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Tuttle Tactical Management Weekly Market Notes

Tuttle Tactical Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. You should not assume that any discussion or information contained in this letter serves as the receipt of, or as a substitute for, personalized investment advice from Tuttle ...


This past week has been volatile. Friday’s jobs number ended up being perfect, not to good, not too bad, causing a big market rally. It has to be noted that the two day rally also came when the market was oversold and was a bounce off of the S&P 500′s 50 day moving average.

Yesterday the market sold off, the excuse this time were some of the issues overseas (Turkey, Japan, ECB stuff, etc). The market also probably got a little ahead of itself on Friday but what is going on in emerging markets is troubling and bears watching.

Today, the futures are pointing to a 100+ point up move for the Dow Jones on the open.

Is the Bull Market in Bonds Finally Over?
We are starting to see the signs:

  1. According to Morningstar mutual funds that invest in long term treasury bonds lost on average 6.8% in May, wiping out years of interest payments.
  2. Other sectors like mortgage backed bonds, high yield, etc. got hit even worse in May.
  3. According to EPFR Global, investors took $12.53bn out of global bond funds in the past week.
  4. And, we sold all of our bond positions except for floating rate bonds.

Interesting and Not Completely Useless Information
Credit Suisse recently upped their target for the S&P 500 to 1730 for 2013 and 1900 by the end of 2014 but they actually included some interesting analysis beyond the usual gobbly gook:

  1. 1. They take 4 1/2 pages to basically say that there is still a bunch of money on the sidelines that is highly likely to move into stocks.
  2. 2. and this: ” So far, the S&P 500 has fallen by 2.5% from its peak. The market underwent its last correction of at least 10% in October 2011. However, over the past 30 years there have been four occasions on which equity markets have continued to rise for significantly longer without being interrupted by a 10% correction (nearly 7 years in the 1990s, nearly 4 ½ years in the 2000s and 2 ½ years in the 1990s). So every decade since 1980 has seen a period of 2 ½ to 4 ½ years without a correction of more than 10% compared to the current period of 20 months.In our experience one wants to consider buying an asset class when commentators first start describing it as a bubble. For instance, Greenspan warned of ‘irrational exuberance’ on Dec 4th 1996 (when the S&P 500 was 740) and the market then doubled over the following four years”

Recent Moves
We sold all of our counter trend positions in the S&P 500, Small Cap Stocks, and Dividend Stocks after Friday’s rally. Yesterday’s selloff caused us to buy back the S&P 500 positions. This brings the cash in our Trend Aggregation strategies to about 30% across the board. Our Momentum Strategies are still fully invested.

I Don’t Care What Other People Made, I Just Care What I Will Make
Over the past few weeks we have won a bunch of awards for our past performance. As I talk to financial advisors across the country I am always asked about it and I tell them all the same thing—-Past performance, ours, or anyone else’s, is pretty much meaningless.

All past performance tells you is that other people either made money or didn’t, it doesn’t tell you whether you will make money in the future. Think about it, did the past performance of internet funds in 1999 tell you anything helpful about 2000-2002? Did the past performance of any stock fund give you any hint to how it would do in 2008? No. When evaluating any investment you need to ask the following:

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