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Author: Blake Davenport

Bulls are at Highest Levels in Years!

Check out Brad’s commentary this week on:

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Bulls are at Highest Levels in Years!

Why don’t you give Brad a call and get his market insight on Sentiment personally?  Brad’s Active Alts SentimenTrader Long/Short Strategy combines several decades of experience and research and actively positions the portfolio to take maximum advantage of market extremes. In both directions.

Book a call on Brad’s calendar here.

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Leverage Works Until It Doesn’t

By John Del Vecchio and Brad Lamensdorf

Investors are levered. Up to their eyeballs.

Leverage works until it doesn’t.

Take a look at this chart below, courtesy of Advisor Perspectives.

Investors have taken on more and more leverage as the market has climbed higher. Negative balances are not quite to the levels of May, 2018 but they do dwarf the levels of February 2000 ad June 2007. That’s right before a major beatdown in the market.

Notice, investors had the highest positive balance in February 2009 about a month before the bottom and a generational buying opportunity.

Once again, the masses are asses. Over and over again we can easily see herd mentality at work. Combined with rich valuations and too much exuberance among the “dumb money” crowd, the market is setting itself up for disappointment in the intermediate-term.

As we pointed out in the September 29 Chart of the Week, the market was due for a bounce after tech leaders took it on the chin last month. That bounce occurred.

Many stocks rallied sharply. But don’t blink as now they are starting to fade rapidly. Worse they are coming down on heavy volume. There is real selling in these stocks.

With too many people leaning in one direction, especially with leverage, it makes the pain of a move to normalcy that much worse.

How should you prepare for the future?

Why don’t you give Brad a call and get his market insight personally?  Brad’s Active Alts SentimenTrader Long/Short Strategy combines several decades of experience and research and actively positions the portfolio to take maximum advantage of market extremes. In both directions.

Book a call on Brad’s calendar here.

 

 

 

 

 

 

 

Stock Market Sentiment Remains Complacent

By Brad Lamensdorf

The pros are back at it again.

The National Association of Active Investment Managers (NAAIM) Exposure Index is fully loaded into stocks.

Stock Market Sentiment Remains ComplacentStock Market Sentiment Remains ComplacentThe NAAIM is quick to point out on their own website that their own survey of members has little predictive value.

That begs the question, why take the survey in the first place?

There is one thing that is predictive.

Human nature.

Collectively, we make huge boneheaded errors. Look at that chart above, and the NAAIM index was at very low levels just before a huge run in the markets. 

That was when the best high reward / low risk trade was on the table. In fact, the best trade in years.

As usual, they were late to the game.

Now they have placed their bets and all of their marbles are on the table. This comes at a time when newsletters are too bullish, valuations are stretched, and speculators have taken levered lottery ticket bets in the options markets for the privilege of losing their money.

The Active Alts SentimenTrader Long / Short strategy uses numerous indicators, including sentiment, to identify market extremes and adjust exposure accordingly for superior risk-adjusted returns. To learn more, visit activealts.com 

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