I was pretty aggressive with my call to hedge in last week’s Trade Signals (What Was I Thinking). That view remains unchanged. While the equity markets cyclical trend remains bullish, the seasonal patterns are concerning and with sentiment back to Extreme Optimism (Bearish), I believe it is time to hedge long-term core equity exposure.
We all buy fire insurance and hope it is never needed. I’m suggesting the same today for your stock exposure.
Valuations are high, margin debt is surprisingly higher than it was in 2007, sentiment reflects too much optimism and the more challenging seasonal May to October period is approaching.
Included in this week’s update (the usual weekly charts):
- Sentiment Charts – Crowd Sentiment Poll: Extreme Optimism (Bearish)
- Sentiment Indicator Based on Forecasts Gathered From 130 Stock Market Newsletters
- Seasonal Tendencies: Challenging May to October Period
- Cyclical Equity Market Trend Charts: Bullish Market Trend Environment Remains
- Cyclical Bond Market Trend Charts: 10-year Treasury & 30-year Treasury: A Declining Interest Trend (note change)
Investment Sentiment charts 4-8-2014:
Sentiment Chart 1 – NDR Crowd Sentiment Poll: Extreme Optimism (Bearish)
Steve Blumenthal
Founder & CEO CMG
Stephen Blumenthal founded CMG in 1992. He is CEO, Chief Investment Officer and portfolio manager at Capital Management Group, Inc. where he manages equity and tactical investment portfolios. He is a frequent speaker and writer on investment strategies and has been featured in various media sources including the Wall Street Journal, Barron’s, Investor’s Business Daily, Pensions & Investments Magazine, Investment News, RIA Biz and Smart Money. He has been a guest on CNBC, Wall Street Journal Live, and Bloomberg. Mr. Blumenthal is a frequent speaker at industry conferences (NAPFA, IMCA, Index Universe, Opal Financial Group Indexing & ETF Summit and NAAIM) and is author of CMG’s popular investment research commentary. With 30 years of investment management and industry experience, prior to founding CMG, Mr. Blumenthal worked for Merrill Lynch Institutional, Merrill Lynch Retail and Prudential Securities.
Mr. Blumenthal graduated with a Bachelor of Science degree in Accounting from Pennsylvania State University. He is married, has three children and is active in his community coaching youth soccer.