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Trade Signals – Sentiment Better, Risk On Remains

Posted on 09.07.16 |

With a nod towards broad portfolio diversification, following is a quick summary of what I am seeing this week — organized by investment category (equity markets, fixed income and liquid alternatives):

Equity Markets: Investor Sentiment moved from excessive optimism to neutral.  The trend remains positive.  Supply and demand continues to evidence more buyers than sellers (a bullish signal).  Don’t Fight the Tape or the Fed moved from 0 to -1.  This next chart shows us why we want to watch out for -2 (an unfavorable trend and unfriendly Fed environment):

09.07.01

The 13/34-Week EMA trend indicator remains bullish.  The CMG NDR Large Cap Momentum Index is nearing a buy signal; its model trend line is bullish.

A quick note on the chart above:  NDR shows price appreciation and not total return.  So, the Buy/Hold + 8.55% Gain/Annum would be higher with dividends added in.  That would be more informative; however, since we are comparing the price appreciation in each zone (+2, +1, Neutral (0) as reflected), I believe the data is telling and useful in giving us a sense for which environments suggest more or less risk.  Actual returns in each category are higher.  A thank you to an astute reader.

Fixed Income: The 10-year Treasury Yield is back down to 1.52%.  Money is voting with its pocket… saying the Fed won’t raise rates.  The Zweig Bond Model remains bullish on bonds and our HY remains in a buy signal.  The underlying HY fundamentals are terrible; however, this is another good example where trend following can be a good friend.  We will ride the uptrend until it reverses.  Further, we see “JNK” and “PCY” exhibiting the strongest relative strength in fixed income (this from a universe of nine ETFs ranging from short-term and long-term Treasury bonds, corporate bonds, munis, high yield, emerging market, inflation and developed market bonds).

Liquid Alternatives: The CMG Opportunistic All Asset ETF Strategy is currently allocated approximately 81% to equities and 19% to fixed income.  We are seeing strong relative price leadership in “EEM” (Emerging Markets), “VT” (Vanguard Total World Stock ETF), “QQQ” and “IYW” (Technology ETFs) and “IYF” (U.S. Financials).  Our two fixed income ETFs, “EDV” (Vanguard Extended Duration Treasury) and “TLT” (iShares 20+ Year Treasury Bond), have rallied nicely.  Biotech looks to be recovering from the Hillary Clinton statements.  For weightings by asset class, please see the CMG Opportunistic All Asset Strategy pie chart below.  Gold (“GLD”) looks to have held support at 125.  The cyclical trend for gold remains higher as evidenced by the Gold chart you’ll find in the full post (link below).

For charts, analysis, and commentary see the rest of the story in Trade Signals — Sentiment Better, Risk On Remains.

The current opinions and forecasts expressed herein are solely those of Steve Blumenthal and are subject to change.  They do not represent the opinions of CMG.  CMG’s trading strategies are quantitative and may hold a position that at any given time does not reflect Steve’s forecasts.  Steve’s opinions and forecasts may not actually come to pass.  Information on this site should not be used as a recommendation to buy or sell any investment product or strategy.

Categories: Tactical Investment Strategies Tags: CMG NDR Large Cap Momentum Index, CMG opportunistic All Asset Strategy, Equities, ETF, fixed income, Gold, high yield, Tactical Investing, Trade Signals, Zweig Bond Model

Trade Signals – Overvalued, Sentiment Remains in Bullish Extreme (S/T Bearish for Stocks), Cyclical Bull Uptrend

Posted on 08.31.16 |

With a nod towards broad portfolio diversification, following is a quick summary of what I am seeing this week — organized by investment category (equity markets, fixed income and liquid alternatives):

