Erik McCurdy's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.com/user/668911/comments http://seekingalpha.com/instablog/668911-erik-mccurdy/313721-the-challenge-of-a-secular-bear-market?source=feed#comment-2707891 2707891
http://bit.ly/wovgbt]]> Thu, 16 Feb 2012 18:21:40 -0500
http://bit.ly/wovgbt]]> http://seekingalpha.com/instablog/668911-erik-mccurdy/313721-the-challenge-of-a-secular-bear-market?source=feed#comment-2666561 2666561 Wed, 15 Feb 2012 13:21:11 -0500 http://seekingalpha.com/article/314662/comments?source=feed#comment-2115146 2115146
http://seekingalpha.co...

Given AMZN's extreme valuation, it will likely experience a massive decline next year as the cyclical bear market that began in May proceeds.]]> Mon, 19 Dec 2011 08:13:20 -0500
http://seekingalpha.co...

Given AMZN's extreme valuation, it will likely experience a massive decline next year as the cyclical bear market that began in May proceeds.]]> http://seekingalpha.com/instablog/668911-erik-mccurdy/227714-stocks-struggle-to-break-out-of-trading-range?source=feed#comment-2097057 2097057
Best,
Erik]]> Sat, 10 Dec 2011 21:02:41 -0500
Best,
Erik]]> http://seekingalpha.com/instablog/668911-erik-mccurdy/241958-the-big-picture-remains-bearish-for-stocks?source=feed#comment-2082620 2082620
Yours is the typical, conventional perspective when it comes to interpreting and analyzing market data. However, if it were true that market behavior provided no statistically significant predictive data, it would be impossible to forecast cyclical market turns with a high degree of reliability and our CTS has identified more than 90% of those long-term turns since 1940. The system details are provided at the following article at Advisor Perspectives if you are interested in learning more about it.

http://bit.ly/uxufRp

Best, Erik]]> Sun, 04 Dec 2011 17:28:11 -0500
Yours is the typical, conventional perspective when it comes to interpreting and analyzing market data. However, if it were true that market behavior provided no statistically significant predictive data, it would be impossible to forecast cyclical market turns with a high degree of reliability and our CTS has identified more than 90% of those long-term turns since 1940. The system details are provided at the following article at Advisor Perspectives if you are interested in learning more about it.

http://bit.ly/uxufRp

Best, Erik]]> http://seekingalpha.com/instablog/668911-erik-mccurdy/227714-stocks-struggle-to-break-out-of-trading-range?source=feed#comment-2022737 2022737
"I noticed that PMI used to have a section on the gold mining index but is not longer there in the daily e-mails and on your new website. I ask because I am interested in this sector, will you be no longer be tracking the gold mining index or only provide updates when important turning point signals are triggered?"

Our service is now focused on providing better coverage of the five primary markets that we monitor (stocks, 10-year treasury note, US dollar, gold and oil), but we will continue to provide GDM updates whenever significant technical developments occur.

Best,
Erik]]> Mon, 07 Nov 2011 12:20:50 -0500
"I noticed that PMI used to have a section on the gold mining index but is not longer there in the daily e-mails and on your new website. I ask because I am interested in this sector, will you be no longer be tracking the gold mining index or only provide updates when important turning point signals are triggered?"

Our service is now focused on providing better coverage of the five primary markets that we monitor (stocks, 10-year treasury note, US dollar, gold and oil), but we will continue to provide GDM updates whenever significant technical developments occur.

Best,
Erik]]> http://seekingalpha.com/article/305862/comments?source=feed#comment-2022688 2022688
May 2011.

Best,
Erik]]> Mon, 07 Nov 2011 12:09:26 -0500
May 2011.

Best,
Erik]]> http://seekingalpha.com/instablog/668911-erik-mccurdy/227714-stocks-struggle-to-break-out-of-trading-range?source=feed#comment-2019692 2019692 Sat, 05 Nov 2011 18:58:35 -0400 http://seekingalpha.com/instablog/668911-erik-mccurdy/227714-stocks-struggle-to-break-out-of-trading-range?source=feed#comment-2010378 2010378
That's why we use a combination of technical and cycle analysis to identify likely inflection points. With one focused on price and the other on time, you can construct relatively narrow windows for turning points across all time frames with a high degree of statistical confidence. The 12 to 18 month and 30% to 50% windows are based on "typical" cyclical downtrends that occur during secular bear markets, but they are only rough estimates. When the time comes for the next cyclical bottom to form, properly applied chart analysis will once again ring the bell, just as it did back in March 2009:

