L.B. Insight - May.pdf

Issue Number 3 June 10, 2015

Macroeconomic Scope: As the month of May reaches its conclusion, the economic outlook remains as it was. With the Dow Jones reaching new highs, investors, traders, and those who follow financial markets became weary of such promising numbers. Many great economic formations, in conjunction with previous analysis implications are starting to become seasoned to fruition. Our previous articles measured the importance of inter-market analysis, the inverse correlation of the Dollar to the Euro, and the relevance of existing commodity prices.

All while providing an inferred implication to market direction, I will touch base on the United States continued economic direction within this article. However, I also want to touch base on the importance of the business cycle accompanied by the implications and reactions in which businesses face within these macroeconomic conditions.

The United States itself is distinguished/designed as a business (on a large scale). So who is to say that the same business cycle reactions don't cohort within the United States? This is a true notion and will be demonstrated utilizing Figure 1.1b.

The business landscape includes many parallels with Darwin's ideology 'survival of the fittest'. Companies with lean utilization skills, and insight into the future allow for opportunities to be continually identified, new technology to be incorporated, and alternative ways of doing business, thus perpetuating success. However, just because businesses are competitive via pricing does not necessarily constitute as effective and competitive. All businesses experience the following aspects:

-Inception -Growth -Expansion -Stagnation -Recession -Deflation

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About the Author With a deep understanding of Financial Markets, Technical Analysis, and Macroeconomic policy, Anthony shares a passion to demonstrate specific market opportunities that minimize risk for readers, allowing them to visualize, analyze, and interpret potential trade opportunities. He believes in the continual education, measurement, and metrics of technical analysis on derivative based markets.

The reasoning behind this risk analysis technique is that it allows for a Macroeconomic scope on the market, providing an insight on microeconomic portfolio strategy. Thus, identifying proficiency, isolating portfolio risk, and creating deeper analysis on specific investment strategies and portfolio objectives.

L.B. INSIGHT May Monthly Trade Commentary

Figure 1.1a


The overall goal is to avoid stagnation, however there are periods in which such instances are inevitable.

So the main question to think about is the following: How does Figure 1.1b add value to my knowledge base?

Valuation of intangible assets are becoming more prominent within businesses, technology, and integration. My outlook is as follows: knowledge is power and the amount in understanding these frameworks allow for complex formulations to be simplified. Thus increasing exposure to better analysis for increased portfolio returns (don't worry, there is a method to the madness).

So lets integrate this framework with our market to paint the macroeconomic conditional picture.

We notice the various business stages that cohort with our current market in expansionitory periods and contractionatory periods.

As we infer from Figure 1.1b we notice much of this cycle attributes to past and present conditions. The visualization indicates during recessionatory periods, there are various market segments that precede, and lag behind one another. An example would include the bottoming of stocks within the business cycle.

The framework is as follows: Within Stage 2, as Stocks reach a bottoming point, bonds begin to rebound. As bonds begin to pivot, so does our stock market in tandem. These events may occur as the result of an economic recovery. Which brings us to Stage 3. As commodities begin to increase in value due to the continued growth, they are accompanied with a shaky economic state (sound familiar?). We then reach that 'euphoria' market stage within Stage 4.

The primary objective in providing readers with Figure 1.1b is to illustrate that analysis is indeed just as much an art, as it is a science. It takes a high degree of variability, accompanied with inter-market analysis to fully understand only a fragment of the macroeconomic picture. However, Figure 1.1b is a great tool for the every day investor to measure where our market currently resides, along with where it may be headed. As I conclude this segment of L.B. Insight, I always enjoy leaving readers to ponder the question: What stage do you think our current economy is facing?


Figure 1.1b

Figure 1.1b denotes the business cycle within our economic system, accompanied with the various stages within the cycle.

Figure 1.1a $DJI (courtesy of Thinkorswim platform via. TD Ameritrade.

Figure 1.2

We notice within Figure 1.2 the U.S. Dollar Strength coming off high over sold parameters, indicating further downward momentum, however dependent on market sentiment.

/DX(M5)- U.S. Dollar index (Courtesy of Thinkorswim platform via TD Ameritrade)


United States Market Direction: As our market continues to receive the mixed notions of fed rate hikes, we are beginning to notice the relative strength revisions coming into fruition. From our charts (DJI), we notice relative strength continuing to project downward in conjunction with falling momentum, volume, and squeeze levels.

What this means: Despite our economy continuing to demonstrate strong growth, the revisions in which are looming are only minor. While I do believe valuations are somewhat overvalued, I also believe that investors are continuing to be patient in determining the proper direction of the market. I believe it is safe to assume volatility will begin to pick up and our current market will exemplify further range bound consistency.

