |

France isn’t that far away from a sovereign debt crisis, and Greece’s problems aren’t going away either, according to John Mauldin, Chairman of Mauldin Economics.

Mauldin described Greece’s latest agreement with its creditors as just another example of kicking the can down the road. ‘They’re borrowing money that they can’t pay, on top of money that they already can’t pay,’ said Mauldin. On Tuesday, Greece reached an agreement with its creditors on new bailout terms, but Mauldin believes a Greek exit from the eurozone remains a possibility in the future. ‘There has never been a monetary union in the history of the world that has stayed together, that hasn’t fallen apart, such as the Euro, without having a fiscal union,’ said Mauldin, who believes the next crisis will prompt the creation of a true fiscal union. ‘I think they actually do this, and I think they do this when France itself goes into a sovereign debt crisis. And France is not that far away from it.’ Mauldin spoke with TheStreet’s Rhonda Schaffler at Camp Kotok, an annual gathering of economists and money managers in Maine. See the Street: Economist John Mauldin Says Eurozone Crisis Will Only Get Worse

RELATED: On My Radar: High Probability of a Global Recession

Categories: Uncategorized

Distressed Debt Reaches 2012 Level

Posted on 08.10.15 |

Distressed debt reaching highest level since August 2012. #HighYield (Chart of the Day) http://t.co/icWy68pA5r pic.twitter.com/MouZ194mxM

— Kathy Jones (@KathyJones) August 10, 2015


RELATED:

Junk Bonds Are The Investment Opportunity Of A Lifetime, Just Not Yet

Watch Junk Bonds For Early Warnings Of A New Financial Crisis

Categories: Uncategorized

The Correction Gains Momentum

Posted on 08.10.15 |

David Stockman, author of "The Contra Corner"

David Stockman, author of “The Contra Corner”

“US stocks declined for the seventh straight day on Friday, a dismal streak not seen for almost four years. The S&P 500 is now down 5 of the last 7 weeks although in total it is just 2.5% below the all time high. If you just own the index I suppose that is not much to be concerned about but there are warning signs galore. The S&P 500 is also basically unchanged in price for now over 8 months dating back to late November of 2014. That might not be a correction in price according to the accepted definition but it probably qualifies as a correction in time. And if you own anything other than the index you are probably suffering your own personal correction as the index itself only tells part of the story.

“If one defines rising as above the 200 day moving average (another one of those widely accepted definitions) then the S&P 500 is barely hanging on to bull market status with about 54% of the index above that line.

“Unfortunately, most other indexes show a majority of their constituents below that magic barrier. Despite all the recent hoopla about record highs, only 43% of NASDAQ stocks are still in uptrends. The NYSE fares even worse with just 39% moving higher. The small cap indexes have done even worse than their large cap counterparts; the Russell 2000 is no higher now than it was in March 2014, 5 quarters ago. So, I don’t know if we call it a correction but by time and price the individual constituents of the stock market indexes are not faring nearly as well as the indexes themselves. That is a result of using capitalization as a weighting factor, with the largest stocks having the greatest influence over the index.”

See the full story: The Correction Gains Momentum – Stocks Down 7 Straight Days by David Stockman.

Categories: Uncategorized

All About Margin Debt

Posted on 08.10.15 |

Steve Blumenthal, CEO, CMG Capital Management Group

Steve Blumenthal, CEO, CMG Capital Management Group

A question came in from an advisor client wanting to know what I think about the record high level of margin debt.  Margin debt is clearly a good thing on the way up and it can be hazardous in down markets when margin calls kick in.

Forced selling can be a painful reality when a long-term bull market ends.  My answer is that while margin debt is at an all time high (indicating excessive speculation), it is currently more supportive to the market than not.

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Categories: Uncategorized

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