TPP vs Mohamed El-Erian

There is a CNBC story from today, 11/2, that Mohamed El-Erian is recommending to take money out of the market. 

The Pivotal Perspective has consistently said upside limited from August 21+, and issued a rare trouble alert on 10/27. So we've beat him by a few days and a few %s. 

But here is where we really differ - I am thinking this looks more like a key low than a time to sell. We'll see what happens. 

ps: In spite of his illustrious reputation and enviable status as retired investor, El-Erian hasn't been the best on stock market lows, claiming that "markets had much lower to go" on 8/24/2015.

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11/13 update: Speculative buy right idea, but I didn't give it enough room and used SPY Q4S1, QQQ Q4P and IWM YP as stop areas, and said out 11/3. SPY NovS2 would have worked. 

Tom Lee vs TPP

Tom Lee told you to sell at the end of July and buy back SPX 2100. That didn't work did it? Nevertheless, CNBC is eager to have one of the most highly paid strategists back as a guest and didn't give him a hard time, just saying "you've been bullish." That is kind of true, as he didn't call for a big top like Gundlach, but still, they let him off easy.

Now he is saying buy USA small caps, which means the Russell. I say no way! IWM (ETF for the Russell 2000) just tagged its 2HR1 level, and YR1 is just above. This is terrible from a risk reward perspective. If you wanted to buy in here, then it was 7/4 and 7/11 weeks with the 2nd launch above the YP. Definitely not up here at significant resistance, especially with the weekly chart showing highest RSI in nearly 2.5 years! Basically, his buy signal is nearly 2 months and about 5% late.

Long term pivots on the weekly chart (look at RSI) below. 

Best performing hedge funds vs TPP

According to ValueWalk, the best fund of 2016 is up 16.75%, with still the top 20 in the world only up 6%+! Frankly I am flabbergasted at these performance numbers, because there have been so many great moves in so many markets a skilled fund really should be up 10+% this year. That means a vast majority of funds are really quite terrible in the trading department, so in which case, why bother?

Needless to say, if you have been following recommendations on this site, even despite today, you would be on this top performing list and without any leverage! With leverage like the funds use, top of the list! Yes really, go back to 1/4/2016 and do the math on the recs! Just consider, short USA stocks first week of January and good cover, long bonds 1/6, then adding, long gold late January, then adding, long Dow and oil 2/12, long other emerging markets the next week, adding longs late February and early March... OK then! There have been a few quick 1 day outs, a couple of shuffles, and today was not pretty but I guarantee larger moves add up to more than 6% gain this year! 

I've been involved in a small world beating team before. I cannot take full credit since I was not the trader, but a small hedge fund that I worked with as a strategist for 3 years was top 3 in the world with about 110% gain in 2013. So I know what it takes to outperform - getting the leaders in size with leverage and holding the best trends. This is why my focus is buying leaders above all pivots first and shorting the laggers down below all pivots first, and holding winners relentlessly. Knowing when to hedge helps, but you have to know when to really change gears too. When those great trends end, it is time to leave. That judgment is the toughest part. Pivots help a lot. 

Anyway, today it seems like companies want certain certifications and certain methods - despite the fact that those certifications just mean crowded trades and methods that continue to under-perform the market.

Fresh thinking here, demonstrated daily on a very part time basis on my part... full time still available if anyone is interested! I may (and hope to) have another commitment soon, though, at which point blogging will reduce considerably. 

Piper Jaffray vs TPP

Strategist at Piper Jaffray keeping to SPX 2350 call this morning. Tough timing for him today, but that's not the point here. Most of Wall Street would doubt this call too, since 2350 would assume a 5% jump in SPX earnings from here (up to 125 from current 118.50) and forward 12 month p/e near 19 (up from 17.5 now which already on the higher side of historical valuations). Both seem quite unlikely at this point; earnings estimates are usually revised lower as the year unfolds. 

But what I can say from The Pivotal Perspective is that using INDU data from 1925, this has never happened. This year has been historic, both in the January drop and Q1 recovery, so nothing can be entirely ruled out. But from 1925 to now, the market (meaning INDU index) has never traded to YS1 in the first half and reached YR2 by the end of the year - which is what his call implies on SPX. 

Of course, the reverse has occurred - from reaching YR2 and then down to YS1. Even that is rare, but it did happen twice: in 1929 and 1987. So basically he is calling for a similar type move this year in reverse. While we can still consider the possibility of a YR1 2163 target as long as SPX holds YP 2015, but I highly doubt we will see YR2 2282, let alone trade above it. 

Kensho vs TPP

Continuing a series... check the "vs" tag below for more. 

Kensho is an artificial intelligence / search / analysis program recently hyped in NYTimes and being mentioned often on CNBC. I don't have a PRO subscription but you can see the call to sell TSLA before the event based on past history. I don't really see any "intelligence" here this is just a pattern that can continue or not. 

TSLA has had tremendous rally but did just stop cold on its 1HP, YP and Q1P pivot area shown in the chart below. So using pivots alone I should side with Kensho here; ie, pivots stopped the move so next move down. But TSLA also could rally above in today's session. 

But I also think that despite analysts waiting for this event for years, this is one of the true innovation stories in today's economy. Musk is a great showman. They could have some ticker showing real time reservations or something like that. Demand will be off the charts. I think it could breakout up above pivots on Friday after the event if this doesn't happen on Thursday. 

But at the same time 3 pivots against the right now I am not suggesting an entry. Although the low looks great as a buy with selling climax and 1HS2, that would have been hard to do. March 3/2-3 with clear hold above the YS1 - and above a monthly pivot as well - would have been much easier psychologically to have both a long term support and medium term strength to signal a buy.