  • Equity Markets: The weekly Ned Davis Research (NDR) investor sentiment remains extremely optimistic (short-term bearish for equities). The daily sentiment indicator is now neutral from extreme optimism (neutral for equities).  At this time, there’s more buying demand vs. selling supply (a bullish signal), the market trend remains positive.  Don’t Fight the Tape or the Fed moved recently from a +1 to 0 (now neutral on equities).  The 13/34-Week EMA trend indicator remains bullish.  The CMG NDR Large Cap Momentum Index is nearing a buy signal.  Valuations, which we’ll look at again in this Friday’s On My Radar, remain extreme (overvalued), so while trend evidence suggests a neutral to positive view on equities, I continue to favor an underweight exposure to equities and hedge.
  • Fixed Income: HY remains in a buy signal or uptrend and the Zweig Bond Model remains in a buy (bullish on high quality fixed income). We see “JNK” and “PCY” exhibiting the strongest relative strength in fixed income (this from a universe of nine ETFs ranging from short-term and long-term Treasury bonds, corporate bonds, munis, high yield, emerging market, inflation and developed market bonds).  It’s been a good year for bonds.
  • Liquid Alternatives: Gold (“GLD”) is testing support at 125. The CMG Opportunistic All Asset ETF Strategy is currently allocated approximately 81% to equities and 19% to fixed income.  We allocated to “IYF,” a U.S. Financial ETF in the last week, trading out of “BND,” a bond ETF.  Emerging markets and technology continue to show strong price leadership.  Biotech has had a tough week.

For charts, analysis, and commentary see the rest of the story in Trade Signals – Overvalued, Sentiment Remains in Bullish Extreme (S/T Bearish for Stocks), Cyclical Bull Uptrend.

The current opinions and forecasts expressed herein are solely those of Steve Blumenthal and are subject to change.  They do not represent the opinions of CMG.  CMGs trading strategies are quantitative and may hold a position that at any given time does not reflect Steve’s forecasts.  Steve’s opinions and forecasts may not actually come to pass. Information on this site should not be used as a recommendation to buy or sell any investment product or strategy.

Categories: Tactical Investment Strategies Tags: CMG opportunistic All Asset Strategy, Equities, ETFs, Steve Blumenthal, Stocks, Tactical Investing, Trade Signals

Trade Signals For Equities, Fixed, Liquid Alts

Posted on 08.25.16 |

CMG Capital Management Group Inc.With a nod towards broad portfolio diversification, here is a quick summary of what I am seeing — organized by investment category (equity markets, fixed income and liquid alternatives):

  • Equity Markets: Investor sentiment remains extremely optimistic (short-term bearish for equities), Don’t Fight the Tape or the Fed moved recently from a +1 to 0 (now neutral on equities). The 13/34-Week EMA trend indicator remains bullish.  The CMG NDR Large Cap Momentum Index is nearing a buy signal.  While valuations remain extreme (overvalued), trend evidence suggests a neutral to positive view on equities (hedged).
  • Fixed Income: High Yield remains in a buy signal or uptrend and the Zweig Bond Model remains in a buy (bullish on high quality fixed income).
  • Liquid Alternatives: The CMG Opportunistic All Asset ETF Strategy is currently allocated 73% to equities and 27% to fixed income. Recent additions include technology, biotech and Emerging Market equities.  For weightings by asset class, please see the pie chart below.

Several additional thoughts: Investor sentiment remains extremely optimistic (which is generally short-term bearish for equities).  Due to high valuations and the aged nature of the cyclical bull market, I favor underweighting exposure to equities (hedged).  I favor an endowment-like portfolio with approximately 30% exposure to equities (hedged), 30% fixed income (tactically managed) and 40% to liquid alternatives (e.g., tactical all asset, managed futures, global macro and gold).

Here is a not-so-fun fact: According to Ned Davis Research, the S&P 500 has gained just 2.41% annualized per year since December 31, 1999 (see Don’t Fight the Tape or the Fed indicator below).  It has gained just 4.45% annualized per year since December 31, 1997 (see Volume Supply/Demand indicator below)…. by Steve Blumenthal

For charts, analysis, and commentary see the rest of the story in Trade Signals: Sentiment Too Bullish: S&P 500 Annualized Return Since 12/31/99 to Present just 2.41% (Wow!) 

The current opinions and forecasts expressed herein are solely those of Steve Blumenthal and are subject to change.  They do not represent the opinions of CMG.  CMGs trading strategies are quantitative and may hold a position that at any given time does not reflect Steve’s forecasts.  Steve’s opinions and forecasts may not actually come to pass. Information on this site should not be used as a recommendation to buy or sell any investment product or strategy.

