The Portfolio Moves To Make Going Forward Are The Ones That Require The Least Amount of Effort
As a method of analysis, the measurement of expectation versus actuality is rarely mentioned. It is, however, an extremely valuable tool for experienced investors to gauge relative strength or weakness in a market. The default stance of investors is that if they present a set of data that dictates the markets should behave in a particular manner, should the markets behave in a contradictory manner to what is expected, then the analysis was incorrect and should then be reevaluated. This default method of discounting one's own analysis in the face of contradictory circumstances as judged by the performance of the market is correct only if one's own analysis is faulty to begin with, based on sets of data that carry little statistical or historical relevance. If an investor presents a robust set of data that, taking our most recent assessment that the markets should have declined this past week as an example, and instead the markets do the exact opposite of what that data dictates, what can be gained from that action? Very simply, the S&P 500, Nasdaq and Dow should have declined this past week. Everything from technicals, to intra-month seasonal patterns, various forms of cyclical data, sentiment and news flow created the perfect environment for a decline of some substance. Instead, every single time the markets attempted to move down what SHOULD have been the path of least resistance, it only served to reveal that the REAL path of least resistance was on the upside. This is extremely valuable information for what is taking place in the markets currently. It tells of strength irrespective of obstacles, with the natural impetus being to move through those obstacles expeditiously and without hesitation. It also tells of substantial bids being beneath the market as the exact scenario discussed here for months of investors being under-exposed to equities is now playing out in real-time with investors scrambling to make their numbers in the face of a stock market and economy that is much stronger than anyone expected. As the door on 2019 slowly slams shut, pressure will continue to build, creating what will increasingly turn into a steady, low volatility grind into resistance a couple percentage points above where we are sitting currently on the major averages. The only question to ponder at this juncture of the bull market is whether this slow grind will turn into a fast blow-off that renders any and all resistance ahead a moot point as we move into 2020? Momentum carried over from bullish calendar years very often last into January-March. With that said, for the time being, there is not a single reason to...
A New Signal From The Market About Future Direction
In the midst of the endless volumes of erroneous data investors have been fed in 2019, there is but one piece of data that hasn't lied, deceived or bludgeoned investors with a rubber mallet: price. Not price in its various biased forms where investors take their opinion of the market and somehow sow it into the fabric of what they expect the markets to do. Price in its purest form. Without bias. Completely left on its own to interpret as it wants to be interpreted. And price is once again cultivating a statistically significant signal for investors in the midst of endless noise. When we last left off a discussion took place with respect to the difficulties the market faced leading into option expiration. With just a couple days left until opex, it is not unreasonable to claim that the markets have handled what should have been difficult period gracefully. That is a valuable signal in and of itself. By all means and measures, the S&P 500 should have, at the very least, tested 3060 this week. It had every reason to, at a minimum, to make an attempt. In fact, we have seen multiple attempts since last week at taking the market lower. Each and every time bidders came into the equation creating what is now an ideal consolidation where there should have been chaos. Another valuable signal. With that said, the consolidation for the S&P 500 above 3060 in such a defined, well thought out and graceful manner is a bullish signal going into next week. The next stop for the S&P 500 is 3150-3160. A level discussed as being the ultimate November target back in late October when the rest of the Wall Street was still trying to figure out if this was still a bull market. Stay mindless my friends. Zenolytics now offers Turning Points and ETF Pro premium service Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction...
Suddenly Everyone Gets It
Everyone gets it. Simultaneously, miraculously and lacking any grace whatsoever, the investment community has embraced the bullish thesis in all its forms. Recession? Never was going to happen. Inverted yield curve? For the birds. U.S. and China? Bromance for life. All of these realizations have come to pass because of one thing and one thing only: PRICE. The market has gone up to new highs, narratives are being built around that price movement, reflexivity is creating reality. And this is exactly what a majority do not truly understand. There are perhaps 26 people on Earth that get this. The markets will keep building a narrative around price movement, further reinforcing new fundamental positives that 6-12 months down the road are headline news. This reflexive relationship will only stop when one of two things happen: Data points that are overwhelmingly negative appear seemingly out of the blue, creating gaps that interrupt the reflexive cycle. The consensus bullish sentiment becomes so substantial that it tips the markets into a negative price cycle, creating a reflexive cycle on the downside that creates a whole new set of negative narratives that further create a new set of negative fundamental realities. Neither of these two events are imminent or worthy of further discussion. They should simply be compartmentalized in your mental Rolodex for sake of future reference. While there will be bumps in the road as outlined most recently just a few days ago, we are now at a point in time in this bull market where all things that could be right for equities are simultaneously working together to reinforce the uptrend within the next leg of a secular bull market that will very simply create spinning heads on Wall Street that the kid from The Exorcist would be jealous of. Zenolytics now offers Turning Points and ETF Pro premium service Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that...
