Global Market Comments
December 27, 2024
Fiat Lux
Featured Trade:
(HOW MY MAD HEDGE AI MARKET TIMING ALGORITHM WORKS)
Global Market Comments
December 27, 2024
Fiat Lux
Featured Trade:
(HOW MY MAD HEDGE AI MARKET TIMING ALGORITHM WORKS)
Since we have just taken in a large number of new subscribers from around the world, I will go through the basics of my Mad Hedge AI Market Timing Index one more time.
I have tried to make this as easy to use as possible, even devoid of the thought process.
When the index is reading 20 or below, you only consider “BUY” ideas. When it reads over 80, it’s time to “SELL.” Everything in between is a varying shade of grey. Most of the time, the index fluctuates between 20-80, which means that there is absolutely nothing to do.
To identify a coming market reversal, it’s good to see the index chop around for at least a few weeks at an extreme reading. Look at the three-year chart of the Mad Hedge Market Timing Index.
After three years of battle testing, the algorithm has earned its stripes. I started posting it at the top of every newsletter and Trade Alert two years ago and will continue to do so in the future.
Once I implemented my proprietary Mad Hedge Market Timing Index in October 2016, the average annualized performance of my Trade Alert service has soared to an eye-popping 44.54%.
As a result, new subscribers have been beating down the doors, trying to get in.
Let me list the high points of having a friendly algorithm looking over your shoulder on every trade.
*Algorithms have become so dominant in the market, accounting for up to 90% of total trading volume, that you should never trade without one
*It does the work of a seasoned 100-man research department in seconds
*It runs in real-time and optimizes returns with the addition of every new data point far faster than any human can. Image a trading strategy that upgrades itself 30 times a day!
*It is artificial intelligence-driven and self-learning.
*Don’t go to a gunfight with a knife. If you are trading against algos alone,
you WILL lose!
*Algorithms provide you with a defined systematic trading discipline that will enhance your profits.
And here’s the amazing thing. My Mad Hedge Market Timing Index correctly predicted the outcome of the presidential election, while I got it dead wrong.
You saw this in stocks like US Steel, which took off like a scalded chimp the week before the election.
When my and the Market Timing Index’s views sharply diverge, I go into cash rather than bet against it.
Since then, my Trade Alert performance has been on an absolute tear. In 2017, we earned an eye-popping 57.39%. In 2018, I clocked 23.67% while the Dow Average was down 8%, a beat of 31%. So far in 2024, we are up 28%.
Here are just a handful of some of the elements that the Mad Hedge Market Timing Index analyzes real-time, 24/7.
50 and 200-day moving averages across all markets and industries
The Volatility Index (VIX)
The junk bond (JNK)/US Treasury bond spread (TLT)
Stocks hitting 52-day highs versus 52-day lows
McClellan Volume Summation Index
20-day stock bond performance spread
5-day put/call ratio
Stocks with rising versus falling volume
Relative Strength Indicator
12-month US GDP Trend
Case Shiller S&P 500 National Home Price Index
Of course, the Trade Alert service is not entirely algorithm-driven. It is just one tool to use among many others.
Yes, 50 years of experience trading the markets is still worth quite a lot.
I plan to constantly revise and upgrade the algorithm that drives the Mad Hedge Market Timing Index continuously as new data sets become available.
“The rule book on how things are done and how they will play out you can just throw away right now,” said Scott Minerd of Guggenheim Partners.
Global Market Comments
December 26, 2024
Fiat Lux
SPECIAL ISSUE ABOUT THE FAR FUTURE
Featured Trade:
(PEAKING INTO THE FUTURE WITH RAY KURZWEIL),
(GOOG), (INTC), (AAPL), (TXN)
Global Market Comments
December 24, 2024
Fiat Lux
Featured Trade:
(THE NEXT COMMODITY SUPER CYCLE HAS ALREADY STARTED),
(COPX), (GLD), (FCX), (BHP), (RIO), (SIL),
(PPLT), (PALL), (GOLD), (ECH), (EWZ), (IDX)
Global Market Comments
December 23, 2024
Fiat Lux
Featured Trade:
(A BUY WRITE PRIMER)
(AAPL)
Global Market Comments
December 20, 2024
Fiat Lux
Featured Trade:
(THE EIGHT WORST TRADES IN HISTORY)
Global Market Comments
December 19, 2024
Fiat Lux
Featured Trade:
(A CHRISTMAS STORY),
(THE U-HAUL INDICATOR)
When I was growing up in Los Angeles during the fifties, the most exciting day of the year was when my dad took me to buy a Christmas tree.
