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Picked up a 50% Position in VXX at the Close.
The absence of volatility has been a miracle, almost as amazing as the Loserville Atlanta Falcons choking to death in the second half, given we have a mentally deranged president 'running' the show for four solid years. Scary.
Or the IMF Backing out of Greece
...which they never, ever should have anything to do with in the first place!
Complete Hole Manifest* 2/5/2017
Increased hedging across the board
Changes for the week. Increased PPLT holdings. Decreased UUP. Increased both intermediate and long bond hedging. Dropped VPU/SDP, VNQ/REK, and QQQ, PSQ. Added IWM/RWM. Added GLD to currencies, took out SLV. Took off GDX hedge. Reduced AAPL by 50%.
Equity position are now 50% long, 50% hedged, 0% short.
-s indicates a short position.
Currency
UUP* 4%
PPLT* 6%
GLD
PALL
Intermediate Bonds
JNK...'spring' * 25%
HYEM...'spring'
IEF... 'winter' * 20%
SJB-s...'winter'
LQD...'fall'
TIP... 'summer'
Long Bonds
TBF-s...'spring' 12%
VWOB...'spring'
JNK...'spring'
TLT...'winter' 10%
LQD...'fall'
LTPZ...'summer'
Global and Domestic Equities
VT* 2%
EFZ-s
DIA* 1%
DOG-s* 1%
SPY* 1%
SH-s *1%
EEM* 2%
EUM-s*
IYE* 1%
DGG-s 1%
IWM* 1%
RWM* 1%
GDX* 2%
MELT
SEA* 2%
SCS
AAPL* 2%
Volitility
XIV-s
VXX
MM
MM* 5%
Week #5 YTD Race Results and Seasonal Analysis.
GA (.17) % .....nc for the week.
DBLTX .32%.....+.23%
JUCIX .49%....+.07%
BND .01 % ...+.02%
QAI .44%...+.19%
...still having trouble finding footing as my hedging became more conservative this week.
With both BND and QAI positive the absolute season is fall, while the relative season moved stronger into spring.
Counting Down Globalisms Numbered Days.
Using bond metrics, globalism has withstood two challenges in the past ten years.
#1 The 2008 collapse.
#2 Angelic Merkel giving in to a Greek bailout preserving the EURO in 2012.
In both those cases a death cross resulted in bonds that favor globalism and those that favor anti-globalism.
Today the pro-globalism index stands at a +16
The last time the index was negative (anti-globalization) was in July 2012, almost to the day of Draghi's...What ever it takes, speech. Since that time there have been four moguls of strength, the last peaking in late August 2016 at 300, when Clinton's lead over Trump was 8 points!.
From August's peak of 300 the index stands at 16, once negative we'll be in anti-globalization.
What we've been experiencing for the past 45 years will flip, with price inflation being the big winner, and asset price deflation the big loser.
Micro vs. Macro Bets.
Bet on a horse race (micro) and you'll know in a minute or two if it was a good or bad one.
Bet on a currency union (macro) and you'll know in a decade or two or three or four, if it was a good or bad one.
Rather than wait for the final outcome in the macro bet, ask yourself 'how are the horses running'?
Are they getting along with each other, and does everything look stable. Well certainly not with the Euro.
There is only so much duct tape in the world and when the last roll is used...well good bye and good riddance to the Euro. THE sore spot for making it work, has always been...and will always be, the north's trade surplus and the south's deficit.
Son, There Are Three Ways to Lose Your Inheritance.
Drinking is the slowest.
Gambling is the quickest.
http://bgr.com/2017/01/31/apple-earnings-day-trader/
...and women are the most fun.
F.C. should have stuck with drinking and women.
An Amazing Coincidence.
Two charts, two golden crosses.
SLV besting GLD.
http://stockcharts.com/c-sc/sc?s=SLV%3AGLD&p=D&yr=0&mn=1&dy=0&i=t92496275976&r=1485879791386
PPLT besting SLV.
http://stockcharts.com/c-sc/sc?s=PPLT%3ASLV&p=D&b=5&g=0&i=t18876242255&r=1485880104268
Markets are not chaotic but march to a subtle drum beat.
Barclay's Long/Short Credit 2017 Results.
http://www.barclayhedge.com/research/indices/ghs/Equity_Long_Short_Index.html
...up a bit under 2% for the year. This is the specific hedge fund group most like the holdings on the GA.
Cat Had an Off Year.
...but recovered nicely after being down some 9% at the end of October.
https://www.crescat.net/products-performance/global-macro-hedge-fund/
Long term record is still an off the scale...wow.
Week #4 YTD Race Results and Seasonal Analysis.
Gross (JUCIX) is closely matching QAI, while Jeff (DBLTX) is closely matching BND. Now that my hedges are coming off GA is set to move this next week...hope it's forward.
