Warning: Declaration of YOOtheme\Theme\Wordpress\MenuWalker::walk($elements, $max_depth) should be compatible with Walker::walk($elements, $max_depth, ...$args) in /home/customer/www/lmtr.com/public_html/wp-content/themes/yootheme/vendor/yootheme/theme/platforms/wordpress/src/Wordpress/MenuWalker.php on line 8

THE LMTR EDGE:

Join over 25,000 investors and get alerts for:
  • Market Timing Reports
  • Sentiment Updates
  • Chart of the Week
  • Weekly Podcasts
  • The Magic Number - Top Stocks

Category: Chart of the Week

Nearly Every Stock is Up. Where to Next?

By John Del Vecchio and Brad Lamensdorf

The market has been the little engine that could over the last year. After a nasty move down during the COVID hit, stocks have done nothing but gone up.

Nearly every stock.

Market breadth is now reaching extreme highs.

Take a look at this chart courtesy of SentimenTrader.com

Nearly Every Stock is Up. Where to Next?
Nearly Every Stock is Up. Where to Next?

As the chart illustrates, the percentage of stocks in the S&P 500 that are above the 200-day moving average hit 95.23%.

That’s a 15-year high.

From here, one might expect a bit of a cooling off. After all, everything is up. We are now in a situation that is 180 degrees from a year ago.

From here, it likely gets a bit more challenging to generate excess returns.

Can stock push higher from here?

Absolutely.

Highs may be tougher to predict because people can keep buying and buying. On the other hand, bottoms may be easier to see because once they have sold all they can, the market looks very washed out and the only place to go is higher.

But at 95%, a level not hit going back 15 years, things would have to be awfully different this time for the not to be a meaningful pullback in stocks sooner than later.

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.

You may book a call here.

 

Weak(er) Hands are Holding More Stock

By John Del Vecchio and Brad Lamensdorf

Buying climaxes continue to jump, just hitting the highest level in year. A buying climax is when a stock makes a 52-week high but then closes down for the week.

This is a sign of distribution.

As the market inches higher, more and more distribution is occurring. Investors and speculators are selling off the moves higher in an increasing number of stocks. Ideally, we would like to see strong buying power as the indexes push higher.

The trend in buying climaxes is a warning sign of weakness under the market.

According to research from InvestorsIntelligence, traders selling off buying climaxes are correct 80% of the time over the next four weeks.

Given the increase in buying climaxes it would not be a surprise to see some market weakness in the coming weeks. Shares have exchanged hands from the strong to the weak in greater and greater proportion.

Weak(er) Hands are Holding More Stock
Weak(er) Hands are Holding More Stock (Chart provided by chartcraft, chartcraft is a division of https://www.investorsintelligence.com)

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.

You may book a call here.

DISCLOSURE: LAMENSDORF MARKET TIMING REPORT

Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.

 

Massive Leverage Suggests Painful Downside (When it Comes)

By John Del Vecchio and Brad Lamensdorf

Many investors have short-term memories. In late 2018 as speculators came off margin
there was a very painful decline. Speculators got a lump of coal in their stocking for
Christmas that year. This set up a very tradable bounce in early 2019.

Fast forward to 2020, and take a look at just how fast the balances decline once COVID
hit. While COVID by itself was a scary event for the markets and the world at large, the
massive amount of negative balances likely contributed to the pace and severity of the
decline. It was a record for the shortest time from a bull market to a bear market.

That record may be broken next time as negative balances have exploded yet once
again.

Massive Leverage Suggests Painful Downside (When it Comes)
Massive Leverage Suggests Painful Downside (When it Comes)

By itself, the level of margin is not an indicator that market is about to crater. In
fact, short-term we are bullish as the market, particularly in technology stocks
became too oversold.

However…

When the tide turns, this will just make the downside just that much worse. It will likely
happen swiftly as peculators come off margin all at once

There are pockets of speculation everywhere. Look at the watch market. Steel Rolex
watches are through the roof, in just 2021 alone. That’s just one example among many.
Of course, people can borrow against their portfolio to purchase all sorts of baubles.
Items that have no liquidity in a swift move to the downside. Shockingly, the banks don’t
much care what you buy when you borrow against your portfolio.

This too will lead to more pain once the market experiences a downdraft.

In our view, this presents opportunities going forward for individual stock selection and
for tactical risk management.