http://bit.ly/sqNwOU

Best, Erik]]> Tue, 01 Nov 2011 21:58:16 -0400
That's why we use a combination of technical and cycle analysis to identify likely inflection points. With one focused on price and the other on time, you can construct relatively narrow windows for turning points across all time frames with a high degree of statistical confidence. The 12 to 18 month and 30% to 50% windows are based on "typical" cyclical downtrends that occur during secular bear markets, but they are only rough estimates. When the time comes for the next cyclical bottom to form, properly applied chart analysis will once again ring the bell, just as it did back in March 2009:

http://bit.ly/sqNwOU

Best, Erik]]> http://seekingalpha.com/article/283438/comments?source=feed#comment-1849105 1849105 Sun, 21 Aug 2011 13:03:40 -0400 http://seekingalpha.com/article/283438/comments?source=feed#comment-1799525 1799525 Sun, 31 Jul 2011 20:05:29 -0400 http://seekingalpha.com/article/270269/comments?source=feed#comment-1655099 1655099
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As for valuations, they are at historically high levels as defined by several reliable metrics such as the Shiller CAPE ratio and the Q ratio.]]> Tue, 17 May 2011 12:30:05 -0400
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As for valuations, they are at historically high levels as defined by several reliable metrics such as the Shiller CAPE ratio and the Q ratio.]]> http://seekingalpha.com/article/262339/comments?source=feed#comment-1581587 1581587
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seekingalpha.com/insta...]]> Sun, 10 Apr 2011 12:49:41 -0400
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The CTS does not predict corrections within cyclical uptrends (or reactions within cyclical downtrends), but intermediate-term cycle analysis does a very good job at identifying those turns. Once the time frame under scrutiny decreases to weeks or days, only IT and ST cycle analysis provides reliable signals.

Best, Erik]]> Sun, 10 Apr 2011 12:40:18 -0400
The CTS does not predict corrections within cyclical uptrends (or reactions within cyclical downtrends), but intermediate-term cycle analysis does a very good job at identifying those turns. Once the time frame under scrutiny decreases to weeks or days, only IT and ST cycle analysis provides reliable signals.

Best, Erik]]> http://seekingalpha.com/article/262339/comments?source=feed#comment-1579012 1579012 Fri, 08 Apr 2011 15:24:30 -0400 http://seekingalpha.com/article/262339/comments?source=feed#comment-1578940 1578940
We have noted on many occasions since then that the June 2010 sell signal was a mistake. Take a look at our 2010 performance review published at the beginning of this year, and note the commentary in the sub-section entitled "Cyclical Trend Trading System":

seekingalpha.com/insta...

When we initially designed the CTS algorithm, our goal was to correctly identify at least 80% of the cyclical trend inflection points. When we far surpassed that objective and identified over 90%, hubris got the best of us and we attempted to achieve an extra 2 to 3 percentage points of performance by identifying very rare situations such as a double dip coming out of a market crash. Take a look at this recent article that categorizes cyclical trends within different secular environments.

seekingalpha.com/artic...

Note that only one cyclical uptrend has had a duration of significantly less than 2 years since the market crash in 1929. We believed that we could correctly identify those extremely rare inflection points and added the double dip exception to the young bull market rule, which subsequently came into effect in June 2010. It was a mistake bred of conceit, pure and simple. Whenever you achieve success in a given endeavor that greatly exceeds your expectations, you have to be wary of falling into that trap. However, mistakes always engender the best learning experiences, and we certainly learned from this one. I will leave you with a quote from the aforementioned performance review:

"In the financial markets, as in life, failures tend to afford much better learning experiences than successes. When investments and trades go as planned, your strategy is vindicated, but when the markets move against you, the loss provides you with an opportunity to critically analyze your methodology and potentially take steps to improve it. Unfortunately, most market participants take no such action. Instead, they choose to dismiss trading losses and simply do their best to forget about them before moving on to the next trade. Don't make that mistake. If you do not already, take the time to carefully evaluate every trade or investment that does not go as planned and then learn from it. Not every losing position is the result of a failure on your part, of course. There are no certainties when it comes to the financial markets, merely possibilities and probabilities, and sometimes the least likely scenario will simply come to pass through no fault of your own. However, when a trade results in an outcome that you did not properly plan for or expect, that is a chance for you to grow and improve your future performance."]]> Fri, 08 Apr 2011 14:52:23 -0400
We have noted on many occasions since then that the June 2010 sell signal was a mistake. Take a look at our 2010 performance review published at the beginning of this year, and note the commentary in the sub-section entitled "Cyclical Trend Trading System":

seekingalpha.com/insta...