What about Greece?: There have been many assumptions, scare tactics, fopa's whatever you call them regarding the macroeconomic conditions of Greece. Speculation of currency exits, non negotiable austerity measures and complete economic reform are all subjects brought to the table. While these ideas were certainly entertaining, one idea which occurred to me did not seem to be visible to many consumers. My idea was as follows, "If Greece did decide to exit the Euro, what would the macroeconomic ramifications associated be? - Yes austerity, yes devaluation, yes currency manipulation, but what about the overall Euro and its association with speculators? To investors the Euro as a whole would look weak in the allowance of regulations to be disoriented and not upheld.

Dollar and Euro: Overall I would look for continual range bound consistencies within the EUR/USD. As investors seek the confirmation of governmental market direction, they are becoming more keen on such analysis and know where great opportunities lie. As the U.S. Dollar continues to appreciate in value, insight becomes revealed as our market continues to suggest increased volatility.

So whats the EUR/USD trade? In conjunction with the projections of the Grexit, the investors are starting to realize the absurdity in addition to the negative ramifications in the occurrence if such event were to take place. As negotiations with Greece and its repayment plan come to a conclusion, I believe the Euro will continue to see a consolidation range bound pattern. Inflation is certainly a great aspect in which Europe is facing, and I would agree parity is still in question, now it just may be a matter of when such can occur.


Figure 1.3

EUR/USD (Euro/Dollar) - Monthly charts. Courtesy of Thinkorswim platform via TD Ameritrade).

Want to trade, but don't know how?

So you have read this article, and have a multitude of questions, no worries.! I would be more than happy to provide commentary, mentorship, and/or a conversation with those who seek a further continued understanding on wealth management. Its completely understandable in instances where both young and senior investors have their lives to worry about (I have been/am in that boat as well). However, the importance and understanding of basic techniques cannot be overshadowed to generate wealth in both a long term and short term scope. Feel free to email me at: [email protected]


As commodities continue to devalue, overall weaker commodity prices reflect indication of strong currency markets, I believe as both U.S and Euro markets. As the continued succession of the Greece Scare, promising bailout plans begin to reach that conclusions, opportunities will be exposed thus signaling a stronger EUR/USD.

Oil: As economic conditions indicate the continual release of oversupply levels (Figure 1.4), I believe we are starting to see Oil normalize and pull back during the driving season. As consumers continue to purchase vehicles for driving weather, gas begins to normalize to a price in which consumers beliefs of affordability, in conjunction with the prospects of an increasing global economy in conjunction with our own. Dont get me wrong, I am still a huge fan of E.Vs, and the influence in its' adjacent industries, however I believe we are continuing to enter a new driving age where technology will begin to become more prevalent within our vehicles, and we will start to experience the grave importance of seamless interconnectivity. This can result in various outcomes. As Oil continues to experience over sold levels, we will see normalization of oil becoming more prevalent within the following months.

Gold: Noted within our previous analysis, the Gold market denoted in figure 1.5 (along with the rest of the commodities markets) is continuing the range bound paths. This one in particular seems to be normalizing in the 1180-1200. As foreign policies are beginning to stabilize alternate investment vehicles, foreign markets, and front line currencies beginning to react to market assumptions, the Gold trade is one that should be monitored continuously. I believe this month Gold will continue to touch key levels at the 1175-1180 mark. Thus posing a great opportunity for a short rally buy. Overall, tread lightly and if you do decide to tread the Gold path dont get too comfortable.

U.S Dollar: In addition to the Macroeconomic conditions of European markets, the United States is experiencing an increased currency consolidation that may impact and influence future direction. Figure 1.2 denotes the explosive bull run the dollar has been experiencing.


Figure 1.4

/CL-(Oil Futures) - Monthly charts. Courtesy of Thinkorswim platform via TD Ameritrade). We can clearly see the consolidation of oil on the monthly charts, its possible this consolidation can further continue as commodities continue to develop a base. The importance in relevancy between commodities, the dollar, bonds, and foreign exchange is crucial in determining market direction.

Figure 1.5

/GC - (Gold Futures) Monthly Charts. Courtesy of Thinkorswim platform via TD Ameritrade. We notice Gold at a pivotal intersection here, our squeeze indicator depicts further price consolidation - a risky trade that should be tread lightly.


Much like our cousins across the pond, I believe we will begin to experience continued normalization range bound consistency in the following months. This is because as the United States maintains its focus globally, while its focus internally results as a by-product.