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.

You may book a call here.

DISCLOSURE: LAMENSDORF MARKET TIMING REPORT

Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.

 

The Fed is Getting Tipsy on TIPS

By John Del Vecchio and Brad Lamensdorf

Inflation expectations are headline news recently. The big question on many market watchers’ minds is what impact the reopening of the economy post COVID and flush with stimulus will have on inflation. Many have downplayed inflation expectations and the view that there will be a huge burst of inflation in coming months.

If that’s the case, why is the Federal Reserve – which has a vast balance sheet – snapping up TIPS? And, not just snapping them up, but buying them hand over fist!

Take a look at this chart:

The Fed is Getting Tipsy on TIPS
The Fed is Getting Tipsy on TIPS

Going back about 17 years, the current TIPS buying from the Federal Reserve is not just outside the norm. It’s in another realm.

Inflation as measured by the CPI is controversial. After all, adjustments are made for advances in technology and its impact in keeping inflation suppressed, for example.

The simple question is what does the Federal Reserve know that we don’t?

Extremes in any market are where the best opportunities lie. And, this is extreme.

Active Alts uses dozens of indicators to monitor extremes and pounce on opportunities with tremendous risk / reward ratios in the market. Book a call with Brad to learn how these indicators can help you navigate the markets in 2021 and beyond.

 

 

General Disclaimer

Active Alts, Inc. (“Active Alts” or the “Manager”) is an investment adviser registered with the state of Connecticut. Active Alts manages the Active Alts SentimenTrader L/S Strategy and SentimenTrader serves as the research/index provider for the strategy. Registration with the state of Connecticut does not imply a certain level of skill or training.
The information set forth regarding securities and investment advice was obtained from sources which we believe reliable but we do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities. The performance quoted above represents past performance and current performance may be lower or higher than the performance date quoted. Past performance does not guarantee future results as investment returns may vary from time to time depending upon market conditions and the composition of the strategy.

SENTIMENTRADER DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. Investors should consult their tax advisors before making investment decisions, as well as realize that past performance and results of the strategy are not a guarantee of future results. The Active Alts SentimenTrader L/S Strategy is not intended to be the primary basis for investment decisions and the usage of the strategy does not address the suitability of any particular investment for any particular investor.

The Standard & Poor’s 500 Index is provided for informational purposes only. Indices are not indicative of the strategy and may not be suitable for comparison purposes. Indices that may be shown do not reflect the deduction of advisory fees, commissions or other transaction charges.
Fees charged by the Firm are negotiable and may vary by client.

Before making an investment, you should consider your goals, objectives, time horizon and risk tolerance to be sure that this investment is suitable for you. There are no guarantees that the strategy will perform as it did in the past. You could lose money and you should not invest unless you can afford to lose some or all of your invested funds.

Calculation Disclaimer
Dividends are included in the performance results. The Manager have also calculated the net results by applying the highest management fee to be charged to advisory clients. Results will vary based on the amount of the fee applied. The results were also calculated by rebalancing the long and short portfolios on a weekly basis. The portfolio selection was and will be generated from the proprietary Active Alts stock selection process which is based on quantitative factors and mechanically driven. Commissions were added. No taxes were deducted; no borrowing costs were added; and no ex-dividend costs were included from the short portfolio.
Downside deviation is a measure of downside risk that focuses on returns that sell below a minimum threshold of a Minimal Acceptable Return (MAR).
Sharpe ratio is the average return earned in excess of the risk free rate per unit of volatility of risk.
Time to recovery is the duration of time it takes to restore the value lost.
Beta is a measure of a stock’s volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0.
Annualized volatility – Historic volatility measures a time series of past market prices. Implied volatility looks forward in time, being derived from the market price of a market-traded derivative (in particular, an option).
Max drawdown is an indicator of the risk of a portfolio chosen based on a certain strategy. It measures the largest single drop from peak to bottom in the value of a
portfolio (before a new peak is achieved).
(1) Indicators drive the exposure while a proprietary Long & Short portfolio are rebalanced monthly for the strategies equity drivers.
(2) Commissions were added to the exposure rebalance as well as the monthly stock rebalance.

 

No Inflation? Bullus Shitus

By John Del Vecchio and Brad Lamensdorf

If you’re an economist that lives in an Ivory Tower, there’s no inflation to speak of.

