Defensive for a Reason

Posted on May 1 2015 - 9:25am by Sharpe Trade

When the SPX hit 2125 four days ago … I was a bit … ‘celebratory’ in my mood.

But I didn’t take my eyes off the puck.

There is a reason I went defensive in my strategy as of late.

Yes … as I have stated a few times here, I’ve gone defensive in part due to draw-down I have experienced earlier this year.  It’s ‘not the year of Dan’, let me tell you.  But I’m not going to sit here and whine about performance.  The drawdown numbers are still acceptable to me.  It is what it is.

And I detest whining.

But there is more than one reason that I have gone defensive. You look at the thirty year, and you look at equity indices … and well?  I detect … a slow … drip.



It’s possible that we have developed a small leak in the plumbing that drew money to the United States markets for the last two years.   We could point to a number of factors.  Taper has completed. The Fed and everyone under the sun is talking about a rise in interest rates.  The strong U.S. Dollar.  Stagnant wages.  Disappointing earnings.  

I tend to turn my eyes toward Europe, since they have just now begun their own party.

I mean … let’s review the U.S. markets shall we?  Stocks … struggling.  Gold getting smacked around like a red-headed step child.  Bonds are down.  We keep having these days where there are precious few major markets to run to unless you’re on the short side.  And Europe, after starting it’s own process and ‘style’ of Monetary stimulus, has the DAX cruising higher?

Money is not destroyed ladies and gentlemen.

It simply flows.

Giving U.S. Equity markets a rough go as of late (in addition to everything else they are dealing with) with some money beginning to flow to the European party.

So although I do well when we experience an equities rally?  I also remain quite … defensive.

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