Tag Archive for hedgephone market model

Hedgephone Market Model Switches From Neutral to Cash After Close 8/7/2012

August 7, 2012 www.hedgephone.com/network

The setup looks pretty promising for the short side… Are we setting up for a major double top into election season? Remember, Democrats don’t own stocks and Republicans can come up with lost lists of things to complain about during the election campaigns — a falling market helped oust Bush… Obama better hope that Bernanke can keep the peddle to the metal or his job may just be in jeopardy…

At Hedgephone we are politic and market neutral, though as a Christian, I tend to be more interested in the well being of others and the environment we all share…. Funny how the Christian Right support the same people that brought us Guantanimo Bay, Iraq, Afghanistan, etc…!

In any event, until next time remember the Golden rule and watch out for falling stocks!

Chart forSPDR S&P 500 (SPY)

 

 

 

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Own Things Which are Outside the Wall Street Game

August 1, 2012 Equities

Investors are turning to things Like farmland, residential real estate (rentals), commodity producing businesses like gold and silver mines, etc… to hedge their inflation risks without throwing money at paper assets like stocks. I think the risk of inflation is becoming more and more obvious to the FED and that stock traders should be trading from the short side here.

The Hedgephone Market Model is still in NEUTRAL!

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Stocks Getting Technically Overbought, Nearing Top of Range Model Switching to Short

July 5, 2012 www.hedgephone.com/network

We have to abide by the rules of the great and mighty HFT programmer hipsters and their love for all things technical analysis (and shunning of any mention of things luike PE ratios or price to book values!!!)…

The RSI on the S&P is around 65, the slow stochastic has moved into extreme overbought territory and stocks in general look to be at the top of the trading range. Our technically oriented market model is now in a short position here… Keep in mind any shorts should be hedged against dollar devaluation (gold, silver, commods, real estate, etc… are all OK hedges for dollar risk)…

Till next time, we would batten down YE Old hatches and prepare for stormier seas ahead, though we hope we are wrong and that the market goes higher forever (or at least 66% of the time like it says in the CFA level one manual…)

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Hedgephone Market Model, Trading the Sell Off, Work-Life Balance

May 9, 2012 Macro Economic Viewpoint

The market has fallen somewhat predictably to a more reasonable perch. Unfortunately for the bulls, even though things look decent for a small “snap-back” rally the problem is that the market is a bit overvalued, over-owned, and bubble-esque. The forces at work here are the usual suspects: fear and greed. The fear is not very palpable considering it’s “sell in May and go away” season and given the high valuations that exist for many of the most beloved technology IPO’s and more speculative growth concerns. Currently, the Hedgephone Market Model is still bearish though we wouldn’t be suprised if stocks make a small-ish comeback over the next few days. After all, the market rises around 2 out of every 3 days and it is election season — the Dems won’t want the “progress” they have made on the economy to slip away from them and even though the Repubs want Obama to lose, they can’t stand missing a rally.

All and all it’s a good time to be on the sidelines right now in our view. Having a good work-life balance is one of the biggest keys to investment/trading success in our view. Good health = wealth according to W.D. Gann and we couldn’t agree more. Another tenet of Gann is to use stop loss orders for every trade. Again, after years of experience in the market as hedge fund professionals and traders, we agree with Gann that stop loss orders are highly important.

I am enjoying some of that work-life balance as we speak. I will be updating from the road, but for now check out my view!

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Markets, Hedgephone, Real Estate, Etc…

April 3, 2012 Equities

Well, NSL has put his money where his mouth is, and no he didn’t pull a Paul Wall and buy a diamond grill for $30K although that may somehow actually make a ton of sense as an investment during quantitative easing and in an environment of rising commodity prices.

Still, we stuck to our guns and bought real estate. We like to buy low and sell high, so to us picking up some rental property in South Florida makes sense. Anyways, our market model is still sidelines but looking to go short here on any confirmed selling pressure. So far, we have been quiet after the model was stopped out last month at around 1340 or so on the S&P… We think the markets will give us a nice trade-able opportunity on the short side either sometime this Spring or Summer or into the Fall’s election madness.

For now, we like real estate, real assets, gold, silver, commodities, some undervalued stocks, and farm land. Continue investing wisely and always hold some emergency cash around as you never know when you will need it! Be ready for the market model to go short again and as always, place stop loss order at 2% from where you enter your trades!!!!

