Market Trends for February 2018

If Trend Following was an Olympic Sport...it would this
February was the month where many markets caught the flu and inflicted pain on many investors. Personally, I caught this nasty bug as well...and right in the middle of the Olympic Games in PyeongChang. But that was in someways lucky, as I had a free pass to watch all the television I wanted...including the Olympic Games. It's fascinating to see people at their peak, do incredible things...and make it look so easy. Watching all this sport, made me think...what if Trend Following was any Olympic Sport...which one would it be?What do YOU think? It took me a while to come up with my favorite... It had to be a sport that would visualize the courage it takes to invest in a strategy that thrives from uncertainty and volatility. Where you don't try to predict but rather accept "knowing what you don't know" and allow your positions to flow with where the markets take you. Where the twist and turns in performance from time to time can hit you with g-force acceleration or deceleration (as experienced in February). ...but I think I found the perfect sport to do just that. Watch this short video and you will see what I came up with :)
Now, let’s look at where the trend Barometer finished the month;

The number of markets recorded in a trending state more than halved from 23 to 11 during the month. With trend changes occuring in some markets like the Grain Complex, which finished the month with some of the strongest up-trend readings. In fact Commodity markets had most of (the few) trends at the end of the month. There were a handful of trends that persisted during the month, mainly in the short-term interest rate markets and US bond markets.

As mentioned last month...Stocks did not finish January in a trending state...so clearly the Trend Barometer picked up the loss of momentum in this sector, before the "crash" in February. Interesting. As mentioned above the markets that were in some kind of trend pretty much all belonged to the two sectors left standing...namely Grains (Up-Trending) and Short-Term Interest Rates (Down-Trending)...so no surprise there. But noticed how pretty much all the other sectors, with the exception of Bonds and Meats, were pretty much close to "0"...I think that really shows how few trending opportunities we had in February due to the reversals and transitions many markets went through.And when there is a major financial shock, correlations move to one and there is no hiding from risks. BUT remember, volatility and risk are not the same thing!


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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