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Kevin Tuttle
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Kevin A. Tuttle is the CEO and Chief Strategist of the Money Management & Capital Services firm Tesseract Asset Management, LLC (TAM). TAM serves as the General Partner of Long/Short Equity & Alternative Investment Hedge Funds and operates a Capital Services division oriented toward... More
My company:
Tesseract Asset Management LLC
My book:
Master Traders
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  • TAM'S Morning Cup Of Jo: February 21, 2012

    "There is no such thing as chance or accident; the words merely signify our ignorance of some real and immediate cause." - Adam Clarke

    1,361.23 (Friday) vs. 1,361.22 (May 2nd 2011 Close - previous high). Over the past two weeks the 'Jo's' have been discussing the massive inflection point at which the market currently sits. But really, how massive is this point? Is this something which should change long-term stance or, is this just another short-term "Flash-in-the-pan," if you will? Maybe it's only another traders' paradise. But what if it's something more substantial, dependable or even; should I dare say… trustworthy?

    As investors yearn for clarity to determine stance (make decisions for longer than a few months without concern regarding massive drawdowns?), they really are attempting to establish the markets health and stability. This, if unsure about by what method to do such, can be a very daunting task. But yet, what's their alternative; daily stress due to news-flow and headline risk? Believe it or not, this determination is not an insurmountable task.

    In a nutshell, finding the potential duration of the next trend is based on two factors; previous trends and the quality of the move. Both of which are not allusive and rather straightforward - almost simple, if you will. The two determining factors you've seen us discuss a multitude of times; yet, rarely together and for this type of discovery. The first (previous trends) requires a longer-term view of the market; one you haven't seen us pen since the September 26th MCoJ - The Monthly Chart. By evaluating this chart investors can determine, with all likelihood, that if 1,350 gives way, 1,500 is the next logical resistance. As far as longevity, that's not impressive. Conversely, this action would push the index above converging resistance.

    SPX Monthly

    The second (quality of the move) is contingent on looking further - beyond the broader index itself. Some turn solely to volume for sign of strength. Typically, this is not enough - never bet the farm on one cow. As you can plainly see above, this has been decreasing as the market head higher for nearly two years. Hence, investors should turn to the secondary indices (BKX & DJTA). In doing so, strength measurements come from internal influence scrutiny; not only through external factors.

    Without our technical influence via verbiage (the whole… a picture is worth a 1,000 words thing), evaluate the next two charts (The BKX - Phlx Bank Index - & the DJTA - Dow Transports - Monthly).

    BKX Monthly

    DJTA Monthly

    Adding it all together…

    If the SPX breaks 1,350 there seems to be a 10-12% move going forward. This should put the BKX above its downtrend and next horizontal resistance point. While at the same time, the DJTA should be at new all-time highs. After which is anyone's guess at this point. On the other hand, this still does not supersede the Mega long-term Secular (5-20 years) trend.

    On a Side Note: In April we will be speaking at the Annual MTA Symposium (Market Technician Association) at Pier Sixty (Chelsea Piers) in Manhattan. We hope to see many of our dedicated readers, especially our NY based. Typically this event costs $750 to attend. However, our readers (if putting "TAM" in the 'Where did you hear about this?' spot) can receive a $200 discount on registration. Click Here for Discount Registration.

    And….. Happy Birthday to my 13-year old son, Dellinger.

    We hope this helps.


    Feb 20 12:53 PM | Link | Comment!
  • TAM's Morning Cup Of Jo: February 13, 2012

    "Be precise. A lack of precision is dangerous when the margin of error is small." - Donald Rumsfeld

    1,350 - well, 1,354 if you want to be exact. The number everyone's been focused on, once achieved, has brought investors the first down week of the year. But, does it mean a correction is afoot? It's been 35 days and ~12% from the December lows; yet, all without a 2% down day and any meaningful drawback. Is it time for a correction? As Dylan so eloquently says… The answer my friend is blowing in the wind. Meaning, even when something seems so certain, we still must wait for the answer. Otherwise stated; inflection point - YES, for certain. Correction certain, not one bit. {Review last week's MCoJ for further explanation - watch for short-term momentum/swing trend break}

    As much as investors are looking for immediate answers; it never ceases to amaze how soon they tend to forget just what their actually looking for. Interesting statement to say the least, wouldn't you agree? So just what is it they're looking for? Direction. Yup, that's it… Direction. But, there is one caveat; time and scale. For months now investors have desired clarity in order to better ascertain the answer to this quest; weather it comes in the form of political, geopolitical, economic, global or otherwise.