As the United States continues to experience growth in its Telecom and Technology sectors (which are essential to macroeconomic analysis), the learning curve for businesses, back end development, and utilization continue to develop in rapid successions. This is why I believe our Dollar may begin to normalize; its normalcy will continue to influence business, and overseas investors realize this technological revolution occurring within our United States. With that notion in mind, we will continue to push the limits of technology increasing our market intelligence.

Summary: As the IMF urges the United States to wait until 2016 in imposing monetary policy, we will begin to see increased volatility, in addition to our current market experiencing tandem effects of stagnation. While there does lie opportunities in overseas currency markets and U.S. Currency Markets. Investors, traders, and hedge funds are keeping one eye open at both Bond (foreign and domestic) markets as well as commodity markets.

When considering to take investments in to your own hands, the importance of sustaining discipline is crucial. Remember, money is made by being patient; sure you can day trade (quite a few day traders make a great living) however it is imperative to realize the distinct difference in both day trading strategies and swing trading strategies. While this analysis is intended for educational purposes, the type of investment/trading strategy is up to the individual.

I believe our generation is part of a great data/tech/integration renaissance. As learning curves are continuously steepened, the transit and abundance of information allows for any individual to learn anything, anywhere. As a country we will continue to push the boundaries of technology, innovation, and business. However as I have stated before, the universe is a mystery and markets do what they want. As markets are continually observed, only time will tell.


One Word. Diversification.

As the continuation of our market conditions continue to propel us into the future, accompanied by the technological advances within our economy, the streamline of information in today's age is so integral, and financially inter-related the importance of diversification cannot be overshadowed. For the young investors stating, "Really, how important is diversification? I will see you a question and raise you one in asking - "How important is understanding which teams have the best players and worst players." The ability to not only diversify, but pivot is becoming more integral within our market place. As the emergence of Robo Advisors, intelligent portfolios, and adjustments, the ability to be versatile is crucial along with the ability to pivot with proper diversification adds supplementary value.

Analysis in the 21st Century

The evolution of analysis is finally starting to come to fruition within the 21st century. As seasoned data aggregation is finally starting to become manipulated, the conjunction of the science behind "data aggregation" and the art of Manipulating data to depict a story.

I believe this is the new direction our society is beginning to grasp the realization. It's interesting the parallels of such in stating the following. Data analysis is as much an art as it is a science. However the characteristics that create this data parallel history and depict not only numerical representations, but historical ones as well.


Disclaimer:

Please read the following disclosures as it provides important information reviewing context. Additional information can be provided upon request except upon instances of proprietary information.

This document is intended for informational purposes only, and should not be relied upon as a prediction of future market activity, performance, nor the performance metrics measured by L.B. Global Advisors, LLC.

It is not an offer to sell or the solicitation of an offer to buy the securities or other instruments mentioned. Portfolio allocations, commentaries, and technical analysis are for illustrative purposes only and may not reflect the actual or current implementation of our strategy. The performance provided is net of management fees and includes the reinvestment of all interest, gains, and losses. No representation is being made that any account will or is likely to achieve returns similar to those shown. Past performance is not necessarily indicative of future results. Performance as of the current month is estimated and subject to change. Return and risk expectations shown here are based on L.B. Global Advisors, LLC. analysis and reasonable people may disagree with the assumptions used and expectations developed there from and there is no guarantee the expectations shown can be achieved. The expectations are considered hypothetical and are subject inherent limitations.

Client returns reported here are net of fees total returns. Any net of fees returns are estimates and are not finalized until the end of each quarter. The Funds advisor may reduce or waive fees or reimbursed expenses, without which performance would have been lower. Net of fees calculations are estimated until the end of the quarter. The returns reported are based on market prices and intended for informational purposes only. Final redemption value may be impacted by transaction costs and liquidity considerations. This document is not intended to be legally binding. For the full legal contract, each investor should carefully review the Private Placement Memorandum, the Limited Partnership Agreement, and the Subscription Agreement. The views expressed here are sole that of L.B. Global Advisors, LLC. and are subject to change without notice. Reasonable people may disagree. You should assume that L.B. Global Advisors, LLC. has a financial interest in the views discussed. The research presented is for informational and educational purposes only and is not an offer to sell or the solicitation of an offer to buy the investments mentioned. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. Investors should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, where appropriate, seek professional advice, including tax advice. Investment decisions should not be based solely on simulated, hypothetical or illustrative information. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of L.B. Global Advisors, LLC.


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L.B. Insight - May.pdf