16 August 2017: Tug of war

Below is a screenshot taken from MarketWatch this morning. These are the headers of two articles which were published on MarketWatch at almost the same time (A bear market could hit U.S. stocks any time now, Buy stocks because you believe in the U.S., not a ‘Trump bump’). This concurrence sums up nicely the feelings among many investors at this moment. On the one hand, we have to conclude that stock prices are high, especially when we take into consideration the price-to-earnings ratio of stocks at this moment. On the other hand, the US economy is doing pretty well and inflation is low. Moreover, interest rates are also still very low. This makes investing, be it in companies or in stocks, very interesting. At this stage, the level of the stock markets is determined by means of a tug of war between so-called bulls and bears. During the last earnings season, the bulls had the upper hand. The current North Korea crisis is seen by bears as a rationale for selling stocks. This two-way pulling might continue for some time, until some major change will take place. News on a decelerating US economy or a new war between the Koreans might do the trick.

 

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US markets were mixed yesterday, after Monday’s substantial rebound. The Dow managed to squeeze out a third day of gains, but only just: +0.02%. The S&P 500 lost 0.05% and the NASDAQ slipped 0.11%. Volatility showed only little movement, especially when compared to the previous five sessions. The VIX closed 2.35% lower. XIV ETNs gained 0.67% and UVXY ETFs dropped almost one and a half percent.
Our models continued their climb back up. Danny Daredevil‘s RSS rose to 162% and Adventurous Anny is getting closer to 20%. The return since their start of Solid Suzy and Lazy Larry closed at almost 27%.
None of our models gave a trading signal at the end of yesterday’s session.

Model  Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil XIV 1 January 2016

162.01%

-35.00%

-39.81%

81%

Adventurous Anny XIV 6 March 2017

18.64%

18.64%

-14.43%

47%

Solid Suzy XIV 6 March 2017

26.81%

26.81%

1.32%

70%

Lazy Larry
XIV 6 March 2017

26.81%

26.81%

1.32%

70%

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

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While riding his bike along the countryside in the province of Brabant, René stopped in awe when he saw the colors of the vegetation on a farmer’s land. While he took the picture below, he wondered what kind of crop it would be, that threw this enchanting soft rose glow on the field. At the time of the posting of this blog post, he still doesn’t know what exactly it is. If anyone knows, please post a comment in the section below.

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