GA (.17) %
DBLTX .09%
JUCIX .42%
BND (.01) %
QAI .44%
With BND slightly negative, and QAI positive that makes for absolute spring weather. With QAI greater than BND that also makes the relative season spring as well. On the bond side spring favors JNK. On the currency side PPLT, and on the equity side, industrials / foreign, with VNQ and VPU (rate sensitives) underperforming.
Complete Hole Manifest* 1/30/2017
-s indicates a short position.
Changes: DTUS was dropped due to poor liquidity. IEF became the 'winter' of choice hedging asset. A small percentage of hedges were removed. Currency position moved from SLV to PPLT with PALL a possible buy. JNK was added to the possible long bond purchase list. In either a perfect 'spring' or 'fall' environment it would be possible to be 100% bond invested in each.
The hedge came off SPY:SH in the favor of SPY. The hedge came off EEM:EUM in favor of EEM. GDX has been paired up with a new 1x bear miner index, appropriately called, MELT.
Anticipated changes this next weeK: Take off more bond hedges. Add to PPLT. Take off DIA:DOG hedge in favor of DIA. Take off GDX:MELT hedge in favor of GDX.
Currency
UUP* 7%
PPLT* 3%
SLV
PALL
Intermediate Bonds
JNK...'spring' * 28%
HYEM...'spring'
IEF... 'winter' * 16%
SJB-s...'winter'
LQD...'fall'
TIP... 'summer'
Long Bonds
TBF-s...'spring' 14%
VWOB...'spring'
JNK...'spring'
TLT...'winter' 8%
LQD...'fall'
LTPZ...'summer'
Sector Equity Strongly Influenced by Bond Prices
VPU* 2%
SDP-s
VNQ* 2%
REK-s
Global and Domestic Equities
VT* 2%
EFZ-s
DIA* 1%
DOG-s* 1%
SPY* 2%
SH-s *
QQQ* 2%
PSQ-s
EEM* 2%
EUM-s*
IYE* 1%
DGG-s 1%
GDX* 1%
MELT* 1%
SEA* 2%
SCS
AAPL* 4%
Volitility
XIV-s
VXX
MM
MM* 0%
Silver Dodging a Death Cross.
http://stockcharts.com/c-sc/sc?s=SLV%3AGLD&p=D&yr=2&mn=0&dy=0&i=t48976316208&r=1485552039197
A deflationary death cross has bee dodged with inflation loving silver putting in a strong relative performance vs. gold. The 200 dma remaining in a rising pattern which supports the strength of PPLT vs. SLV.
Once again PPLT/PALL are the most inflation/growth loving PM's with silver second and deflationary loving (relative speaking) gold last.
Golden Cross Today...Last 2013.
http://stockcharts.com/c-sc/sc?s=PPLT%3ASLV&p=D&yr=5&mn=0&dy=0&i=t69211152635&r=1485520924678
Platinum, is more of an industrial metal, than silver, which is more industrial than gold.
Platinum over silver points to a stronger global economy, helped along by fiscal spending as monetary policy normalizes and negative long term interest rates disappear.
Both equities and JNK should both do well in this environment, which starts today!
IT's SPRING !!!
QAI (equities) + 44% YTD with BDN -.16% YTD.
Classical spring with equities in the plus column and bonds negative.
Took the Trump Press. only a couple of days to turn fall into spring.
http://stockcharts.com/c-sc/sc?s=JNK%3AIEF&p=D&b=5&g=0&i=t23083415789&r=1485380345437
A picture speaks a 1,000 words...notice the 'spring' JNK, popping out of the 'fall' LQD.
Some but not all winter hedges fell by the wayside so I'm now 1/3 net exposed to TBF.
Markets Move Deeper into Fall on Trumps First Day
BND (debt) .29% is now greater than QAI (equities) .20% with both positive putting the absolute fall season equally in place and shifting the relative season to winter.
Interesting that the Trump presidency is now where every other president has been for the past 35 years. If this guy is going to shake up things...the markets are waiting.
Seasonal Analysis of Trump Presidency.
...it all starts today.
Weekly, along with the race results, I'll include how the markets are signally what season they are in.
The seasonal analysis will be both absolute as well as relative based on the percentage changes in BND and QAI.
As of day for the year the analysis would be: Fall (absolute), Spring (relative), favoring both the fall bond LQD, and spring bond JNK. Bonds not favored would be TIP (summer) and IEF/SJB (winter).
The basis of the analysis is the percentage change in BDN YTD of +.02% and QAI +.20%. BDN is positive in a low growth, low inflation environment and QAI in a high inflation high, growth environment. The fact both are positive makes for a fall environment of faster growth with disinflation for the absolute measure, but the relative measure places the market in spring by .18%. So as of date the markets aren't concerned with inflation/deflation in the least, and are mildly optimist concerning growth.
