8/13/19 Bullish on Emerging Markets

I like today's action in EEM (emerging markets).  The ETF retested the August 5 closing low of 39.05, then quickly rallied >+1% above it on high volume.

I plan to reopen VEMAX (Vanguard Emerging Markets) at the close. 

Also opened a small position in EWH (Hong Kong).

Addendum:

What happened today?

No capitulation, no panic.  No complicated technical indicators. 

In my opinion, what happened was much better!  Institutional fund managers apparently decided valuations in the EM sector were compelling and started buying. 

We can't know ahead of time when the buying starts.  In fact, expecting a continuation of the downtrend I closed a position in EEM this morning way below the highs of the day.  Instead, we close with bullish 'outside days' on high volume in EEM/ VWO/ IEMG, all of which closed up > +1.2%.  

There was no point front-running the trade last night - last night it would have been a high-risk gamble.  Paying up for the trade today?  Not a problem - it's now an attractive play, and we can consider the higher price an insurance premium.  (I had a bit of luck at the close - VEMAX [Vanguard Emerging Markets] closed up just +0.48%, and I reopened the position at a -4.6% discount to my last exit in late July.)

8/4/19 Correction Ahead

It's my opinion the markets will experience a correction of -10% to -15%.  In fact, to throw everyone off it may even (finally) retest last December's lows, in which case we're talking about a -20% correction for the SPX.  As you know, my opinions are often wrong, and subject to change at a moment's notice- however, whenever I post an opinion it's an honest reflection of my current take.

Even a -10% correction would wipe out my current ytd gain of +9%.  My baseline position will be cash.  My plan is to play the counter-trend rallies that always occur- in fact, it's my favorite play.

I'm waiting to hear China's response to the renewed threat of tariffs.  Best guess for Monday is a gap-down open followed by a relief rally.  In order to control risk/maximize flexibility I plan to trade only ETFs or (in the case of accounts limited to trading mutual funds) Rydex funds that trade twice daily (1030 am/ 345 pm est).  No plans to trade either inverse or leveraged Rydex funds.   

As always, I'm open to being completely wrong.  In which case I'll change my strategy.

7/21/19 The Devil Lies In The Details

I finally got around to reading the Milton Berg interview:

https://www.marketwatch.com/story/investor-who-nailed-the-1987-crash-ditches-stocks-and-bonds-and-heres-why-2019-07-12 

Which has me turning bullish.  Why?  Read it carefully.  The devil often lies in the details.  The 'one thing that doesn't quite add up' (which I take to mean the two indicators out of 100 that remain inconsistent with levels seen at prior market tops) - that has me thinking Bert is front-running his model.  Maybe it's nothing - or maybe it's everything. 

5/3/19 A Different Take On China

Interesting opinion piece written over a year ago.

https://carnegieendowment.org/2018/03/13/china-s-economy-is-not-normal.-it-doesn-t-have-to-be-pub-75796  

Excerpts:

China has never been a normal economy. It experienced an average of nearly 10 percent growth rates for almost four decades, a record; it is the first developing nation to become a great power. So why couldn’t it keep defying expectations?

What some take to be the Chinese economy’s weaknesses have, in fact, been strengths. Unbalanced growth isn’t evidence of a looming risk so much as a sign of successful industrialization. Surging debt levels are a marker of financial deepening rather than profligate spending. Corruption has spurred, not stalled, growth.

Centralized authoritarian power has its benefits, including the ability for those who have it, at least in theory, to correct course rapidly. This has allowed China’s leaders to put the economy on a more sustainable growth path in recent years. The gross domestic product growth rate rebounded last year. Foreign reserves are back up as well. Wages have increased. The recent abolition of term limits for the president and vice-president’s terms gives President Xi Jinping more time and leeway to promote his vision of a more prosperous, modern and powerful China, and with the help of trusted advisers: His former corruption czar, Wang Qishan, is expected to be named vice-president and Liu He vice-premier in charge of the economy.  

4/7/19 A New Bull

I reread Mark Hulbert's take on a new bull market this morning:

https://www.marketwatch.com/story/this-bull-market-is-10-years-old-try-three-months-2019-03-07?mod=mark-hulbert 

I agree with his opinions re bear markets in 2011 and 2015.  In addition, I've always felt that US investors ignored the devastating bear in emerging markets that ran from January 2016 through mid-2017.

Are we now experiencing one of the quickest recoveries from a bear that began last December?  I'm not fully convinced - but that's exactly why it's likely to be the case.

If it turns out to be a new bull, then US indexes are likely to see double-digit returns between now and December 31.

3/19/19 Disengage

I've always said that when we near retirement age, it's time to leave the playing field and think about coaching instead.  I plan to slow down my involvement in the capital markets.

Currently about +13.5% ytd, closer to +17% off the December 24 lows, and at an all-time high. Those are decent gains for a three-month period, and given the fact that I closed 2018 off just -1.36% - well I don't feel the need to push for anything more at this point.  I'll wait for a decent pullback. 

2/3/19 The Outer Limits

'The Outer Limits' was a great Sixties TV series that always opened with the voice-over 'There is nothing wrong with your television set.'

We're now hearing (from Urban Carmel) that the recent +15% uncorrected gain in the global markets places the current rally in the outer limits of what is realistically achievable.

That's a positive.  The fact is that homo sapiens love to set new records, and I think they're ready to bid prices higher.