Here Is How To Play The Market Turbulence Between Now and Option Expiration
We're all playing a game here. It's a game that involves multiple levels and nuances that none of us can quite grasp the exact depth of. Nevertheless, we show up everyday with the intention of making the best decisions possible in the face of quickly shifting circumstances and volatility. Given that this is a game, it's important to understand when the nozzle of the manipulation hose is turned onto the power stream setting and when it's set to just drip. In the 5-7 trading leading up to option expiration, there is a tendency for the skull drudgery to be amplified considerably. The reason is simple: the derivatives market is a massive entity and as such, whenever there is an abundance of money on the line, there will be efforts to maximize profitability for the house and minimize profitability for the players. We're setting up between exactly now and next Friday the 15th for an abundance of deceptive market moves that will be neither useful or real. In fact, they should largely be ignored. However, since it's our intention to profit from these types of market moves, here are the plays: Defensive sectors: Reits looks especially attractive. Single family rental reits, such as INVH and AMH have been a favorite here for nearly all of 2019. Metals: While we are intermediate term bearish on gold, there is a small window there where a 1-2 week move up could yield some profits. KL is a leader in the sector, as well as a favorite from a trading perspective. Short financials: Financials have had a nice run. They are susceptible into option expiration next week, as interest rates will likely soften a bit in the midst of market chaos. Long housing: With interest rates moving down, housing will attract some dip buyers. There has been some fairly substantial profit taking recently, allowing an opportunity to gain short-term exposure. The firepower gained by the market by throwing a few curveballs to investors at this point in the game should allow for a move to 3150 to take place in the S&P 500 by month end. Game on. Zenolytics now offers Turning Points and ETF Pro premium service Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC...
Ghost
This bull market is a ghost. Nobody sees it. Those who do see it view it as an aberration with little to no staying power. The level of disbelief with respect to the bull market of the past decade has not diminished in the slightest. It has only been upended by varying degrees of cynicism. Cynicism with respect to the economy. Cynicism with respect to the Fed. Cynicism with respect to the markets. Cynicism with respect to politics. As we are in the process of kicking off the next leg of the bull market, this note serves as a reminder that there only a handful of individuals who have fully grasped what we are in the midst of presently. Those individuals can be counted on one hand. That level of disbelief is a continuation pattern in and of itself. Never mind the fact that the price pattern, overall sentiment, global central bank liquidity, economic resilience, fiscal stimulus measures and so on, are creating a virtuous cycle the likes of which the modern financial system has never witnessed. We are getting layers of stimulus piled onto an already hot U.S. stock market while central bankers globally get on their knees praying to the economic gods for inflationary fireworks and doing everything possible to unleash that inflation worldwide. Yet here we are with an overwhelming majority of investors who refuse to acknowledge the truth of what is occurring simply because they have bad case of recency bias, as well as an incomprehensible tendency to believe that since the bull market is X number of years old then it is mature, being susceptible to all types of negative outcomes simply because it has been persistent in nature and extraordinary in strength. The exact reason investors are avoiding this market is the exact reason investors should be buying this market: It has been persistent in nature and extraordinary in strength. Secular bull markets have expansionary tendencies in every single facet of their existence. This means that not only do multiples expand, not only do market caps expand and not only do various measures of sentiment expand, but the duration is also subject to expansion. Your grandmother's secular bull market does not compare to the secular bull market of present. Each successive secular bull market redefines expectations moving forward, leaving those who rely on predictable, stale data scratching their heads as they nervously adjust their bow tie while watching CNBC and studying charts of historical price to earnings ratios. Turn off everything. Everybody is lost. Zenolytics now offers Turning Points and ETF Pro premium service Click here for details. Disclaimer This...