On May 3, we sold short 2 Euro futures contracts at 1.1576. Five trading days later, we covered the first contract at 1.1400 for 1.5% gain (76% annualized) and covered the second contract another 4 trading days later at 1.1331 for a 2.1% gain (55% annualized).
To learn more about Demeter Research and Matt’s trading/analytical framework please Click Here.
According to Bank of America investors are exiting the market in droves.
Investors pulled a whopping $44 billion out of the stock market in the past five weeks. BAML’s Michael Hartnett, who characterized this as an “equity exodus,” noted that this was the largest redemption over a 5-week period since August 2011.
So where is that money going?
In the past week, $3.5 billion went into bond funds and $1.0 billion went into precious metals funds, which offer exposure to gold. There was also $10.9 billion poured into money market funds, the largest inflow in 13 weeks.
Here is another interesting fact. As of last week commercials (smart money) have increased their net long VIX exposure to an all time high. As per out weekly COT reports.
And that’s just the start Goldman Sachs downgrades stocks
With stocks selling near historic high valuations levels and considering today’s fundamental backdrop, it is a literal miracle that the stock market is trading where it is today.
As you can imagine, I can keep going with the bearish premise. And there lies the problem.
Everyone is too bearish. Or are they?
The setup above can fire off in one of two ways. We either get a major sell-off in capital markets or the market is able to rally higher, to climb the proverbial wall of worry.
If you would like to find out what it will actually do, based on our timing and mathematical work, please Click Here.
5/17/2016 – A negative day with the Dow Jones down 183 points (-1.03%) and the Nasdaq down 60 points (-1.25%).
Before we get to that, consider the following.
“The reality is, there should be a relationship between GDP growth and profit growth, and that has largely been absent. We’ve been supporting profits growth with things like share buybacks and other unsustainable factors, and fooling ourselves into thinking that that’s actually sustainable profits. What this is pointing out is that… we are paying too much for the growth that we can expect to get out of the S&P 500,”
Now, let’s take a look at the following valuation metric. Shiller’s Adjusted S&P P/E Ratio.
Coincidentally, both metrics tend to agree. The market is overvalued by 50-75%.
Now, an argument can be made that today’s zero interest rates, future earnings, lower anticipated dollar, etc…. justify current valuation levels. I don’t believe that such a “This Time Is Different” notion is appropriate here. Today’s environment is NOT that different.
Long-term metrics that measure internal health and valuation levels of the market agree. The overall stock market is in a clear bubble territory. Reminiscent of the 1929, 2000 and 2007 tops. If so, long-term investors should anticipate no further gains from this point on. If anything, they should prepare for a big drop…..if history is any guide. Invest accordingly.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. May 17th, 2016 InvestWithAlex.com
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On April 18, we sold short the Aussie Dollar at 0.7733 AUD/USD. Over the 3 weeks since, it has been the weakest major currency of the six we follow, losing 6% over the period. We now have a built in gain. To find out what happens next Click Here.
To learn more about Demeter Research and Matt’s trading/analytical framework please Click Here.
In space, two aliens are talking to each other
The first alien says, “The dominant life forms on the Earth planet have developed satellite-based nuclear weapons.”
The second alien asks, “Are they an emerging intelligence?”
The first alien says, “I don’t think so, they have aimed it at themselves”
Jim Simons arguably runs one of the largest and most successful hedge funds ever, Renaissance Technologies LLC. Shockingly, in a rare interview last year Jim gave away his secret to market timing and the reason behind his hedge fund’s success. My jaw nearly hit the floor when he started talking about Euler Characheristic, cubes, spheres, toruses, vertices, edges, multiple dimensions, etc…. in his presentation.
The audience didn’t have a clue that the concept he was talking about is not some arbitrary mathematical theory, but the secret to his market success.
5/16/2016 – A positive day with the Dow Jones up 175 points (+1.00%) and the Nasdaq up 58 points (1.22%)
Over the last couple of weeks we have witness a number of headlines from the industry heavyweights.
But here is where it gets interesting. Warren Buffett is buying whatever Icahn is selling.
Who is right?
Both are. I believe it would be little unfair to compare what Mr. Icahn is doing to what Mr. Buffett is doing. It is a bit like comparing oranges to avocados.
First, Mr. Buffett takes an extremely long-term approach. He doesn’t necessarily care what the stock market will do this year or the next. It is more like a 5-20 year time frame. Second, by this point Mr. Buffett and Berkshire Hathaway are the stock market. Entirely too big and slow to move in and out.
Mr. Icahn on the other hand plays an entirely different game. He is a speculator who is small enough, in relative terms, to have the ability to move in and out at his heart’s content. When he sees short-term opportunities present themselves, he takes them.
And that’s the difference. At least based on my analysis. Carl Icahn sees the market a lot lower over the next 12 months. Mr. Buffett might see the same thing, but he is building his positions out with a much longer time frame in mind. Invest accordingly.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. May 16th, 2016 InvestWithAlex.com
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
Matt executed a trade in the 20+ Year US Treasury (TLT) EFT on 5/16/2016 at $131.83. Find out what that trade was (long or short) and why at Demeter Research.
To learn more about Demeter Research and Matt’s trading/analytical framework please Click Here.