When we initially designed the CTS algorithm, our goal was to correctly identify at least 80% of the cyclical trend inflection points. When we far surpassed that objective and identified over 90%, hubris got the best of us and we attempted to achieve an extra 2 to 3 percentage points of performance by identifying very rare situations such as a double dip coming out of a market crash. Take a look at this recent article that categorizes cyclical trends within different secular environments.

seekingalpha.com/artic...

Note that only one cyclical uptrend has had a duration of significantly less than 2 years since the market crash in 1929. We believed that we could correctly identify those extremely rare inflection points and added the double dip exception to the young bull market rule, which subsequently came into effect in June 2010. It was a mistake bred of conceit, pure and simple. Whenever you achieve success in a given endeavor that greatly exceeds your expectations, you have to be wary of falling into that trap. However, mistakes always engender the best learning experiences, and we certainly learned from this one. I will leave you with a quote from the aforementioned performance review:

"In the financial markets, as in life, failures tend to afford much better learning experiences than successes. When investments and trades go as planned, your strategy is vindicated, but when the markets move against you, the loss provides you with an opportunity to critically analyze your methodology and potentially take steps to improve it. Unfortunately, most market participants take no such action. Instead, they choose to dismiss trading losses and simply do their best to forget about them before moving on to the next trade. Don't make that mistake. If you do not already, take the time to carefully evaluate every trade or investment that does not go as planned and then learn from it. Not every losing position is the result of a failure on your part, of course. There are no certainties when it comes to the financial markets, merely possibilities and probabilities, and sometimes the least likely scenario will simply come to pass through no fault of your own. However, when a trade results in an outcome that you did not properly plan for or expect, that is a chance for you to grow and improve your future performance."]]> http://seekingalpha.com/article/262339/comments?source=feed#comment-1577261 1577261
The June 2010 sell signal was an ill-advised attempt to improve on the 92% success rate of the system by identifying likely double dip scenarios. The sell signal occurred while the cyclical bull market in progress was less than 24 months old, violating the young bull market rule mentioned in the article, and should have been categorized as invalid. The double dip rule exception has since been eliminated from the methodology.]]> Thu, 07 Apr 2011 20:33:56 -0400
The June 2010 sell signal was an ill-advised attempt to improve on the 92% success rate of the system by identifying likely double dip scenarios. The sell signal occurred while the cyclical bull market in progress was less than 24 months old, violating the young bull market rule mentioned in the article, and should have been categorized as invalid. The double dip rule exception has since been eliminated from the methodology.]]> http://seekingalpha.com/article/262339/comments?source=feed#comment-1576621 1576621 Thu, 07 Apr 2011 15:11:30 -0400 http://seekingalpha.com/article/262339/comments?source=feed#comment-1576582 1576582 Thu, 07 Apr 2011 14:56:54 -0400 http://seekingalpha.com/article/262284/comments?source=feed#comment-1575858 1575858
"Market data by definition can only look backward."

As noted in the article, I certainly disagree with that assertion. Markets are discounting mechanisms that reflect all available data, thereby providing the most reliable outlook for the future. This is an old debate that I am sure will continue. The PI is not a market, of course, but changes in the long-term trend have provided meaningful signals in the past, so it is worth monitoring.

Best, Erik]]> Thu, 07 Apr 2011 10:51:43 -0400
"Market data by definition can only look backward."

As noted in the article, I certainly disagree with that assertion. Markets are discounting mechanisms that reflect all available data, thereby providing the most reliable outlook for the future. This is an old debate that I am sure will continue. The PI is not a market, of course, but changes in the long-term trend have provided meaningful signals in the past, so it is worth monitoring.

Best, Erik]]> http://seekingalpha.com/instablog/668911-erik-mccurdy/78347-long-term-sell-signal-in-stocks-has-been-confirmed?source=feed#comment-1527829 1527829
No, the June 2010 sell signal was stopped out on September 20, 2010 when the S&P 500 index broke out of the trading range between 1,050 and 1,130.

