Speaking Out of Both Sides of my Mouth

It was such a pleasure and privilege to spend an hour on Fox Business’ Opening Bell with Liz Claman, one of my all time favorite anchors. She was hysterical off camera and we had a lot of fun with the various segments which I will publish here over the next week. The whole Fox Business crew was incredibly nice as they always are. I can’t wait to do it again, hopefully next month.

The first topic we covered was Market Flashing Warning Signs. This is not a new topic for blog readers, but it’s one that I imagine will be front and center for some time. As supported by fierce sector rotation, including taking the momentum groups out and shooting them, the stock market is transitioning into the next and final stage of the bull market. At this point it looks like the final top isn’t until 2015, but I will take the information as it is presented.

Although stocks have basically gone nowhere since late February and really all year, we have seen somewhat of a schizophrenic market with the Dow up triple digits one day and down triple digits the next. While that may seem frustrating on the surface, the bulls say it is a sign of underlying strength that after such a powerful advance, the bears cannot make any meaningful headway. The bears on the other hand, say that the stock market is distributing stock from strong hands to weak hands as a major peak is developing. In fact, they can both be correct depending on one’s time frame.

It is definitely bullish in the short-term that stocks are holding up so well with all of the geopolitical nonsense and Fed tapering. At the same time, trading ranges like we are seeing now, often resolve themselves with a final blast higher to a peak that leads to corrective behavior over the intermediate-term. That’s putting the cart before the horse as we have not yet seen the blast off by any of the major indices.

For now, we need to watch the indices as they attempt to breakout or down from the range. I am absolutely loving the action in emerging markets, not only because our EM strategy is finally killing it after a few challenging years, but also because it was one of my trades of the year, long EEM and short IWM. It’s also a positive for the bull market.

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Just Call Me “No One”

FYI, I have the privilege of co-hosting Fox Business’ Opening Bell this Monday from 10:00am – 11:00am. Maria Bartiromo is on vacation so I finally get to meet Liz Claman after being interviewed by her for years and years. I am a HUGE fan!

All Time Highs… Bull Market Alive

Earlier last week, I wrote an article called All Time Highs on Tap where the Dow and S&P 500 would see all time highs unaccompanied by the other major indices. There has been an ongoing divergence or non confirmation with the Dow and S&P 500 that has some calling for the bull market to end here. I could not disagree more.

While some of the ingredients may be in place when bull markets end, many of the key ones, like the NYSE advance/decline line, are not. Much of 2012 and all of 2013 saw a very powerful bull rally, perhaps even borrowing some of this year’s return. In January, I forecast a digestive type year and remain in that camp. There are going to be times to make money and times to preserve money, but most of the time it will be a year to sit in a trading range.

Sector Rotation Vicious

Sector leadership rotation has been fierce this year and I don’t think that’s about to end until we see a full fledged 10%+ stock market correction. This action is causing some short-term frustration in our sector program, but that’s one of the consequences that this type of investing sometimes brings.

Strength in REITs, utilities and consumer staples along with the incredible rally in the treasury bond complex are all forecasting something on the dark side this year. Whether that’s a single event or big picture issue, it should not be ignored.

Something Dark Out There

As an aside, the 10 year note yield is almost at my 2.50% downside target. For the time being, I am just going to sit back, watch, and enjoy the large position we have in our global macro strategy. Last week, I saw an interview with Brian Belski on CNBC’s Squawk Box where he said that “no one saw this treasury bond rally coming”. That just seemed like an excuse for Brian getting it wrong or he gave me the new nickname, No One.

European stocks continue to do very well and I am glad our global macro strategy has had a position here for a long while. One of my strongest trades of 2014 was in the emerging markets after they were left for dead to begin the year. EM hasn’t been kind to investors, present company included, for several years and I am glad they are reemerging as leaders, excluding China and Russia. Some are explaining this rally away as simply a play on the rally in bonds, but that’s a dangerous path to go down as both stocks and bonds in the US have both rallied since early February, breaking the expected inverse correlation.

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An Hour on Fox Business’ Opening Bell

I am really excited to join Liz Claman who is subbing for Maria Bartiromo from 10am to 11am on Monday the 19th on Fox Business’ Opening Bell.

Having been interviewed by Liz many times during her tenure at CNBC, I can’t wait to meet her and co-host the show for a full hour. She is one smart woman!

As I worried about having enough to say, I am often reminded by my family that I don’t know when to shut my mouth and stop talking so I shouldn’t worry about the hour.

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