Archives for November 2015

Rich Man, Poor Man

Posted on 11.29.15 |

Richard Russell, who wrote the influential Dow Theory Letters since 1958, died recently at 91 years old.

Overall, from a trading perspective, I am now with a neutral view on equities. Our CMG NDR Momentum Index (my favorite measure) which looks at momentum and market breadth remains in a sell signal. However, the weekly 13-week vs. 34-week moving average has just turned bullish on the market. The markets are generally stronger November through April. There is a strong seasonal tailwind.

Sentiment is neutral to negative. The daily sentiment charts are showing extreme optimism which is generally short-term bearish for equities. Fed policy is unfavorable, valuations are high, trend is positive but market breadth is neutral at best.

The 3 Big Market Risks

Posted on 11.22.15 |

At a recent conference, I was asked what I see as the biggest risks ahead. I answered that it is not subprime but everything that existed in 2008 from the perspective of debt levels, debt to GDP, margin balances and derivative exposure (and the related counter-party risks) is worse today than in 2008. Further, the Fed now finds itself painted into a corner with an inflated balanced sheet (QE asset purchases) and a zero interest rate policy.

Watch Out For Minus 2

Posted on 11.19.15 |

The significant signal this week is the -2 reading on the Don’t Fight the Tape or the Fed model. The model looks at the technical health of the broad equity market (how are most stocks doing across the various sectors). When the majority begin to break down and just a few support the market (looking at trend and momentum of thousands of stocks), the technical health is not good. This indicator combined with a 10-year Treasury yield indicator creates a reading from +2 (bullish) to -2 (bearish).

Facing Your Investing Mistakes

Posted on 11.15.15 |

I really love when a trader/investor is able to speak honestly about his/her mistakes. The best seem to be able to change course and adjust quickly.

I read a piece from Ned Davis recently where he reflected on the biggest mistake he made in the business. It was in the late 1990s and was tied to record high equity market valuations. He cut back on equity exposure too soon. He wasn’t alone.

Blumenthal On The ETF Revolution – Video

Posted on 11.12.15 |

CMG Capital Management Group CEO Steve Blumenthal is featured in this four minute video segment from Asset TV called “The ETF Revolution.” Steve was filmed at the ETF Bootcamp, where he moderated a panel. The video appears on ETFTrends, YouTube, and Asset TV. Or, you can watch it below. Steve answers several questions.

Here are two:

For an advisor, tell us why ETFs have revolutionized the market?

What To Do When Valuations Are High

Posted on 11.08.15 |

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

At 8:30 a.m. Friday morning, we got the October jobs number. The estimate was 185k new jobs with the consensus believing that a 150k number would be enough for the Fed to hike rates in December. The number came in at 271k. The unemployment rate dropped. There is nothing but good news in the numbers. However, for now – good news is bad.

With the Fed more likely to raise rates next month, the market moved lower, the 10-year treasury yield shot up to 2.32% (it was under 2% just a few weeks ago) and the dollar gained against the yen and the euro.

The Future is Technology

Posted on 11.06.15 |

Steve Blumenthal, CEO of CMG Capital Management Group is quoted in an article in ETF.COM called Strange Bedfellows: Advisors & Robos. The article begins:

“There’s much soul searching in the financial advice industry these days. What will its future look like?

Thanks to a leap in financial technology, largely at the hands of robo advisors, traditional advisors today are faced with a changing relationship with investors, who have come to expect—if not demand—more for less.”

Says Steve Blumenthal: