Market Trends for April 2018

Early Signs of Worst Nightmare for Investors, could be good for trends!
Q2 kicked off with an early sign of what many investors are fearing. A sell-off in both bonds and stocks at the same time. This of course is nothing new, we saw it during the financial crisis...but the truth is that it has not happened very often in the past 30+ years, mainly because the interest rate cycle has been going down. If you are in the camp that believe the interest cycle is about 35 years long and that it changed direction in 2016 with historic lows in most fixed income markets...well you may also expect that the traditional "safe-haven" correlation between bonds and stocks may be less reliable going forward. But even if you do not fall in to this camp, and still believe bonds will provide adequate protection...allocating part of your portfolio to a truly non-correlated asset class, such as trend following, would still be a good idea.Now, let’s look at where the trend Barometer finished the month;

The number of markets recorded in a trending state increased from 18 to 19 during the month, with a few landing right at the neutral reading (indicated by the "grey" shade right at the 30% level. Please note that for the individual markets a reading of 30 is considered neutral as opposed to the Trend Barometer itself, where this level is 45. What is interesting is that 13 of the 19 trending markets all came from the Commodity side, with Energy markets showing very good trend behavior across the board. Grains and Softs also looked good in general.

It kind of confirms the early performance indications of a flat month for CTA's but given that the Trend Barometer did managed to close above 50...it surprised me a bit to see that Energies was the only sector that overall showed trend behavior.But since Commodities were the leading markets in terms for trends, it does makes sense that larger managers with much less ability to trade these markets, did not see much performance in April...and hence the CTA indices would reflect this.


PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
I hope you found the information useful as part of your own evaluation of the trend following part of your investment portfolio. I will continue to do my best to keep you up-to-date with regards to the environment for diversified trend following strategies and would love to discuss any of this information with you. Just reach out to me. P.S. if you want to follow the Trend Barometer on a daily basis, please click here and if you want to see the list of Market Symbols explanations, please click here.Most Comprehensive Guide to the Best Investment Books of All Time

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