Seeking Alpha

Jeff Diercks'  Instablog

Jeff Diercks
Send Message
Jeff Diercks, is an investapreneur and recovering CPA. He actively trades his own money and manages the assets of a select group of clients at InTrust Advisors, a Tampa, Florida based wealth management firm focused on trend following and price momentum strategies utilizing ETF securities. Mr.... More
My company:
InTrust Advisors
My blog:
InTrust Advisors
My book:
View Jeff Diercks' Instablogs on:
  • Where Are Bond Yields Going? Don't Let Them Sneak Up On You!

    Ten year treasury bond yields ticked up .50% in May, a big move for the bond markets that equates to a 2.5% loss in value. So where are bond yields headed? In this video we try to answer that question.

    Here is a link if the video does not display right on the blog post:

    Tags: IEF
    Jun 20 2:02 PM | Link | Comment!
  • Performance For May 2013

    The month of May proved to be a very good if you loved U.S. equities and were in a broad index fund. If you were trying to actively trade or manage a portfolio, it was a very tougher month.

    Although you may not be able to tell from the pure performance numbers (see below), May was a month of extremes. First, there were extreme market moves to the upside. Stocks exploded higher in early May riding on the coat tales of Japanese Quantitative Easing and a feeling by the market participants that developed market Central Banks had to do likewise in stealth currency war between the world's largest economic markets.

    Then someone almost overnight flipped on the sell signal in Japan. We woke up to an 8% down opening here in the U.S. Japan is the largest component of the EAFE Index and continued weakness in this country really weighted on the overall index during May. By the way, there still is no economic reason for the destruction in the Nikkei, literally someone decided to sell big on this index in thin overnight trading over several days. This index has had historically low volatility, but I would say an 8% opening decline on the index puts the whole "safe haven" thesis to rest.

    About the same time came conflicting stories between what the Federal Reserve Governors were saying in speeches before various groups about further Quantitative Easing and what the minutes to the recently completed Fed meeting stated. In truth with borrowing down and economic activity up in the U.S., the Fed was already planning how it would taper back its QE to infinity. This sent bond yield rising and bond prices plummeting in one of the biggest move in years. The carnage even included high yield bonds, which typically trade with equities. Of course, historically small yield spreads over treasuries didn't help the high yield sector.

    The result, a very bifurcated market as you can see below.

    Stock-Signal Performance

    The Stock-Signal individual index and sample portfolio performance really mirrored the market activity highlighted above. As an example, our equal weight sample portfolio had flat performance despite the NASDAQ and S&P 500 indexes having fantastic months. Unfortunately, the EAFE and High Yield indexes completely offset gains in those two indexes.

    Our Global Opportunities sample portfolio was again the better performer this month due to big profits in our short (inverse) positions in gold and commodities. The dollar even chipped in for the month with a modest gain.

    (click to enlarge)

    (click to enlarge)

    On a year-to-date basis, the Stock-Signal sample portfolios continue to make money. However purely buying and holding the S&P 500 index continued to be the big winner for 2013. Note, however, that continues to outperform the CTAs trading similar trend following strategies.

    Markets like these drive active managers crazy as they do not adequately compensate us for our risk process and any Tom, Dick or Harry can look like a genius just by holding the broad market index. The truth however is that markets rarely go straight up and at some point you will be happy that risk management is important to active managers and to

    Market Forecast - June

    So with so much action in May, what does June have in store?

    First, let me remind you that my forecast is just an educated guess and should not be relied upon. It is just for educational purposes (and fun).

    So enough with the disclaimers, here is what we see. First, this market and the U.S. market in particular is very extended. Markets tend to move up and down above and below a simple moving average. If you looked at the S&P 500 relative to a simple 20 period moving average on a weekly chart, you would see it is very extended relative to the moving average of price. This doesn't mean that price cannot become more extended, but chances are there is a reversion to the mean for the S&P 500 in June. My target is a drop to at least 1600 on the S&P 500 in the month of June.

    (click to enlarge)

    Longer term, we would not be surprised if stocks took the summer off. I could easily see a repeat of past summers where we decline in June, rally in July and August and get hammered in September or October. So strap on your "big boy pants" because this summer could be a wild one!

    Jun 20 1:57 PM | Link | Comment!
  • Reading The Gold Charts Like A Pro

    So much has been written about where the price of gold will go over the next few weeks, months or years. So much of this information is biased based on a writer's gut, business interest or long-term thesis.

    One of the great things about looking at investments purely on a technical basis is a lot (not all) the biases can be eliminated and a clear picture emerges of where an investment will be going.

    For instance Gold (see chart) was clearly in an uptrend from 2009-2011 as evidenced by the fact that price was above its blue 50 period moving average.

    (click to enlarge)

    Then the unthinkable happened, gold began to consolidate for more than year and half. During this time, I have to admit that your guess would be as good as mine as to whether we would be heading higher or lower. In fact, I would say the odds favored a move higher.

    Then in April 2013 we broke trend support (yellow line) and now the direction of gold is much clearer. That direction is down!

    Do you see how in the uptrend, the price of gold would move up and then correct back towards the moving average? This is normal price action in an uptrend. Higher highs and higher lows is the norm.

    The reverse will likely be true in this downtrend!

    Right now we are quite extended to the downside in comparison to the blue 50 period moving average. So the chart watcher would expect a move back towards that moving average before we could see further weakness.

    My guess is gold bounces here if it can hold above 1321 and bounces all the way up to 1550 to 1600 an ounce (at or just above the yellow line that was prior support now turned resistance).

    Thereafter barring unforeseen market forces (i.e. Central Bank intervention), the trend should continue to the downside. A 61.8% retracement of the move from 2009-2011 would put a price target at roughly 1100-1150.

    Disclaimer: This analysis is not meant as buy or sell recommendation. This analysis of gold is just for educational purposes.

    Tags: Gold
    May 22 9:41 AM | Link | Comment!
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.