On a absolute basis:
BND + / QAI + = Fall
BND + / QAI - = Winter
BND - / QAI + = Spring
BND - / QAI - = Summer
Will Peter Be Proved Right?
http://www.321gold.com/editorials/schiff/schiff011917.html
Don't know, but I did restructure currencies so I can move quickly into SLV if he is. I've set up UUP vs. SLV with 10% of my portfolio at stake. In addition I've added a potential holding of 2% GDX, and 2% IYE.
If indeed the 'everything is now different' argument wins out then 'fall' the dominant globalization season for over thirty years will turn into anti-globalization 'summer' a season of stagflation. In that environment there will be no better holdings than TIP, LTPZ, and GLD/SLV.
Complete Hole Manifest* 1/21/2017
-s indicates a short position.
Bunch of changes taking place in the last two weeks, now creating a hole perfectly hedged on the major holding in intermediate and long bonds. Equities are also now very hedged as the GA (and everyone else) sail into the uncharted (Trump) waters.
Bond changes include the possibility of holding HYEM.
Currency holdings knock out all currencies except UUP vs. SLV.
Commodity holding knock out JJG and GLD.
Equity holding knock out ASHR/CHAD and add IYE/DDG, and GDX.
Short Bonds
DTUS * 2%
Intermediate Bonds
JNK...'spring' * 22%
HYEM...'spring'
IEF... 'winter'
SJB-s...'winter'* 22%
LQD...'fall'
TIP... 'summer'
Currency
UUP* 5%
SLV* 2%
Long Bonds
TBF-s...'spring' 11%
VWOB...'spring'
TLT...'winter' 11%
LQD...'fall'
LTPZ...'summer'
Sector Equity Strongly Influenced by Bond Prices
VPU* 2%
SDP-s
VNQ* 2%
REK-s
Global and Domestic Equities
VT* 2%
EFZ-s
DIA* 1%
DOG-s* 1%
SPY* 1%
SH-s * 1%
QQQ* 2%
PSQ-s
EEM* 1%
EUM-s* 1%
IYE* 1%
DGG-s 1%
SEA* 2%
SCS
GDX
AAPL* 4%
Volitility
XIV-s
VXX
MM
MM* 3%
Week #3 YTD Race Results.
Got squeezed a bit as portfolio under went a substantial change during the week, now in very hedged position in credit and equities.
GA (.22) %
DBLTX .09%
JUCIX .20%
BND .02%
QAI .20%
Short End of Curve More Volatile.
http://vixcentral.com
1-3 months whips up and down with later months more stable.
Week #2 YTD Race Results.
GA .20%
JUCIX .20%
DBLTX .28%
BND .33%
QAI .52%
Time
Tvix is determined by 1-3 month vol future contracts, Tviz 4-6.
And They're Off...Week #1 Race Results.
GA +.26%
DBLTX +.19%
JICIX +.15%
Average + +.16%
BND +.20%
QAI +.34%
Both equities and the long bond had a great week which is kind of weird in that the long bond should have suffered on the good news...but didn't. Go figure. Ps vol cost .2% performance on the week with a 1% position in VXX initiated at the close on Friday.
Going to Phoenix for the week I'll post when I get back.
So When Will the Bond Market Blow?
http://www.marketwatch.com/story/perfect-storm-could-lead-to-historic-bursting-of-bond-bubble-warns-harvard-academic-2017-01-04
Great article on the extremely long history of bond prices.
The question of when has already been answered.
The global bond markets entered into a long term decline on 12/1/2016.
It will take the market a while to figure out what happened, but happen it did.
Completely Out of VXX.
...When the market speaks I listen. Actually a tad long on XIV.
VXX served it's purpose acting as portfolio insurance.
Setup said a market meltdown was likely on Tues.
On Monday Europe, which was open, opened up down .3%, but when the ISM's crossed the tape a half an hour later it was blue sky. China's ISM, as well as USA, added to the party.
Strong Global ISM's Blow Up TVIX Setup.
I've reduced my portfolio insurance from 2% to 1% VXX.
Yesterday was the mirror opposite of the first day trading in 2016.
Strong Inflation Pulse on Day One.
http://stockcharts.com/c-sc/sc?s=DBV&p=D&b=5&g=0&i=t64931356390&r=1483527166775
...notice how the inflation loving currencies, NOK, NZD, and AUX popped in an exceptionally volatile first day of trading. On a longer term note inflation loving TIP kicked SJB to the curb as the second favored intermediate bond with JNK still the top dog.
