Jeff Diercks

Long/short equity, momentum, trend following
Jeff Diercks
Long/short equity, momentum, trend following
Contributor since: 2010
Company: InTrust Advisors
All great comments infrontofyourback! Trend following works when their is an orderly turn in a stock or market.
If this market has been so managed that it works till it doesn't and then it drops quickly and like a rock, there are very few managers who will do well in that scenario.
If that happens and you are lucky enough to go to cash beforehand, better not have your money in a bank because they will take a portion of it on a "bail in."
It is certainly a tenuous environment!
However, that said, markets tend to anticipate major market moves. There are always some who are tipped off or in the know who start to sell (or buy) before major events and those signs are evident to those who watch. Even if this managed market starts to roll, instead of climbing on good or bad news, I doubt it happens overnight and there will be evidence in other markets that it is going to happen.
Thanks for your comments. Greg is right on in his commentary and I love to watch his videos as well. The thing he lacks and anyone lacks is the timing of this thing coming apart!
Hi Greg, I watch your videos all the time. I love them!
I wish I had enough time to do a daily video, but the nature of my business is just too time intensive.
Keep up the good work!
Anyoption, thank you for your comment. You are certainly right that global tensions are impacting gold prices. However, even before these tensions started rising gold started to consolidate in anticipation of something....something big I believe! It now appears that gold will eventually break to the upside and that could be bad for global stock markets.
Great post! Trend following really does work well if you understand that for equities it works best in secular bear markets.
Also if you combine multiple indexes and signals you can reduce volatility and the occasional desire to drift from the system due to periods of under performance. Unfortunately, the under performance usually comes when "buy and hold" is doing well, which makes it tough to hold onto this strategy. However, if you stick with it, the big payoffs comes during the larger than normal cyclical bear periods during the longer-term secular bear cycle. I think 2013 - 2014 could be the payoff years again.
I guess the ETF space must be like every other...there is innovation, growth, bloating and then consolidation and right sizing!
Isn't amazing how the dollar and short Euro trades came to a halt last week as Mario Draghi reassured the markets the Euro will remain intact? I don't know how we can trust anything constructive to come out of Europe, but it appears the markets are reading into this a coordinated easing effort by global central banks.
Despite whatever these Central Bankers do or don't do, it won't last long and before we see renewed dollar and short Euro appreciation. Next week will be very telling!
A global recession could keep rates down for at least the next 12-18 months. Obviously, it is a good bet rates don't go dramatically lower, however it's possible they stay low for some time before exploding higher as the real end game begins globally to inflate away excess debt on the backs of the middle class.
What is your plan now that the Euro didn't hold $1.27?
If FXE can move up from today's new multi-month low, it looks like 129.50 to 130 will be retested.
Good piece Tom! The breakout in long-term treasuries is even more evident on the weekly chart where we have price moved above the upper Bollinger Band last week. We also have a moving average crossover. It does appear that we may see some pullback here for the balance of the week and maybe next as you pointed out. http://scharts.co/JbdxtL
Seems a little funny to me that the market wants to move higher on declining momentum and volume ahead of the November elections. We have quickly moved up 7-8% on no volume and a series of opening market gaps in September.
Dare I say this price action seems fishy to me.
Could it be the best way to placate a restless populous is for the markets to make the average man feel richer between now and an important mid-term election? Gee! I wonder who would benefit by such a move and might be behind such market moves?
Nice job. I think the only other key market that you failed to really look at was the currency markets. The dollar's reversal yesterday definitely confirms that markets are anticipating further weakness ahead.

It wouldn't surprise me at all if the European sovereign debt markets became an issue again over the next few weeks or possibly an ensuing attach on Iran by either the U.S. or Israel. It is always amazing to me how the markets anticipate news that really is not privy to the general public yet.
Nice job Graham summarizing where we are at the moment!
What makes you think the Fed and the Central Banks around the world won't be able to forestall a crisis in September by lowering rates, printing more of their currencies or via quantitative easing?
Obviously, this tab becomes due at some point, but so far they have done a masterful job pushing this point way into the future. It's also been a disaster to fight the Fed so far.
By the way, check out a video update on the market and this VXN consolidation pattern at:

www.intrustadvisors.co.../
Thanks guys for weighing in. This graph is not the "holy grail." It is just another data input to think about. As Matt pointed out above it is a bit of a "risk on" / "risk off" and can be affected by the dollar movements to extreme relative to U.S. equities.
In my mind, today and possibly tomorrow's price action in stocks should really tell us whether we maintain a downward bias for equities or miraculously recover again.
Trend followers like us use a myriad of models for different asset classes and markets. We also use different models over differing time periods.

