Q1 2017 Results

Our first quarter total came in at 26.17% versus 5.53% for the S&P 500.  This brings our average monthly return to 8.39% for 2017 YTD and to 14.58% for the period since Jan 2015.

While Q1 returns were lower than those earned in 2015 and 2016, there has been significantly less volatility these past few months, and much fewer opportunities to short.

Discussion

This quarter was arguably the most challenging in recent memory.  Coming on the heels of the algo-driven post-election ramp job, stocks rallied strongly into the year end.  This was in keeping with our analog first posted on Aug 3 [see: A New Analog] which called for SPX to reach 2297 by Jan 5.

From the Dec 9 Analog Update:

SPX was a little late, reaching 2297 on Jan 25 and then reversing.  But, two weeks later, it shot up through 2300, breaking out of a sharply rising channel and tacking on an additional 100 points before finally running out of steam.

This was unexpected, and we spent much of January and February getting head faked by frequent weak closes which were then followed by strong gaps higher the following morning (11 of 39 sessions.)

March was more fruitful, as the sharp decline in oil prices we had forecast finally played out, driving stocks lower in the process.  This was a nervous few weeks, as speculative long positions had reach all-time record highs.  But, it worked out nicely, and we were able to maintain higher conviction on our positions throughout the month.

As we’ve discussed often, VIX took up the mantle of chief market manipulation tool following the US election [see: Why the Trump Rally is a Fraud.]  Between Dec 21 and Apr 5, it dropped below the bottom of a long-term channel that used to warn of impending corrections an astonishing one out of every four sessions (the yellow arrows.)

While VIX has moved off the yellow channel bottom these past few weeks, USDJPY and CL are still quite active in propping up stocks.  Just today, USDJPY completed an IH&S Pattern that drove SPX nearly 1% higher.

There will no doubt be many head fakes and trap doors ahead. In the next week alone, we face the prospect of war, the next step in the dissolution of the EU, a budget showdown and government shutdown, and the continuing oil price collapse.  Our latest forecast indicates plenty of fireworks!

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Membership Promotion

To celebrate successfully getting through a difficult quarter, we’re throwing a little membership promotion through the end of April.  Earn a 25% rebate on a monthly or quarterly membership [CLICK HERE] or take advantage of special prices on annual memberships.

But, don’t wait too long.  Annual memberships start at $500 today, April 20, and rise by $50 each day through the remainder of the month.  Just CONTACT ME with the subject line “set me up!”

The sale ends Apr 30, so don’t delay!

 


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