The signal itself was only generated as a result of an exception to the rule that characterizes all sell signals in young cyclical bull markets as invalid. The exception attempted to identify cyclical trend inflection points that develop as a result of double dip recessions, such as the top in 1937. The objective was to improve upon the 90% success rate of the system by 2 or 3 percentage points, but we subsequently concluded that the we had reached the point of diminishing returns with respect to system adjustments and the exception was consequently eliminated. In retrospect, implementing the exception was ill-advised to begin with and was obviously motivated by hubris. We have learned to be satisfied with only identifying 90% of the stock market cyclical trend inflection points.

As an aside, the long trade that was opened in May 2009 was recently closed when our cyclical trend price oscillator exceeded its overbought threshold. No sell signals have developed yet, but the potential for one exists during the next two months.]]> Mon, 14 Mar 2011 19:32:56 -0400
No, the June 2010 sell signal was stopped out on September 20, 2010 when the S&P 500 index broke out of the trading range between 1,050 and 1,130.

The signal itself was only generated as a result of an exception to the rule that characterizes all sell signals in young cyclical bull markets as invalid. The exception attempted to identify cyclical trend inflection points that develop as a result of double dip recessions, such as the top in 1937. The objective was to improve upon the 90% success rate of the system by 2 or 3 percentage points, but we subsequently concluded that the we had reached the point of diminishing returns with respect to system adjustments and the exception was consequently eliminated. In retrospect, implementing the exception was ill-advised to begin with and was obviously motivated by hubris. We have learned to be satisfied with only identifying 90% of the stock market cyclical trend inflection points.

As an aside, the long trade that was opened in May 2009 was recently closed when our cyclical trend price oscillator exceeded its overbought threshold. No sell signals have developed yet, but the potential for one exists during the next two months.]]> http://seekingalpha.com/instablog/668911-erik-mccurdy/143399-technical-analysis-discussion-blog-for-march-2011?source=feed#comment-1525867 1525867
Best,
Erik]]> Sun, 13 Mar 2011 22:06:03 -0400
Best,
Erik]]> http://seekingalpha.com/instablog/668911-erik-mccurdy/131595-technical-analysis-discussion-blog-for-february-2011?source=feed#comment-1501797 1501797
seekingalpha.com/insta...]]> Wed, 02 Mar 2011 15:58:45 -0500
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It is possible to identify secular trend inflection points with a relatively high degree of statistical confidence by analyzing a large basket of fundamental, technical and psychological data. For example, our secular trend score has identified every secular top and bottom in real-time since the market crash in 1929:

www.prometheusmi.com/p...

Even further, cyclical trend inflection points can be identified using a similar strategy, and trading those long-term component trends has been shown to outperform both buy-and-hold (forever) and secular market timing strategies:

seekingalpha.com/artic...

Best,
Erik]]> Wed, 02 Mar 2011 09:36:57 -0500
It is possible to identify secular trend inflection points with a relatively high degree of statistical confidence by analyzing a large basket of fundamental, technical and psychological data. For example, our secular trend score has identified every secular top and bottom in real-time since the market crash in 1929:

www.prometheusmi.com/p...

Even further, cyclical trend inflection points can be identified using a similar strategy, and trading those long-term component trends has been shown to outperform both buy-and-hold (forever) and secular market timing strategies:

seekingalpha.com/artic...

Best,
Erik]]> http://seekingalpha.com/article/254286/comments?source=feed#comment-1488278 1488278
Is your current strategy of "[loading] up during corrections" based on investment merit or trading merit? From an investment merit perspective (requiring a minimum time frame of 10 years), I would argue that stocks are priced to perform very poorly during the coming decade. If you look at expected returns as forecast by the most reliable earnings and dividends models, stocks will likely produce an average total annual return of slightly over 3% during the next 10 years. Take a look at any recent commentary from fund manager John Hussman for more details:

seekingalpha.com/artic...

From a trading perspective, I would also submit that now is not an optimal time to go long stocks. The cyclical uptrend from early 2009 has caused stock valuations to double during the course of 2 years. That has only happened 3 times during the past 100 years, and in every case stock market returns have been negative during the following 6 months. We are currently in an environment of extreme long-term volatility as you can see on an S&P 500 index monthly chart:

seekingalpha.com/artic...

The next meaningful decline, which may be finally underway, is likely to exhibit the same type of violent behavior as all of the trends since the market crash in 2008.

With regard to your strategy of trading based on expected earnings, how well has it performed historically, say during the past several secular market cycles? How well did it perform at the long-term tops in 2000 and 2007, and the long-term bottoms in 2002 and 2009?

