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:
  • Five Ways To Profit With Signals

    Subscribers are always asking me "What is the best way to profit from using's buy and sell signals?"

    There are so many that I thought I would list out the Top Five. Here they are:

    1. Build A Diversified Portfolio is an easy way to build a diversified portfolio of positions that each have their own set of buy and sell signals.

    Not every position in your portfolio will always go up in together with other positions. So why not build a portfolio that gets separate buy or sell signals on each piece? It is easy to do with our seven indexes!

    We even offer a few sample portfolios you can use in our member's area.

    2. Hedge Another Portfolio

    This is an option that few think about buy with all the leveraged ETFs out there, you can use one or more sets of signals to hedge another long-only portfolio.

    Let's assume you commit 70% of your capital to the long-only portfolio and the balance to your hedge. Let's assume you hedge with our signals for the S&P 500.

    You will make money in a bull market and then get signals to move to inverse ETFs in a bear market. If when you get the sell signal you buy a 2x leveraged inverse ETF, you would be effectively hedging 60% of your overall stock market with your net exposure just 10% long.

    Not a bad way to sit out a bear market!

    3. Portfolio Management

    I don't know how many times I ask potential clients for our advisory business "are you prepared for the next bear market?"

    They typically answer "no."

    I then suggest to them that they at least should know where the door is and when to exit through it.'s signals are a great way of gaining that intelligence. In fact our most stable and least likely to change signal, the S&P 500 buy and sell signals, may be just the ticket you need to find that exit and protect capital when the time comes.

    4. Market Exposure

    What if you looked at your current portfolio and then selected our index signals that most closely matched? You could then use the cumulative signals as your exposure meter.

    Let me explain how this might work in an example.

    Let's say you have a simple portfolio that 60% U.S. equities, 20% commodities and 20% international. So you would select our S&P 500 signals for the U.S. equity component. The DB Commodity index signals for the commodity piece and EAFE signals for the international allocation.

    Now let's say they are all on "buy" signals. Your exposure would then be 100%.

    However, let's say we issue a "sell" on the EAFE index. You would then have just two signals on a "buy" equaling 80% of your portfolio. So you might use those cumulative buy signals to reduce your overall portfolio exposure to 80%.

    In other words, use the buy signals as your cumulative measure of how much of your capital to have at risk at any given time.

    5. Manage 401(k) Risk

    For many people this is their largest liquid asset. So why do we just add money and never change the allocation, even in bear markets?

    Don't be that deer in the headlights when the next bear market comes! Instead use our signals to move to cash in your 401k and then back into equities when the coast in clear.

    Just using our S&P 500 signals for this purpose will more than pay for your subscription in protected capital when that mean old bear finally comes!

    I hope this helps. I you can think of other uses, give me a shout out. In the mean time, please consider a 30 day free trial of

    Nov 18 11:52 AM | Link | Comment!
  • Performance For October 2013

    October is not just scary due to Halloween, the market has historically held its own horror show in October.

    According to, October is known as the jinx month because of the crashes in 1929, 1987, the 554-point drop on October 27, 1997, back-to-back massacres in 1978 and 1979, Friday the 13th in 1989 and more recently October 2008 (lest we not forget).

    Seasonally, October ends the worst 6 month period for performance annually and marks the beginning of the best season six month period of the year.

    So I probably don't need to tell you the horror story we experienced in October! These numbers really tell the story!

    (click to enlarge)

    Yes, that is right! Big gains! Not carnage at all!

    It certainly fooled me as I failed to keep the "petal to the metal" in our separate accounts due to worries of a pullback in October that never materialized. In fact, I am beginning to wonder if real market driven corrections are a thing of the past in this new Fed driven environment.

    What worries me is the day the Fed stops supporting this market. Could we see another October 27, 1997?

    It's worth considering and its also worth planning for that day, lest you be the last one to sit down when the music stops. Performance

    Despite my problems in our separate accounts, did pretty well in October. As they say the "trend was our friend!"