Categories: Tactical Investment Strategies Tags: CMG opportunistic All Asset Strategy, Steve Blumenthal, Trade Signals

ETF.com Portfolio X-Ray of CMG Opportunistic All Asset Strategy

Posted on 06.18.16 |

ETF.comETF.com Writer Cinthia Murphy looks at the portfolios of select ETF strategists. Cinthia does a “Portfolio X-Ray” of the CMG Opportunistic All Asset Strategy. Cinthia speaks to CMG CEO Steve Blumenthal about the primary goal, methodology, target client, and asset allocation breakdown of the strategy. There are currently 10 ETFs in the portfolio. The portfolio allows a maximum of 11 ETFs. See the full story in ETF.com.

Categories: Tactical Investment Strategies Tags: CMG opportunistic All Asset Strategy, ETF.com, Steve Blumenthal

CMG Tactical Strategy Update

Posted on 09.27.15 |

CMG Capital Management Group Tactical Rotation Strategy

CMG Tactical Investing Approach

We believe that price momentum can tell us a great deal about supply and demand dynamics.  When you compare a set of assets against each other, typically some are leading while others are lagging.  The idea behind relative strength based investment strategies is to position in the assets that are showing the strongest price leadership.

* (Download Whitepaper on Correlation & Diversification).

Read More >

Categories: Tactical Investment Strategies Tags: CMG opportunistic All Asset Strategy, Correlation & Diversification, Steve Blumenthal

Investors are More Diversified, Blumenthal in WSJ

Posted on 02.13.14 |

Steve Blumenthal, CEO of CMG Capital Management Group, is quoted in The Wall Street Journal “Wealth Adviser” story Fear of Market Risk Ebbs Post Crisis (subscription required). The article begins:

The Wall Street JournalMany high-net-worth investors see recent stock declines as a buying opportunity thanks to lessons learned from the market implosion of 2008-2009.

The financial crisis left wealthy investors with a better understanding of risk and of the importance of liquidity, financial advisers say. In addition, wealthy clients who own small-business now have a more positive outlook on the economy and are willing to take on a bit more portfolio risk, they add.

“They’re not running scared from the market,” says one adviser.

Read More >

Categories: CMG News, Portfolio Construction, Tactical Investment Strategies Tags: CMG opportunistic All Asset Strategy, On My Radar, Steve Blumenthal, Trade Signals, Wall Street Journal

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Hypothetical Presentations: To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including: (1) the model results do not reflect the results of actual trading using client assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight; (2) back-tested performance may not reflect the impact that any material market or economic factors might have had on the adviser’s use of the model if the model had been used during the period to actually mange client assets; and, (3) CMG’s clients may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model. Please Also Note: Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that future performance will be profitable, or equal to any corresponding historical index. (i.e. S&P 500 Total Return or Dow Jones Wilshire U.S. 5000 Total Market Index) is also disclosed. For example, the S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The historical performance results of the S&P (and those of or all indices) and the model results do not reflect the deduction of transaction and custodial charges, nor the deduction of an investment management fee, the incurrence of which would have the effect of decreasing indicated historical performance results. For example, the deduction combined annual advisory and transaction fees of 1.00% over a 10 year period would decrease a 10% gross return to an 8.9% net return. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet, his/her investment objective(s). A corresponding description of the other comparative indices, are available from CMG upon request. It should not be assumed that any CMG holdings will correspond directly to any such comparative index. The model and indices performance results do not reflect the impact of taxes. CMG portfolios may be more or less volatile than the reflective indices and/or models.
In the event that there has been a change in an individual's investment objective or financial situation, he/she is encouraged to consult with his/her investment professionals.
Written Disclosure Statement. CMG is an SEC registered investment adviser principally located in King of Prussia, PA. Stephen B. Blumenthal is CMG's founder and CEO. Please note: The above views are those of CMG and its CEO, Stephen Blumenthal, and do not reflect those of any sub-advisor that CMG may engage to manage any CMG strategy. A copy of CMG's current written disclosure statement discussing advisory services and fees is available upon request or via CMG's internet web site at (http://www.cmgwealth.com/disclosures/advs).