CMG AdvisorCentral

Tactical investing news, views and resources for financial advisors

Archives for October 2015

CMG Trade Signals

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Short-term investor sentiment is now excessively optimistic which is short-term bearish for stocks.  The S&P 500 index sits today at 2090.  The next important resistance sits at 2100.  There is significant resistance at the prior high near 2133.

Having broken above important technical resistance (dotted red line in chart that follows) a pull-back test of that breakout makes sense.  Look for a correction to the 2040 area.

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Hedging Equity Exposure – Blumenthal in Forbes

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ForbesCMG Capital Management Group CEO Steve Blumenthal writes in his latest Forbes article:

“Many equity investors are feeling okay right now. Yes, the 2008 financial crisis was downright scary, with exploding credit spreads, disappearing financial institutions, and sharply declining stock market. However, if investors have stayed in equities since then, their wounds have healed.

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CMG Tactical Strategy Update

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Steve Blumenthal, CMG Capital Management Group, at Bloomberg ETF Master Class

Steve Blumenthal, CMG Capital Management Group, at Bloomberg ETF Master Class

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 (relative strength analysis), 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.

CMG Opportunistic All Asset Strategy – The strategy selects from a broad universe of asset classes and invests in up to eleven positions.  We measure price momentum of the various assets to identify the strongest relative strength.  Positions are held anywhere from one month to several months.  Positions are continuously re-evaluated.  The objective is to invest in the positions showing the strongest relative strength (price leadership) and, importantly, avoid assets that are showing the weakest price movement.

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Equity Sentiment Long-Term Negative

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Steve Blumenthal, CMG Capital Management Group

Steve Blumenthal, CMG Capital Management Group

The CMG NDR Large Cap Momentum Index remains in a sell (June 30, 2015 at S&P 500 Index level 2063).  Two weeks ago, NDR’s Big Mo indicator moved to a sell signal and last week moved back to a buy signal.

I favor the CMG NDR Large Cap Momentum Index signal. Overall trend evidence remains negative for equities.

Sentiment remains pessimistic which is short-term bullish for the market.  I share some thoughts on the S&P 500 Index (resistance levels – technical challenges) below.

The Zweig Bond Model remains bullish on high quality bonds.

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Hedging Your Equity Exposure

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Steve Blumenthal, CMG Capital Management Group, on hedging your equity exposure

Steve Blumenthal, CEO, CMG Capital Management Group

I continue to favor 30% Equities (hedged), 30% Fixed Income and 40% Alternative (defined as anything other than traditional buy-and-hold).  Find complimentary (low-correlating) ETFs, funds and strategies to build your alternative bucket just as you’d diversify your equity and fixed income allocations.

One of the great advantages advisors and individuals have over large endowments and pensions is the ability to source liquidity quickly.  One of the great disadvantages is that many individuals are unable to gain access to exceptional hedge fund managers or private equity funds.  Though you can get close enough.

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Equity Indicators Remain Bearish

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Steve Blumenthal, CEO, CMG Capital Management Group, on theStreetThe CMG NDR Large Cap Momentum Index remains in a sell (June 30, 2015).  This past week, NDR’s Big Mo indicator moved to a sell signal.  The cyclical trend remains down for equities.

Sentiment remains pessimistic which is short-term bullish for the market.  Having expected a rally due to such extreme sentiment, the S&P 500 has reached a point of significant resistance.  Now would be a good time to re-establish hedges and raise cash.

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Risk of Recession Rising

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Steve Blumenthal, CEO, CMG Capital Management Group, on theStreetThe economic slowdown is real – risk of recession is rising. A Few Economic Notes:

  • Widespread disappointment in last Friday’s employment report. Non-farm payrolls increased 142,000 in September, below the consensus of 200,000. Also, the prior two months were revised down by a total of 59,000. The unemployment rate held steady at 5.1%.
  • The participation rate fell because of declines in the number of employed (-236,000, the most since October 2013) and the number of unemployed (-114,000). As a result, the employment-population ratio fell back to 59.2%, the lowest reading of the year.

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