    (click to enlarge)

    (click to enlarge)

    It still holds that the S&P 500 index has been near impossible to beat in 2013! In fact, it is during periods like these that we sometimes get our separate account clients pulling out 401(k) statements and crowing about their investment management skills due to the returns in the S&P 500 Index fund this year. They then turn to us and say "how come you haven't done this in 2013"

    The answer is always the same "every dog has his day and this is just the S&P 500's day." Truth is we could be months or even years away from the next trending market where we outperform. That market may be the next bear market. I do no it will come and that their will be a reversion to the mean (upward) for trend followers. There always is!

    Our sample Equal Weighted Portfolio had its best returns in October. Difficult cross currents in the commodity, gold and dollar complexes hurt returns for the sample Global Opportunities Portfolio.

    Please note that the benchmark NewEdge CTA Trend Following Sub-Index has a decent month. Our strategies continue to outperform this index of the largest Commodity Trading Advisors due primarily to greater equity exposure and less exposure to the murderous commodity sectors of the market.

    Market Forecast - Balance of 2013

    Sunny and beautiful with a light winds from Washington. In other words, seasonality is now on our side. The Fed continues to provide support for the market. So aside from brief periods of profit taking or market consolidation, this market is likely heading up despite the fact that many long-term indicators are flashing "overbought."

    I personally feel this market will ignore those metrics as long as the Fed remains accommodative. If it decides to taper, watch out!

    However, how can it taper? We already saw that just the hint the Fed might taper its Quantitative Easing (QE) program sent interest rates spiraling upward. Can the U.S. really afford higher interest rates on top of spiraling government borrowing? The answer to that is no! The Fed is trapped in QE to infinity!

    Nov 04 2:53 PM | Link | Comment!
  • Could "Risk Off" Be Here Again

    There has been one constant since the March 2009 market lows and that is change. This market has been one of constant rotation between "risk on" and "risk off" trades.

    This trade has even become so prevalent that a number of ETF providers have even fashioned ETFs to provide coverage to one or both trades. The first provider to do so was PowerShares with the S&P 500 High Beta ETF (NYSEARCA:SPHB) and their S&P 500 Low Volatility ETF (NYSEARCA:SPLV).

    The high beta ETF (or high volatility) includes the usual suspects including financials, technology, consumer discretionary, industrials and material stocks. The low volatility portfolio includes health care, energy, utilities, and consumer staple stocks.

    Prior to the introduction of these two ETFs, the best way to get a handle on risk on vs. risk off was to compare consumer discretionary to consumer staples on relative basis, as you can see below.

    (click to enlarge)

    When this chart shows rising prices, consumer discretionary is leading and risk is on. When price is declining, consumer staples is leading and risk is off.

    With the introduction of these two risk on / risk off ETFs, that comparison is even simpler! Here is a chart of the High Beta (risk on) ETF relative to the Low Volatility (risk off) ETF.

    (click to enlarge)

    So what are these charts telling us today?

    Let's start with the consumer discretionary / staples price relative chart. As you can see, risk has turned down and it appears that risk off will be the place to be until we reach support at the red diagonal trend line. Based on the past, this could be a period as long as three - six months.

    The second High Beta / Low Volatility price relative chart is telling us that the risk on trade is at 2012 resistance (black horizontal line). It is also telling us that much of the past 6-7 month's climb has been within a wedge pattern that is usually a bearish pattern (blue dashed lines) and ultimately resolves its self to the downside. Finally, this chart is telling us the former pattern has been broken and we are now hanging around in "no man's land" between prior channel support (pink dashed lines) and 2012 resistance.

    A break of channel support would likely mean a move to the bottom of the channel. Since risk is usually associated with rising markets, this would likely mean a corrective or sideways market would ensue.

    If the risk on relative to risk off can break 2012 resistance, we will likely see further market gains. However, given both price relative charts, I see this as a slim possibility.

    This is probably what all the hedge fund managers are seeing and why they have been and continue to pull money out of this market.

    Hedge Funds Just Unloaded The Most Stock Since December 2008 via @themoneygame

    - (@Stock_Signal) October 30, 2013

    Tags: SPLV, SPHB, XLY, XLP
    Oct 30 12:13 PM | 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.