There has already been one rejection 3/22-23 that was met with strong buying on 3/24. Yesterday 3/30 looked like another rejection of the YP but maybe that is bought as well. Clearing would be bullish. Let's see what happens. 

4/1 update: Human with brain beats the AI search tool. 25% short interest too haha!

Sell stocks? UBS vs TPP update

Last week there seemed to be quite a lot of bearish sounding calls with markets at highs. To me everything seemed quite healthy and I wrote up this piece. PS, we can even add the very respected Mohamed El-Erian who called for a 10% drop on 3/24! Remains to be seen but so far that is going the wrong way. 

Now, the VIJ6 16.85 did trigger and that worked really well for a 1 day hedge as suggested with an exit the next day. But rather than sell stocks I thought best to have a few very brief defensive plays (also TLT long, XLF short, FXI short if in EEM long) against a mostly long book (DIA, SOXX, GLD/GDX, small oil related remaining, EEM) and then see what happened. 

Also from 3/22: "If stocks are green on the year as more and more are this will put pressure on the fund managers to buy. I am not necessarily saying jump in and buy today, as anyone following along got decently long from the end of February through 3/10-11 after having starter longs on 2/12. But right now holding longs, and being careful ie not so eager with shorts or hedges, is proving the right approach."

And that is how it has played out folks. What I didn't peg was how SPY going green would trigger large short covering on IWM, that would have been nice. 

Sell stocks? UBS vs TPP

Business Insider is reporting that a tactical team at UBS with a hot hand is saying sell. And ZeroHedge is sharing a Goldman note about raising cash for expected volatility. Seems accurate, but you know, ZH. I cannot confirm their list of companies issuing bearish notes in that article.

Anyway, sell stocks is the easy call to make right now. Daily RSI on ESM6 as I type is 71, and has been 69+ for 4 consecutive trading days. Also, the buyback window is closing as we head into earnings season. CNBC is also noting this here through their artificial intelligence market wisdom software collaboration. 

I thought markets would pause this week too and had several short-term defensive play ideas. Yesterday only 1 triggered on DAX and today is already out. TLT cannot catch a bid, and has been rejected from its weekly pivot 2 days in a row. Stocks could be dropping but they aren't. I did suggest a VIJ6 buy at 16.85; the low today was 16.92, so that missed by a hair unless you allowed some discretion. And IBB the weakest USA sector has rebounded quite strongly as VRX stabilized, as I thought might happen. 

So maybe things change tomorrow but right now things look quite bullish. I will change my tune if we see NYA and other risk asset indexes / sectors with long term level rejections. Right now we aren't, and only 7 trading days from quarter end. If stocks are green on the year as more and more are this will put pressure on the fund managers to buy. I am not necessarily saying jump in and buy today, as anyone following along got decently long from the end of February through 3/10-11 after having starter longs on 2/12. But right now holding longs, and being careful ie not so eager with shorts or hedges, is proving the right approach. 

File this under TPP (still bullish) vs UBS (sell now).

Deutsche Bank vs The Pivotal Perspective

Continuing a series, the big banks vs The Pivotal Perspective. First in series here. 

Deutsche Bank was recommending gold on 2/26.

Admittedly I had some shuffle last week, but I was more concerned with taking profits on the YR1 area (larger red crosses) especially if stocks continued to show some strength above their FebPs. 

Here at The Pivotal Perspective we are buying key pivot status changes and looking to lock in gains at major resistance. Certainly we can hold if that clears and look for higher levels. But the DB buy after a 15% jump right at YR1 is quite frankly very late. 

Goldman Sachs vs The Pivotal Perspective

People who work at Goldman Sachs are incredibly smart, have advanced degrees in economics, math, etc, from the best schools along with the advanced certifications, and all the data and computer tools at their disposal. But their "6 top trades" for 2016, 5 have already gone bust. No, I'm not making this up!

http://www.bloomberg.com/news/articles/2016-02-09/goldman-sachs-abandons-five-of-six-top-trade-calls-for-2016

Meanwhile, following this blog:

1. Buying USA leaders ie NDX / QQQ and perhaps some SPX / SPY early October; as major pivots held and recovered. I was clearly bullish because it was obvious using pivots; over the course of 2 days 10/2-5 2015 SPY recovered 3 of 4 levels and triggered a buy. 

2. Shorting a choice of weaker global indexes EEM, FXI, PIN, RSX, EWZ in November; all of these below all pivots at various points, and they were frequently mentioned as hedges. Some of these probably have taken some profits or out, some holding still today. 

3. Shorting oil as early as 10/19, scratch or small loss near 11/3, shorting again 11/4-5 using simple strategy of a daily close below all pivots for huge gain. 

4. Reducing USA longs 1/4-7 (most of which bought early October) as pivot status went from likely "open 2016 above all pivots" to 3 of 4 to 2 of 4 (ie mixed trend, no reason to be big long) on the actual open due to gap, and breaks soon after that; 1/6 SPY short possible under the YP aiming for YS1 which delivered; and/or putting on new shorts via IWM. Any remaining tech longs cut 1/7 (because that was the last index to break its YP). 

5. Buying TLT or other bond vehicle 1/6+.

6. Buying GLD 1/25 and maybe GDX after that too. 

If you doubt these calls please see the featured posts and when they were written, or go back and read the blog and my daily SPY / ES commentary. 

So, take your pick. Simple and what works, or complex positions that depend on  economic theory. I'm not against economics, but there is a crucial difference between economics and markets in how they function. Also, notoriously, once everyone on Wall Street agrees that something has to happen, it doesn't.