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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: January 9, 2012


    “One must become as humble as the dust before he can discover truth”
    – Mahatma Gandhi

    With the change of year comes our change of stance; go figure. Since the August break we’ve held a bearish posture based on associated underlying risk; both fundamentally and technically. Nevertheless, the longer-term downtrend has not continued and has begun to show signs of technical strength. This, due to shifts on both the broader and secondary indices, has caused us to transition back to a “Market Neutral” outlook.
     
    About one week ago, during the midst of the holiday season, we began to notice formations in some individual stocks which portrayed the possibility of a bottoming formation. (Volume & Stochastic Divergent Double Bottoms) When this occurs, on more than just a few occasions, a good technician needs to take notice and become more aware of the surroundings. From there, January 3rd, started the year off with a bang (kinda) – 1.5% move with below average volume. Nevertheless, the three eldest sisters (DJIA, SPX & NDX) all crossed above technical downtrends and horizontal resistance points – only to leave the youngest (RUS) trailing below its 200-DMA. 
     
    SPX Weekly


    Looking at the weekly SPX graph we can plainly see the break above the recent downtrend. This move has positioned the SPX back into the “2011 Channel of Indecision.” This, for all intents and purposes, should allow a greater probability of retesting the Channel highs (~1,350). Henceforth we’ll be looking for further signs of strength (and or weakness) to add to the weight of evidence and probability stacking to help determine if this move has longevity or is based solely on New Year “Hope.”
     
    Evaluate the three most important secondary indices for further clues of internal strength (Transports, Semiconductors & Banking).
     
    We hope this helps.
     
    TAM-KAT
    Tags: SPY, QQQ, DIA, IWM, SPX, NDX, DJIA, RUT
    Jan 09 8:09 AM | Link | Comment!
  • TAM's Morning Cup of Jo: January 3, 2012


    “Caution is the most valuable asset in fishing, especially if you are the fish.”
    – Anonymous

    Good Morning Stakeholders! 2011, as you might already know, closed the SPX dead even (1,257.64 – 1,257.60). Considering the massive volatility that’s not too bad. The annual range was from 9% up to 14.5% down for a grand total of 23.5%; peak to troth. Needless to say, a lot of work was put it for simply no results for the indices. Now that 2011 has been put to bed, it’s time to look forward and establish 2012’s potential. 
     
    As our dedicated followers already know, we continue to remain bearish due to the SPX continuing to trade below the Bear Market trend since July. However, this could change at any moment. Both the NDX and SPX have been flirting with this line since the October bear rally high. If push comes to shove, and the Bulls take control of the New Year, our stance will immediately shift to a market neutral – back to an uncertainty perspective. It is only with a bull trend confirmation will we shift completely.
     
    SPX Daily

     
    NDX Daily

     
    Market psychology driving the tape at the beginning of the year shifts dramatically due to the transition from beta chase mode to an investment stance mode. This can cause impressive moves within the first few weeks. In 2011 the first move (ending February 18th) was nearly the peak for the year. In 2010 it lasted two weeks and in 2009 it lasted 3 days. This is NOT to say any January rally will be sold, but it is simply to realize that many “first-out-of-the-gate” moves can be extremely slippery.
     
    If the market closes above the bear trend we do expect a rally toward 2011’s ‘channel of indecision’ top around 1,350. That being said, the EU debacle and US Politics will certainly drive the tape for the foreseeable future. But as we’ve always stated… it’s the lightning bolt you don’t see that kills you. Keep your wits about you this year and use extreme caution, the ice is thin.
     
    Happy New Year!
     
    TAM-KAT
    Tags: SPY, QQQ, SPX, NDX
    Jan 03 8:00 AM | Link | Comment!
  • TAM's Morning Cup of Jo: December 19, 2011


    “To be yourself in a world that is constantly trying to make you something else is the greatest accomplishment.”
     - Ralph Waldo Emerson
     
    Good Morning Stakeholders and welcome to the beginning of the Holiday Year-End trading. One thing to expect for certain, with the typical lack of volume; the action will be very whippy and somewhat schizophrenic.  In the November 28th ‘Jo’ we exemplified how the institutional money managers will drive the uncertainty of the tape for the last month of the year in attempt of job security and paychecks. This opinion has not altered.
     
    Given last week’s negative downturn – inclusive with Tuesday’s bearish engulfing – the tone and direction remains down; especially for the NDX higher beta stocks. In evaluating this index you can plainly see the continued gap-ridden and massively broadened standard deviation range (typical vs. triple).  It’s truly remarkable, since the new cyclical bear market began in August, what has become the daily norm for volatility.  What used to take months or weeks to transpire, now takes days or even hours.
     
    NDX Daily Range


     
    For investors (not traders) this has added a greater metric to money management as it has more so become a process of hedging, not just investing, strategies. For instance, our team now spends at least ½ of our daily portfolio management meetings discussing when to utilize and when to relinquish said hedge strategies. Previously this was done weekly. Conversely, with the increase in volatility, it has – and will continue to – separate the men from the boys (forgive the idiom).   Once this year is completed, those who sought alpha with no regard to beta will not only be identified, but most likely shown the door. 
     
    This industry, as sad as this may sound and with total fault of its own, is ridden with annual superstars who are soon left in the food line because of no concern for the simple risk/reward metric. Four weeks ago we received an email telling us how absurd our opinion was when we illustrated a continual bearish stance at the end of October – based on our technical risk/reward analysis. This comment has remained taped, like an enemy flag upon a war map, to the top of my desktop to continually remind us of why we are paid to do what we do – preserve capital in times of uncertainty.  
     
    After 20-years there are a few simple things I’ve learned…
    ·         Do your own analysis
    ·         Don’t follow the heard
    ·         Ignore emotion
    ·         Sell Greed and Buy Fear
    ·         And know in your soul it’s the right thing to do
     
    If, as an investor, you can consistently maintain these five metrics, the rest is simple.
     
    Happy Holidays to All!!!!!
     
    TAM-KAT

    Tags: QQQ, NDX
    Dec 19 8:55 AM | Link | Comment!
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