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Stock Rally Looks Pensive…

January 12, 2012 Equities

We are up again today but the fact that gold is outperforming stocks tells me this is simply a dollar risk story versus a real rally based on earnings. Looking at ownership of individual businesses as a futures contract trading purely on technical chart patterns is strange to me and never made much sense to me as a trader. If you wanted to trade charts and charts alone, I always thought you belonged on the futures exchanges and not trading individual equities. That said, times have changed and today 80% of the already non-existent volume in the stock market comes from machines and not human traders. While this phenomenon does work to the advantage of the few, it generally picks the pockets of the many a few pennies (or fraction of a penny) at a time.

Today’s rally has everyone looking at the $1300 mark for the S&P 500… If we break substantially above this technically all important price level our short signal will be violated and the current hedgephone.com market model trade could be stopped out for a 1.3% or so loss. That said, the market is so overbought on slow stochastic and the RSI that any further push to the upside may be followed by a correction from the $1330 or whatever levels and then we have the $1350 level as the high from 2011 — If we push all the way up to that level, I expect a correction of at least 7% or so… For the long long long term investor, most of this is meaningless. At hedgephone.com, we are traders looking for a risk adjusted profit. Even if you think the market will grow your money at a 10% rate, sitting with cold hard cash in your account and only coming out for a few highly technical trades per year helps you sleep pretty well at night.

All in all, holding gold and silver still looks wise here. Investors may want to add to existing long positions but should be (sort of) mindful of the 200 day moving average levels for gold because that is what all of the “big boys” will be watching day in and day out.

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Hedgephone Market Model Switches to 100% SHORT

January 9, 2012 Equities

1/9/2012 Hedgephone Market Model switching to a full short position here….

QQQ

AMZN

GRPN

LNKD

ALXN

etc……

Look to sell calls/buy puts or go short…. Will update

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Hedgephone Market Model Switching to 100% Short

November 5, 2011 Equities

Provided the QQQ remains below the 200 day moving average the market model will be short starting Monday Morning. That said, if the market gaps up above the 200 day Monday morning the market signal will be cancelled. Right now, we are just barely below the 200 day MA on the QQQ and because of the slow stochastics and also the 200 day, the model is short equities here. One way to play this would be to short the QQQ but stay long MSFT, INTC, GOOG, ORCL as a long short play on the market.

There are plenty of cheap stocks around but you have to do your homework. Hedgephone will be much more active this month and we apologize for not being more aggressive in our trading calls (mainly we have been in cash since August).

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Hedgephone Market Model Switches to 30% SHORT, 70% CASH

October 13, 2011 Equities, Macro Economic Viewpoint

We have been “cashy and trashy” now for the past month, urging readers to hold most of their trading/risk capital as freying green paper in their checking accounts while simultaneously looking for bargain basement equities like OSK, PBR, WMT, BRK-A, JNJ, KO, etc… so that investors don’t get too bored sitting on the sidelines. We suggested a 25% allocation to deep value stocks, 50% cash allocation, and 10-30% in hard assets, with the remainder in foreign currencies.

While we are not doomsday types here at Hedgephone, we are also not “believers” in the cult of equity technology stocks either. In our view, now is the time to go hunting for some short exposure. While we think it’s now okay to short some CRM, QQQ, IWM, and Amazon.com we would keep stop losses very tight and would maintain some long exposure to the highest quality or lowest price to book value names (which have been crushes lately) as a “long hedge.”

The reason for our bearish bend here is that we are now at the top end of the range in equities while none of the sovereign debt issues has been resolved in any material fashion. Issuing more debt and then levering that debt up 10X is certainly not a long term cure for debt. European contagion fears will be out of the markets anytime soon and the Euro has to be viewed with a serious dose of skepticism (as with most paper money currencies). The long term fundamentals are still in place for hard assets like gold, silver, and fancy color diamonds (hint hint www.usdiamonds.net) to outperform both equities and cash. Real estate is the outlier here, whereas the real estate market has been so beat up and crushed that we think it may actually catch a bid at some point in the near future.

For the financial planner/allocator in you we like the following mix:

25% in long short equity and macro hedge funds

25% in Blue Chip US Equities

25% in Foreign and US Currencies

25% Short Overvalued US Momentum Equities

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