By Stephen Blumenthal, CEO, CMG Capital Management Group
The market feels heavy and the “sell in May and go away” seasonality issues are immediately in front of us. Although aged the overall trend remains positive as measured by Big Mo, 13/34-Week EMA and because volume demand continues to be stronger than volume supply (more buyers than sellers). “Don’t Fight the Fed” remains an important theme (at least for now).
- Cyclical Equity Market Trend: The Primary Trend Remains Bullish for Stocks
- Volume Demand Continues to Better Volume Supply: Bullish for Stocks
- Cyclical Trend for Bonds Remains Bullish
In summary, both Big Mo (Momentum) and the 13/34-Week EMA suggest that the market remains in a cyclical bull market (up trending) state. I believe trend is most important; therefore, buy the dips (on extreme pessimism) as long as the 13/34-Week Blue EMA line is above the Red EMA line and own equities (but hedged as valuations are high, the market bull is aged; thus, overall equity market risk is high).
From an investment management perspective, I’ve followed, managed and written about trend following and investor sentiment for many years. I find that reviewing various sentiment, trend and other historically valuable rules based indicators each week helps me to stay balanced and disciplined in allocating to the various risk sets that are included within a broadly diversified total portfolio solution.
My objective is to position in line with the equity and fixed income market’s primary trends. I believe risk management is paramount in a long-term investment process. When to hedge, when to become more aggressive, etc.
Trade Signals History: Trade Signals started after a colleague asked me if I could share my thoughts (Trade Signals) with him. A number of years ago, I found that putting pen to paper has really helped me in my investment management process and I hope that this research is of value to you in your investment process.
For the full story, including charts and graphs, and important disclosures see Trade Signals: New Recession Forecasting Chart (Signaling No Recession Just Yet).