The CPI was up a seasonally adjusted 0.3% most recently.

If you live in the real world, you’d call that Bullus Shitus, as one might say in pig Latin.

Take a look at world food prices in the chart below:

No Inflation? Bullus Shitus
No Inflation? Bullus Shitus

Prices are straight up since last Summer.

People are not understanding that assets are going up because there is inflation and the purchasing power of money is going down.

But the bond market has been in a nasty down trend and it will eventually need to adjust to a higher rate.

This also will create multiple compression in the stock market and cap rates in real estate.

All the more reason to start to hedge your portfolio.

Speaking of hedges…in case you missed it…

Brad hosted a webinar on February 9th talking about achieving better risk-adjusted returns in an overheated market.

The Active Alts SentimenTrader Long / Short Strategy returned 25.87% in 2020 compared with 7.86[1] % in the Credit Suisse Long / Short Index.

What’s more, is that the Active Alts SentimenTrader Long / Short Strategy experienced a 9.99% draw down and held an average cash position of 19.4%[1] for the year.

The webinar dives into:

  • • How to navigate the rocky markets we have been living through
  • • How to generate alpha on the long and short side of the market
  • • The power of our proprietary exposure gauge and what it means for investment returns in current market conditions

If you missed the webinar, you can watch it here!

Brad Lamensdorf Jason Goepfert Webinar

General Disclaimer
Active Alts, Inc. (“Active Alts”  or the “Manager”) is an investment adviser registered with the state of Connecticut. Active Alts manages the Active Alts SentimenTrader L/S Strategy and SentimenTrader serves as the research/index provider for the strategy. Registration with the state of Connecticut does not imply a certain level of skill or training.
The information set forth regarding securities and investment advice was obtained from sources which we believe reliable but we do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities. The performance quoted above represents past performance and current performance may be lower or higher than the performance date quoted. Past performance does not guarantee future results as investment returns may vary from time to time depending upon market conditions and the composition of the strategy.

SENTIMENTRADER DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. Investors should consult their tax advisors before making investment decisions, as well as realize that past performance and results of the strategy are not a guarantee of future results. The Active Alts SentimenTrader L/S Strategy is not intended to be the primary basis for investment decisions and the usage of the strategy does not address the suitability of any particular investment for any particular investor.

The Standard & Poor’s 500 Index is provided for informational purposes only. Indices are not indicative of the strategy and may not be suitable for comparison purposes.   Indices that may be shown do not reflect the deduction of advisory fees, commissions or other transaction charges.
Fees charged by the Firm are negotiable and may vary by client.

Before making an investment, you should consider your goals, objectives, time horizon and risk tolerance to be sure that this investment is suitable for you.  There are no guarantees that the strategy will perform as it did in the past. You could lose money and you should not invest unless you can afford to lose some or all of your invested funds.

Calculation Disclaimer
Dividends are included in the performance results. The Manager have also calculated the net results by applying the highest management fee to be charged to advisory clients. Results will vary based on the amount of the fee applied. The results were also calculated by rebalancing the long and short portfolios on a weekly basis.  The portfolio selection was and will be generated from the proprietary Active Alts stock selection process which is based on quantitative factors and mechanically driven. Commissions were added. No taxes were deducted; no borrowing costs were added; and no ex-dividend costs were included from the short portfolio.
Downside deviation is a measure of downside risk that focuses on returns that sell below a minimum threshold of a Minimal Acceptable Return (MAR).
Sharpe ratio is the average return earned in excess of the risk free rate per unit of volatility of risk.
Time to recovery is the duration of time it takes to restore the value lost.
Beta is a measure of a stock’s volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0.
Annualized volatility – Historic volatility measures a time series of past market prices. Implied volatility looks forward in time, being derived from the market price of a market-traded derivative (in particular, an option).
Max drawdown is an indicator of the risk of a portfolio chosen based on a certain strategy. It measures the largest single drop from peak to bottom in the value of a
portfolio (before a new peak is achieved).
(1) Indicators drive the exposure while a proprietary Long & Short portfolio are rebalanced monthly for the strategies equity drivers.
(2) Commissions were added to the exposure rebalance as well as the monthly stock rebalance.

2018 - All Rights Reserved © LMTR, LLC

Privacy Policy - Contact Email: info@lmtr.com