    On May 1st, 2011 - exactly 288 days ago - the market (SPX) closed at 1,361; pretty much where it is now. And yet, investors are scrutinizing what will transpire tomorrow to influence decisions which could be relevant for years. Let's take a look at a longer-term chart to supplement this banter with additional meaning.

    SPX Weekly

    It is only when stepping back to gain a larger (~longer) perspective of the markets, do we really grasp the risk associated with how we're invested; or for that matter, want to be. This chart speaks for itself as it is plain to see the converging resistance points (from the top of the '2011 Channel of Indecision' and backside of the prior Cyclical Bull Trend). Not to be a "Debby-Downer" but for as good as this 2012 has begun, it's just not that important in the broader since of the word.

    Our point today is nothing more than awareness. Stepping back far enough to make decisions based on, for lack of a better analogy, "Time Horizon," rather than short-term momentum and market hype. Since 2012 began it's all been about a "renewed' energy in the market" or "the beginning of a new bull run." Now maybe that's true, or maybe it's not. Our point is that it's way too early to tell when evaluating the greater picture. Please don't mistake our view of caution and potentially jaded opinion of absolutes when it comes to investing, with the desire to see this market have a 20-30% year.

    As Always, we hope this helps


    Feb 13 7:51 AM | Link | Comment!
  • TAM's Morning Cup Of Jo February 6, 2012
    "The great end of education is to discipline the mind, rather than furnish it; to train it to use its own powers, rather than fill it will the accumulation of others." - Tyron Edwards

    "Jabber-Jawing" - Two weeks ago the discussion was the DJIA's new high potential. Last week it was the "Golden-Cross." What's this week's theme gonna be - the new Bull Market or market overbought? Before entertaining either of these ideas, let's recap some of our recent missives.

    MCoJ Jan 2012 Recap:

    • 2011 closed even and remains below Bear Trend.
    • Tape psychology at the beginning of the year (first moves) can be tricky.
    • If Bulls take control, our technical stance will immediately shift….
    • If so, expect a rally toward 1,350 - the top of 2011's Channel of Indecision.
    • More stocks showing technical strength but SPX still showing weekly Converging Resistance at 1,350.
    • The 1,350 level - top of 2011's Channel of Indecision - will be the true test of what's in store for 2012.

    And here we are - 1,344. Now what? Well, there are only three choices. Increase longs and gain greater exposure, less long and diminishing exposure or… hold tight until further information arises?

    Before making such decisions - ascertaining one's portfolio weighting and determining allocation shifts - investors should employ three simple tasks. First, determine which area they inhabit (short-term, intermediate-term or long-term). Secondly, investors should NEVER, anticipate; only evaluate. Otherwise stated, assess the probability of what the market will most likely do, based on a compilation of evidence available, and wait for it to complete before taking action. And thirdly, be decisive - when you've determined what plan of action to take, don't second-guess when the time arrives.

    Example of how this may transpire for a shorter-term (Momentum or Swing) investor.

    As the SPX is coming up to resistance at 1,350, awareness is heightened for potential correction. Overbought indicators are reading highs and potential divergences. The index distance from its moving averages is nearing smaller parabolic levels. And lastly, volume is not currently indicating strength. However, and most importantly, the short-term (momentum/swing) trend has yet to be broken.

    So… what to do? By using the aforementioned three simple rules … ascertain probability of break (done above), decide what shift (stance) to take if occurs, and be decisive when it happens. Otherwise, status quo - the trend is your friend. As simple as this sounds, you would be amazed the number of investors (professional and individual alike) who get caught up in the emotion and make decisions based on anticipation of a potential happening which never occurs. Emotion is the investor's worst enemy. If you cannot learn to control it - find someone who can.

    As our team constantly discusses… self-awareness (relinquishing of pride), is not only the hardest attribute to accomplish as a professional portfolio manager, it is the most important. It's easy to blame everything else on why things transpired the way they did. Wall Street is full of those. To separate from such you have to know the… "Man in the Mirror."

    We Hope this Helps


    Feb 05 3:18 PM | Link | Comment!
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