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Home Archive for category "Market Risk" (Page 8)
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Critical Day for the Market in Your Near Future

Just after Labor Day we made a post about value stocks warning of the market nearing a top.  Today we’ve updated the chart that shows Berkshire Hathaway (BRKB) and the S&P 500 Index (SPX).  As you can see, the rotation to value has continued over the past month.  This is evident by the price of BRKB continuing up while SPX moves sideways.  As we mentioned in the previous post, this is a sign that we’re closer to the top of a rally than a bottom.  Money managers continue to move slowly but surely to safety. This in itself isn’t a near term problem because it takes managers with a lot of money time to make major adjustments to their portfolios.  Big dollar sellers try to sell into strength so they don’t move the markets much as they change positions.  This slow steady distribution and rotation is what creates tops that last several months before they are recognized. When we look at value stocks (using BRKB as a proxy) out performing

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Market Overview 9/8/2012 – Cautiously Optimistic

Over the past week we saw improvement in almost all of the market health indicators that we track allowing us to move to a 100% long position in our hedging strategies.  Our measures of market quality improved slightly, market strength improved substantially, and our trend indicators finally confirmed.  Our measures of the economy turned positive, but are still on the weak side causing concern that the positive signal may not last long.  Our measures of risk remained positive, but flat, even as the market moved higher.       Positive Our Twitter sentiment indicator for the S&P 500 Index turned positive on a short term basis.  In fact, it had the highest reading to date on a daily basis.  This reading signified confirmation of the close on SPX above 1422.  Our smoothed sentiment indicator has strengthened over the past three weeks, but is still painting a series of lower highs for the entire rally out of the June lows. This comes as a result of many market participants tweeting over

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Market Strengthens – Negates Risk Warning

Our market risk indicator flashed this week, however, we always use a weekly close to generate a signal.  The strength on Thursday and Friday reversed the signal early this week so we end the week without a risk warning. This means we didn’t add any aggressive hedges today.  Instead, we’re following our core hedging strategy indicators leaving us 100% cash in our Long/Cash strategy and 100% hedged with a short of the S&P 500 in our Long/Short strategy. Some of our core indicators are getting close to going positive that could give us some exposure to the market at the end of next week if the trend continues.  

 
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Market Risk Warning

Published on July 24, 2012 by in Market Risk

Just a quick note.  Our market risk indicator flashed today at the close.  We always wait for confirmation on a weekly basis so we won’t have an official signal until Friday.  If the signal holds till Friday we’ll be moving our current 100% hedge away from a simple short of SPY (or SH if that’s your preference) to an instrument that is more aggressive.  Some examples would be puts that mirror our portfolio, managed short funds like HDGE, BEARX (use with caution), or midterm volatility like VIXM or VXZ.  As always, don’t use any financial instrument you don’t understand (options, volatility, shorting).

 
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