Our Latest Market Commentary

The Market that Cried “Wolf”

Article Summary:
  • We’re living in the second-longest bull market in history, and it just turned 10 years old in March (the longest was 14 years old before it died: 1987 – 2000).
  • For a trend-following model “whipsaws” like the ones that took place in 2010, 2011, 2015, and 2016 cause forced selling on the way down the hill (in an effort to avoid a crash) and buying back into stocks at higher prices (if the market ultimately does not crash), which results in a short-term performance lag.
  • Looking back at history, these whipsaws and short-term lagging periods cause investors to become complacent as they lose confidence in a trend-following model, thinking that the market will never crash again.
  • This complacency is the exact kind of behavior that creates the euphoria, which ultimately re-kindles the conditions that result in market crashes like the ones we experienced in 2000-02 and 2007-09.
  • The current market conditions are healing, but we’re still not out of the woods yet, and it’s entirely too early to get complacent and call 2018-19 another “whipsaw” until more improvement is observed.

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2nd Quarter 2019 Scouting Report

It’s already ¼ of the way through the year.  Crazy!  As always I’ve put together a recorded screencast so that those who like watching a VIDEO can follow my mouse, watch, and listen to me explain my way through this quarterly update on the state of the markets.  However, we’ve kept with our tradition of also providing a written version, for those people who would rather read than watch.  Naturally, I’d recommend the video and some headphones.  I think it helps things “sink in” better than reading, but that’s just me.  Alrighty… without further anticipation, let’s get to it! read more…

What’s To Like In The Stock Market?

This week’s update on the state of the market is going to be quick and concise, as I’m writing it on Saturday morning after wrapping up the annual CMT (Chartered Market Technician) Symposium in New York City.  So let’s just get down to it as I want to share a few pictures and charts, along with what I like, and what I don’t like about each.

The first is the market (S&P500) going back to summer of ’18.  We had a -19.8% drop from Sept 21st thru the bottom in late-December.  Since then, the market has rallied and in the vast majority of cases (all but one, to be precise), whenever the market is above a rising long-term trend (as defined by the 200-day moving average) and falls more than -14%, for the first time since WWII, we haven’t seen a notable “re-test” of the initial lows.  Not to say it can’t happen still (I’ll elaborate on that next week), but so far, here’s what I see: read more…