With its semi-desert climate, Southern California offered pine trees that were thin and scraggly at best, and we didn’t want to chop down the view that we had.
So, the Southern Pacific Railroad made a big deal out of bringing trees down from much better-endowed Oregon to supply local holiday revelers.
You had to go down to the freight yard at Union Station on Alameda Street in downtown LA to pick them up.
I remember a jolly Santa standing in a box car with trees piled high to the ceiling, pungent with seasonal evergreen smells, handing them out to crowds of eager, smiling buyers for a buck apiece.
Watching great lumbering steam engines as big as houses whistling and belching smoke was enthralling. We took our prize home to be decorated by seven kids hyped on adrenalin, chugging eggnog.
A half-century later, the Southern Pacific is gone, the steam engines are in museums, anyone going near a rail yard would be mugged or arrested for vagrancy, and Dad long ago passed away. Dried-out trees at Target for $60 didn’t strike the right chord.
So, I bundled the kids into the SUV and drove to the Eastern shore of Lake Tahoe, on the Nevada side, a $10 US Forest Service tree-cutting permit in hand.
Deep in the forest at 8,000 feet, the kids, hyped on adrenalin, made the decision about which perfect 12-footer to take home. I personally chopped it down and dragged it along the ridge, huffing and pugging all the way. I then tied it to the roof and drove us home. Lifting a 200-pound tree gets tougher every year. Thank goodness the kids are getting bigger.
I netted three trees that day, one for each home and one for my oldest daughter. I figure I saved myself $600.
With any luck, these memories will last until the next century, long outlasting me.
Now, the story really comes full circle. I was in Portland, Oregon, a few years ago and had some free time to kill. So, I wandered across the river to the Oregon Rail Heritage Center.
What do I see, but Southern Pacific engine no. 4449, the exact same locomotive I marveled at in LA 65 years ago, all decked out in its glorious orange and red paint.
It was like discovering a long-lost family member. The 435-ton, 72-year-old behemoth was recently rebuilt from the ground up by a dedicated team of similarly aged volunteers to serve as the city’s Polar Express train in 2014.
For the link to the museum, please click here.
Union Pacific still maintains in running condition some of the largest steam engines ever built for historical and public relations purposes.
One, the “Old 844,” once steamed its way over the High Sierras to San Francisco on a nostalgia tour. The 120-ton monster was built during WWII to haul heavy loads of steel, ammunition, and armaments to California ports to fight the war against Japan. The 4-8-4-class engine could pull 26 passenger cars at 100 mph.
When the engine passed, I felt the blast of heat of the boiler singe my face. No wonder people love these things! To watch the video, please click here and hit the “PLAY” arrow in the lower left-hand corner.
Please excuse the shaky picture. I shot this with one hand while using my other hand to restrain my over-excited kids from running onto the tracks to touch the laboring beast.
Merry Christmas
John Thomas
It is the end of the semester at the University of California, and as a single parent, the unenviable task of retrieving my daughters out of the dorms for the holidays fell to me.
When I arrived, I was stunned to find nothing less than a war zone. Both sides of every street were lined with mountains of trash, the unwanted flotsam and jetsam cast aside by departing students.
Computer desk, embarrassingly stained mattresses, broken lava lamps, and an assortment of heavily worn Ikea furniture were there for the taking. Newly arriving students were sifting through the piles, looking for that reusable gem.
Diminutive Chinese teenagers were seen pushing massive suitcases on wheels down the sidewalk on their way back to Shanghai, Beijing, and Hong Kong. The university attempted to bring order to the chaos by strategically placing dumpsters on every block, but they were rapidly filled to overflowing.
It was all worth it because of the insight it gave me into one of my favorite, least-known leading economic indicators. When I picked up the truck at U-HAUL, the lot was absolutely packed with returned vehicles, and there were more parked on both sides of the streets.
The booking agent told me there is a massive influx of people moving into California from the Midwest and the Northwest, with the result that lots all over the San Francisco Bay Area are filled to capacity.
I love this company because, in addition to providing a great service, they get the first indication of any changes to the migratory habits of Americans. The last time I saw this happen was after the dotcom bust when thousands of tech-savvy, newly unemployed pulled up stakes in the foggy city and moved to Lake Tahoe to work in “the cloud.”
Bottom line: California is enjoying a resurgence of hiring and new economic growth, most likely driven by Artificial Intelligence. This is what the stock market is screaming at us right now.
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