Some of our short-term models went bearish and we moved out of that exposure, while some of our longer-term models continue to flash a bullish sign. The end result has been that we have taken our net exposure down and are looking for a retest of last week's lows to initiate possible added exposure.
None of our models use this simplistic 200 day moving average as a signal.
Nice analysis. However, I believe the dollar is really driving this equation with crude oil. The dollar's rise again speaks to a possible late March and April correction in equities and commodities in my mind.
Also emerging countries have been weak relative to U.S. equities as many of these countries (China and India) are putting the breaks on run away growth. This has got to affect oil demand.
Richard, I agree with you on defaulting on debt. This could be inflationary as funding costs for government securities would rise dramatically, which is inflationary.
However, raising taxes would reduce consumer demand (deflationary). With the government the primary employer and consumer at present, if they cut budgets, salaries and projects, this will reduce demand and possibly raise the ranks of the unemployed. This is also deflationary. So there is a chance some government actions could continue certain deflationary trends already in the marketplace.
The prior comment is right on. Except to fight the trend is still "suicide." If the HFTs want to drive small caps....go along for the ride. Just make sure your prudent risk management is in place.
This lesson, I have learned the hard way. I haven't liked a thing about this market since the March 2009 lows. However, the trend is still up despite the building evidence of market manipulation and government induced speculation.
Bill,
Corrections are normal and so far each one since March has led to higher prices. The real question is which one of these corrections will turn into the next leg down in this secular bear market.
It looks to me like the VIX may need to hit the 15.80-16.80 range before we hit the ultimate bottom and reverse in a larger move down in the markets.
Good analysis John. Althought it has got to be painful to sit through the bounce being short. I think you will get a signal today that you were indeed right to hold the shorts.
Technically, the 60 minute market charts show we are in a rising wedge pattern that is unsustainable. We may break this pattern today and it may set the stage for the beginnings of what has been outlined above.
Many daily charts also had reversal candles on Friday that may be confirmed today. If confirmed this would represent a classic lower high for these charts.
This bull won't die that easily. Look for one more weak push higher as a exit and to relieve the short-term oversold condition. I agree with Mad Hedge Fund Trader, from here sell the rallies.
Did you run this on the last three days of the month as well? I believe these are also powerful up days for the S&P 500 on average.
This is just a technical bounce in a long-term downtrend. Purely a tradeable moment.
By the way, Bill40, I like your story. The problem is every country prints money. It's just we have a trade imbalance and trillions in debt that makes our ability to "make good" on that IOU less than a sure thing.
I think all this shows is that it is due to pull back to the trend line and got ahead of itself and its pattern. If you traded on this pattern alone, you would have your head handed to you.
Your point that "we listen to what the market is telling us that it wants to do" is the best part of this analysis.
Essentially, its easy to get all worked up with predictions by Jim Rogers or Dr. Doom, but nothing has changed yet. The trends are still up at this point. It would be silly to fight the trend.
This chart says debt growth. I assume it's year-to-year and not cumulative?
If it's just year over year growth, this is to be expected with tight credit markets and an overleveraged consumer. It has been tough to get credit even with a clean balance sheet over the past twelve months unless you qualified for government backed financing of some kind.
The trend is your friend until it stops being your friend. Trying to predict the end is a suckers game. Wait for the evidence, you will have more time than you think to move out of the way if Chris is indeed right.
GDX and GDXJ both displayed a candlestick doji reversal signal on Tuesday and confirmed the reversal yesterday. At least in the short-term both appear headed higher.
The dollar ($USD) also looks like it needs to take a corrective break. However, its weekly trend is solidly up and it longer-term trend may run for some months to come.
It will be interesting to see what happens to both the miners and the dollar beyond the next week to ten days.
Great comments and thoughts Graham.
I think Bert is right on with his analysis. Tops can take a very long time to full mature and there can be interruptions that prolong the process. Right now liquidity is king and as long as the Fed keeps pumping it into the system and other emerging nations are willing to take some of our paper (and that of other developed nations), this market will head up with mild corrections.
The real shocker is how little of our paper they are currently buying which could portend an end to this rally is coming sooner rather than later as confidence continues to erode in our fiat currency.