Best,
Erik]]> Wed, 23 Feb 2011 14:31:01 -0500
Is your current strategy of "[loading] up during corrections" based on investment merit or trading merit? From an investment merit perspective (requiring a minimum time frame of 10 years), I would argue that stocks are priced to perform very poorly during the coming decade. If you look at expected returns as forecast by the most reliable earnings and dividends models, stocks will likely produce an average total annual return of slightly over 3% during the next 10 years. Take a look at any recent commentary from fund manager John Hussman for more details:

seekingalpha.com/artic...

From a trading perspective, I would also submit that now is not an optimal time to go long stocks. The cyclical uptrend from early 2009 has caused stock valuations to double during the course of 2 years. That has only happened 3 times during the past 100 years, and in every case stock market returns have been negative during the following 6 months. We are currently in an environment of extreme long-term volatility as you can see on an S&P 500 index monthly chart:

seekingalpha.com/artic...

The next meaningful decline, which may be finally underway, is likely to exhibit the same type of violent behavior as all of the trends since the market crash in 2008.

With regard to your strategy of trading based on expected earnings, how well has it performed historically, say during the past several secular market cycles? How well did it perform at the long-term tops in 2000 and 2007, and the long-term bottoms in 2002 and 2009?

Best,
Erik]]> http://seekingalpha.com/instablog/668911-erik-mccurdy/135649-intermediate-term-low-in-gold-nearly-confirmed?source=feed#comment-1486143 1486143
I prefer SGOL primarily because I prefer my physical to be stored in a Swiss vault.

Best,
Erik]]> Tue, 22 Feb 2011 15:35:50 -0500
I prefer SGOL primarily because I prefer my physical to be stored in a Swiss vault.

Best,
Erik]]> http://seekingalpha.com/article/253624/comments?source=feed#comment-1478597 1478597
seekingalpha.com/artic...

Additionally, cycle analysis indicated that a meaningful bottom was formed three weeks ago, signaling that a return to all-time highs is likely:

seekingalpha.com/insta...

Best,
Erik]]> Fri, 18 Feb 2011 10:04:14 -0500
seekingalpha.com/artic...

Additionally, cycle analysis indicated that a meaningful bottom was formed three weeks ago, signaling that a return to all-time highs is likely:

seekingalpha.com/insta...

Best,
Erik]]> http://seekingalpha.com/article/251938/comments?source=feed#comment-1460072 1460072
As I mentioned in the article, rising treasury yields alone do not warrant great concern. However, when you combine them with 1) an extremely overextended advance from September, 2) excessive bullish sentiment and 3) deteriorating broad market internals, you have an environment that has been very hostile to stocks historically. During the past 60 years, this particular combination of market characteristics has been followed by sharp declines nearly 90% of the time. Granted, as a statistics guy, I must concede that it is possible we are currently experiencing the 10% scenario, but I don't like those odds.]]> Thu, 10 Feb 2011 07:29:41 -0500
As I mentioned in the article, rising treasury yields alone do not warrant great concern. However, when you combine them with 1) an extremely overextended advance from September, 2) excessive bullish sentiment and 3) deteriorating broad market internals, you have an environment that has been very hostile to stocks historically. During the past 60 years, this particular combination of market characteristics has been followed by sharp declines nearly 90% of the time. Granted, as a statistics guy, I must concede that it is possible we are currently experiencing the 10% scenario, but I don't like those odds.]]> http://seekingalpha.com/article/251109/comments?source=feed#comment-1451588 1451588 Sun, 06 Feb 2011 14:59:25 -0500 http://seekingalpha.com/article/251109/comments?source=feed#comment-1451443 1451443
What you are describing is the difference between investing and trading. From a purely investment merit perspective, now is one of the worst possible times to buy and hold stocks for the long run. However, the extreme volatility afforded by this type of market environment does provide ample opportunity to profit from violent cyclical swings. And as I mentioned earlier in this discussion thread, I certainly agree that TA missed the mark in 2010 as it suggested that the start of a new cyclical downtrend was likely. But it has an excellent long-term track record, and being right most of the time is the key to consistent success.]]> Sun, 06 Feb 2011 13:40:59 -0500
What you are describing is the difference between investing and trading. From a purely investment merit perspective, now is one of the worst possible times to buy and hold stocks for the long run. However, the extreme volatility afforded by this type of market environment does provide ample opportunity to profit from violent cyclical swings. And as I mentioned earlier in this discussion thread, I certainly agree that TA missed the mark in 2010 as it suggested that the start of a new cyclical downtrend was likely. But it has an excellent long-term track record, and being right most of the time is the key to consistent success.]]>