What surprised the dickens out of me was the strong support for the long bond which came out of Europe as the Italian banking crisis proves to be no crisis at all with Mario still turning the handle as the fiscal bailout is put together.
New Year Resolution...Carry Very Little Cash
The goal of the GA is always to be running with a full hole of something.
Since the GA is a long/short ship if TLT doesn't work then TBF will.
On occasion, when an asset is in transition such as VNQ/REK is currently, cash will be held until the direction is known.
Going into 2017 the GA is 98% invested, with a goal for 2017 of always being 90+% invested.
Past Ten Day Forecast.
Winter winds +1.25%
...not much of a forecast when looking backwards, but that's the only game in town.
Each week I'll post the wind direction and percentage strength.
Winter is the season of both lower growth and lower inflation.
Complete Hole Manifest* 12/31/2016
-s indicates a short position.
Intermediate and long term point to faster growth and inflation, but short term points to a slow down in both. Nothing is harder than to sail a ship in swirling wings, explaining my defensive posture in backing both spring and winter assets.
Intermediate Bonds
JNK...'spring' * 22%
SJB-s...'spring'
IEF... 'winter'* 22%
LQD...'fall'
TIP... 'summer'
Currency
UUP* 9%
DBV* 1%
FXA
FXY
FXC
CEW
CYB
MM
Commodities
JJC
SLV
GLD
MM
Long Bonds
TLT
TBF-s* 9%
DTUS-s* 2%
LQD
LTPZ
VWOB* 9%
Sector Equity Strongly Influenced by Bond Prices
VPU* 2%
SDP-s
VNQ
REK-s
Global and Domestic Equities
VT* 2%
EFZ-s
DIA* 2%
DOG-s
SPY* 2%
SH-s
QQQ* 2%
PSQ-s
EEM
EUM-s* 2%
ASHR
CHAD-s* 2%
SEA* 2%
SCS* 1%
AAPL* 4%
Volitility
XIV-s
VXX* 2%
Barclay's Long/Short Credit Hedge Category.
On a weekly basis GA will be running head to head against JUCIX and DBLTX.
On a month to month basis GA will be running aganist the leading and average long/short credit hedge fund.
http://www.barclayhedge.com/cgi-bin/site/awards/awards_display_top_10.cgi?dstamp=2015-12-01§or_id=yearly_hf_fFILSCred&is_yearly=1
GA is 65% concentrated in long/short global credit, 24% long/short equities/vol, and 11% currencies/commodities.
Year End Match Race Results...
GA wins by 4 1/2 lengths going away.
For the year GA +4.00% vs. QGMIX +.02% and VASFX -.98% /2 -.47% average.
GA is now setting it's sights on the two 'Bond Kings' Gross with JUCIX (up +4.23% for the year) and Gundlach DBLTX (up 2.17 for the year) /2 3.20% average.
Now That I've re-Kick Started the Board.
...I think this is my third time since 2014.
I gave you the buy yesterday and i'll give you my sell when it takes place.
Setup appears to mimic last year, with the averages plunging into second week of Feb.
Will 2017 be the same as 2016? I don't have a clue and neither does anyone else.
All I know is that my cross moved from very slightly negative to strongly negative in the last half hour of trading! This bodes ill for the market on Tues.
Everything, but then Maybe Nothing.
Read No. #1 on the List.
http://www.marketwatch.com/story/the-most-important-books-on-investing-from-1923-to-today-2015-11-19?link=MW_latest_news
...and forget the rest.
Oops, Meant to Say VXX.
Where the Heck Did Everybody Go?
I haven't bought a vol positive asset in quite a while but made a 50% or 1% position in XIV. If vol kicks in again tomorrow I'll pick up the second 50 at the close.
Maybe the board going dead is the counter indicator the market needs to tank.
Time will tell.
Match Race Week #51...VASFX BROKE DOWN
All percentages are YTD.
Sad to see a horse break down, on Friday VASFX cashed by over 3%, causing interference with QGMIX off 1% for the week as well.
With only one week to go GA is in the clear by over 4 1/2% over the average of the two funds.
GA +4.31% vs. QGMIX .25% and VASFX -.98%% /2 = -.37%
On the 'Bond King' side JUCIX 5.24% and DBLTX 1.65% /2 = 3.45%
Two Pair to Watch in 2017.
My eyes will be focus on two credit pair.
JNK:SJB and VWOB:TBF.
Markets will soar if JNK and VWOB longs win out, or crash if SJB and TBF shorts do.
Going into 2017 I'm favoring JNK and TBF, so right now it's a mixed bag.
HOWEVER... the trend is favoring both JNK and VWOB so the start of 2017 should be nothing like the start of 2016. In other words.
SANTA's COMING TO TOWN, and January 'should' be a good month for the bulls.