The World is Flat!

Market Date: 10.8.2014

The world is flat! What I mean by that is we go up a percent or two then decline a percent or two. One day your account is up, the next it’s down. The first thing I would say is “get over it.” That is where the market is now and either you do something about your portfolio or, live with it. If you can rise above the noise (market perturbations) you can manage your risk. Here is a screen shot of a TtM page that is implementing my investment strategy. This part of the TtM system is similar to a barometer. Rather than measure the barometric pressure, this function measures the market pressure (what we know as the Bulls and the Bears tug-of-war).

MarketMood8.14

For the last forever, the Market Mood barometer has been fluctuating between 0.000 and 3.500. This is all Bull state and cycling between the lower Complacent mood and the upper Upbeat mood. There is no real frequency to the movement; it is very reactionary to whatever the latest news cycle contains. What is interesting, and the reason for this early post, is the barometer has actually hit negative territory for the first time in a while. What happened with the market yesterday was it dipped its toe in the Bear market. Only slightly but it hasn’t done this for a while. I’m also looking at the velocity of the movements in the moods. The mean is generally the same but the volatility is increasing.

As you can see, I’m in a hedge position. I’m 50% long and 50% short (with some cash). The only reason I’ve decided to a 50-50 hedge position is to jump on a trend. You could have done this by going to cash and waiting for a trend call by TtM. My longs and shorts are primarily ETFs and inverse ETFs, such as SPY and SH. I’m pretty conservative with this strategy but as the Market Mood begins to pick a direction (and I really don’t care what direction it takes) I’ll get more aggressive and pick new additions for my portfolio from the TtM Two Day Long/Short reports.

If you are not familiar with these reports you may want to read the TtM Introduction. In a nutshell, the two day long and short reports include all of the symbols in my catalog that changed state today and yesterday (last trading day). How do we know that? That is the magic of TtM. It knows the state, mood, and much more about the 2500+ symbols in our catalog (stock universe for now). Since the market is in an Anxious mood, we won’t even bother to look at those reports for now.

I’m going to cut this short but wanted to get a real post out there so we can start monitoring the Market Mood together. My recommendation:

Cash or cash equivalent (10.8.14)

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