That Damned V

We deliberately warned against a bad June in our newsletter a few weeks ago so that it wouldn’t happen, in a sort of reverse psychology move (whatever we say, the opposite tends to happen). Unfortunately, our superstitious powers seem to be on the fritz, because the exact thing we had hoped to avoid – a bounce off of the May lows – is almost exactly what we’ve seen so far in June.  If you’ve ever wondered what people are talking about when they talk about a V-shaped recovery to a recession, or a V-shaped rally in markets… (PS – it’s hard to talk about “V” in our office without the tech guys reminiscing about what they call one of the greatest sci-fi miniseries ever.)

Just take a peek at the price action of the S&P 500, Cotton, Euro, and Aussie Dollar below (at least three of which were short positions for most trend following managed futures programs heading into June) to see what we mean by a V-shaped rally.  The result? Coming into today, the Newedge CTA index is down -1.72% for the month.

One market not participating in the V-shaped rebound is Crude Oil, where a more “L” shaped pattern is showing itself. Here’s hoping Crude knows more about the near future than the rest of these markets and leads the pack lower into the end of the month (Disclaimer: past performance is not necessarily indicative of future results).

And the “L” shaped…

All charts courtesy Finviz.com.

Speak Your Mind

*

Interested in distributing or reprinting this content? Check out our reprint policy here.

DISCLAIMER

Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.

The entries on this blog are intended to further subscribers understanding, education, and – at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex, and is not intended as investment advice, or an offer or solicitation for the purchase or sale of any financial instrument. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts. Opinions expressed are that of the author.

*The mention of specific asset class performance (i.e. +3.2%, -4.6%) is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.), and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship and self reporting biases, and instant history.

The mention of general asset class performance (i.e. managed futures did well, stocks were down, bonds were up) is based on Attain’s direct experience in those asset classes, estimates of performance of dozens of CTAs followed by Attain, and averaging of various indices designed to track said asset classes.

It should be noted that past market performance is not indicative of future market movement.No market data or other information is warranted by Attain Capital Management as to completeness or accuracy, express or implied, and is subject to change without notice.

Managed Futures Disclaimer:

Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.