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Tactical Investing in the 21st Century. The FMAM Team is composed of seasoned Wall Street professionals with combined active experience on the buy side and the sell side of the Street. Together, we have worked as RIA's, managed BD's, banks, and mutual funds as well as proprietary trading desks.... More
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  • The Momentrix View of the Markets
    Tuesday August 16, 2011- The market seems to be searching for a direction. The recent rally has been encouraging, but we continue to see it as just a retracement of the recent oversold state. For the rally to continue, the bulls are going to have to work much harder to push the tape higher as the easy points have been made. The S&P 500 has been able to hold its close above its 10 moving average of yesterday. As time goes on with price in this area, the average will first flatten then eventually turn to the upside, potentially helping support the market (if you believe in the validity of technical analysis).
    On the day the S&P 500 lost 11 points or 1.0%, volume slightly higher than yesterday. Many market participants are encouraged by the move off the lows. We are less enthusiastic as we have concern of a grinding slow rollover lulling the bulls to sleep.
    Our “Trifecta Indicator” showed 2 out of 3 in the green today, signaling moderate stress. The outlier was the FXF, closing down about 1%. Recently there have been rumors about the Swiss Franc being linked to the Euro potentially removing some effectiveness of the ETF as an indicator. We may have to revise the Trifecta Indicator in the coming days; we want to see how the FXF acts for a while longer prior to removing or replacing it.
    On the economic front, the capacity utilization and industrial production numbers were better than expected. Many economists are expecting the economy to continue to slow and these data are contrary to this thinking. The GDP numbers out of Europe show a much quicker slow down than previously perceived. There appears to be a divergence between Europe and the U.S. developing and bears watching in the coming months.
    The Momentrix Model portfolio remains in significant cash. We are concerned about the slowing economy, Europe, and the potential that earnings estimates are too high. The rally in the last few days was very sharp; many times the sharpest rallies occur in bear markets. We do not know if this is the case but it is not out of the realm of possibility. Until we have a better feel for what kind of market we are in, we will remain in higher than usual cash.
     
    Aug 16 5:08 PM | Link | Comment!
  • The Momentrix View of the Markets for August 15, 2011
    Monday August 15, 2011- The market staged another rally, its third in a row, the S&P 500 finishing the day up 2.20%. On the positive side, financials were among the market leaders today, an encouraging sign as this group was the worst performer during the sell-off. On the negative side, the GLD (gold etf) rallied steadily today, a sign that some currency stress remains in the system.
    The S&P 500 closed above its 10 day moving average, the first time since the correction began. The last time the S&P closed above this average was on July 26. Although this is also encouraging, the trend of the 10 day moving average is so steep to the downside that it will likely be difficult for this to hold over the short term. We generally like to see moving average trends to be in the same direction as price. It just takes time to change directions. We still hold high levels of cash and may initiate some hedges should our stress indicators start to rally.
     
    Aug 15 6:12 PM | Link | Comment!
  • The Momentrix View of the Markets for Wednesday August 10, 2011-
     The market took away all of the gains from yesterday, the S&P closing down 4.6% and the NASDAQ down 4.0%. Europe was front and center once again today as many French banks were under pressure similar to the U.S. banks back in 2008. The instability in the market makes this a very difficult environment to invest in to say the least.
    Although we are not calling a bottom, as that is a futile game, we did remove our hedge in the market and brought our long exposure back to 60% long with 40% cash. Judging by the finish of the day, it is highly likely that tomorrow will have an ugly start. It is still possible that the market has an all-out crash but at these levels we feel the risk reward is starting to tilt toward the upside as a significant amount of the economic slowdown has been discounted. The problem remains that we have not discounted a crash in the U.S. Dollar or a breakup of the Eurozone. The worst case would be both events occurring simultaneously.
    The bottom-line is that it will take time for the market to work out its equilibrium and lower the volatility. We like the risk reward although we will not dig our feet in if it becomes apparent that we are wrong. Discipline and exiting trades is the key to investment success over the long run. We intend to follow this course with our moves in the coming days.
     
    See MomentrixInvesting.com for further information and sign up for our beta for the Momentrix RT3 Trader's Toolbox app for All the Markets. All the Time.
    Also visit Momentrixreport.com for All the News. All the Time....
    Aug 10 5:04 PM | Link | Comment!
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