CMG AdvisorCentral

Tactical investing news, views and resources for financial advisors

Archives for February 2016

Charting The New Bull Market in Gold – Blumenthal in Forbes

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ForbesIn Steve Blumenthal’s latest Forbes article he discusses a way to block out the noise of gold fever and adhere to a time-tested method of modulating exposure to gold. According to this trend-following method, says Steve, a new cyclical bull market period for gold has just begun. Excerpt from the Forbes story:

Consider the use of a simple trend-following process to trade gold. One of my favorite methods is to compare two smoothed moving-average price lines: a 13-week moving average and a slower 34-week moving average. Think of a moving average as a smoothing of the price of a security (or index) over the past number of weeks.

See the full story in Forbes: Charting The New Bull Market In Gold.

Building A Hunker Down ETF Portfolio – Blumenthal at Barron’s

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Steve Blumenthal, CEO, CMG Capital Management Group, speaking with Barron's Funds reporter Chris Dieterich about ETF StrategistsSteve Blumenthal, CEO of CMG Capital Management Group, tells Barron’s funds writer Chris Dieterich that his firm has been clinging to ultra-safe bonds and utility stocks during the market storm. The video segment How to Build A Hunker Down ETF Portfolio, can also be seen below. An excerpt:

“We are what is called an ETF Strategist. We design and build portfolios for specific reasons. ETFs are a great tool because they offer so many ways to have concentrated exposures to markets on a low fee basis.

“Most of the leadership we see now is in fixed income. When we look at our portfolio we’re looking at relative strength. We’re looking to compare different ETFs against each other.”

Chart of the Week From CMG #highyield

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Steve Blumenthal, CMG Capital Management Group, on hedging your equity exposureOne of our advisor clients called and asked for my thoughts on what the high-yield bond market may be telling us about recession.  I shared the following:

My nearly 25 years of trading HY has taught me that the sector is a good leading indicator for the equity market and the economy.  I believe that, in general, bond managers are really on top of their individually-held corporate credits (bonds).  As you’ll see in this chart, the major long-term trend for HY is down.  This is concerning to me.

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Negative Trend Continues For Equities

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

Steve Blumenthal

The trend remains negative for equities and is neutral for high yield.  Investor sentiment remains extremely pessimistic.  Such extreme readings are generally bullish for equites.  We are finally seeing the oversold rally.

The S&P 500® Index is nearing its February high at 1947.20.  The 50-day moving average line (trending lower) is currently at 1960.  I favor establishing hedges on equity exposure in the 1925 to 1960 area.

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Chart of the Week From CMG

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Steve Blumenthal, CMG Capital Management Group, on hedging your equity exposureToday I share with you a great chart that shows the 10-year forward return statistics by quintile based on reported earnings to calculate median P/E (lowest valuations to highest valuations) and we include the market decline statistics in each of those categories.  Not surprisingly, you’ll see that the best returns and lowest risk periods were when valuations were low and forward potential return high.

There are ways to invest that enable us all to build stronger, more resilient portfolios.  When valuations reach a point that they become attractive again, and they will, then it will be time to overweight equities within portfolios.  When they are expensively priced, like today (here), then underweight and hedge equity exposure.

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Trend Neg For Stocks And HY; Relative Strength Leadership For Utilities And Fixed Income

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Steve Blumenthal, CEO, CMG Capital Management Group, on theStreetThe trend remains negative for equities and high yield.  We continue to see relative strength leadership in utilities, fixed income, tax-free fixed income and gold.  Investor sentiment remains extremely pessimistic.  This supports a short-term oversold bounce in equities.

The Global Recession Watch indicator continues to show a probable global recession has started.  See my U.S. Recession Signals Intensify article in Forbes here.

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Margin Debt At Record High

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Steve Blumenthal, CEO, CMG Capital Management Group Inc.One of the indicators I like to watch and post in Trade Signals from time to time is margin debt.  Simply put, markets dislocate when leverage unwinds (would be market makers and buyers step aside).  I’ve been concerned for some time about the record high level of margin debt but, in general, most of the time, margin is not a bad thing.  It is when it declines below its moving average trend line (“smoothing”) that our concern should grow.

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