Nov 11th

As we recall, I have been looking for 3,125 on the S&P 500.  We are now at about 70 on the S&P 500 blended model.  Historically, the index does see some failure at this 70 level.  My first thought is that much of phase 1 is built into this level.  However, the index will have a back stop and don’t see a sell the news reaction even if phase 1 is sold off because then you will have negotiations for phase 2.  I do think the risk is increasing as the smallest chance phase 1 cant be completed will easily send the S&P 500 back to 2,980.  However, trump is so desperate to get this phase 1 deal, he may completely wall back all tariffs as China is requiring.

Additionally, as we mentioned previously about bonds, the 10 year  yield just made a 5 months high and is demonstrating equities are risk on.

Oct 30th

Follow up from Oct 30th… I have very little to discuss as my thoughts have not change.  While I feel the trade deal is a shame and will be a zero sum gain and a waste of time as nothing will be accomplished in Joint venture partnerships, intellectual transfer and IP.  However, the market will take a trade war loss to move forward as we discussed.

The Fed cut .25bps today, on a day GDP came in at 1.90 and hit all time highs yesterday and again today… LOL… and consumer sentiment came in yesterday around 125.  Amazing, while I do understand the Fed wants to get ahead of a slow down, I also think its absurd to appease the markets this much.

In conclusion, my opinion of 3,125 on the S&P seems likely by year end, however, just maybe 3,050 will be met with some resistance.  It would not be unusual for some profit taking of weak longs and a possible pullback into 3,000 and a reload to 3,100 by year end.  But then again, if no deal is signed in Nov that could cause greater pressure within the market.

Oct 21st

The price action around the S&P 500 / equities to me regarding the China trade deal is rather crazy.  The Phase 1 trade deal being proposed is nothing different than the proposed light deal from 1 year ago already offered.  I am shocked to see investors think this time that any meaningful deal will come to fruition with China.  However, something has changed.  Trump’s is caving for reelection, his advisers reportedly (Larry Kudlow) are telling him to end the trade war if he wants to get reelected. So far he has spun the Phase 1 as a big win, however, this deal has very little substance.  Trump has eased up on his tweeter rants and Kudlow today said Decembers tariffs could be removed.

This has been enough so called progress for the markets. While a complete waste of time and effort on the administrations part to get almost nothing accomplished in terms of meaningful (IP transfer – the real issue at hand) the markets will be grateful to have this behind it.  You have earnings coming in better than expected once again as the market was anticipating weak numbers.  Even if earnings and revenue were weak, the market would get a pass based on trade talk progress. Then we have the Fed’s dovish positioning and news driven future traders bidding up the S&P 500 futures on any non-eventful news.   Lastly we are at a critical shorter term level on the 10 year yield and a close above of 1.865 could cause a big unwind of bonds causing risk on for equities.

Conclusion, as we mentioned back on September 12th, a close above 3,035 will take the S&P 500 up to around 3,125.  While I remain very skeptical of this so called Trade deal Phase 1,2 and 3.  Price is truth when it comes to your investment balance sheet.

Oct 11th

Very interesting day, the market rallied 52 points before any announcement was made.  Once the deal was announced for phase 1 the market did sell of about 20 points.  I don’t read anything into this.  The $40 to $50 soy beans was a given.  What was not expected until mid day was the removal of JV on technology ventures and a vague deal on U.S. financial institutions.  Now we 5 weeks for this deal to be signed, then onto phase 2.  Unless something completely falls apart, I just don’t see what is going to stop this market from worst case retesting the old time highs.  That is only 65 handles from the 2,970 level we closed at today.  Last for the first time in several months the 3 month and 10 year treasury yield uninverted.

Oct 10th

Just to reiterate our Oct 3rd commentary, we would reduce some exposure around the 2,940 level.  The market has been extremely resilient, but in my opinion that the recent resilience is more so a function of news driven algos that bid the market up and level human capital. I personally do not believe tomorrow’s meeting will result in anything tangible except maybe more trade on Soy beans.  While I hope I am wrong, I think China can play the long game as Trump politically is in some trouble. Additionally, Trump will not cave on the important issue in terms of IP transfer.  The risk seems to be to the downside in my opinion and raising some cash to add to lower levels in my opinion seems prudent.  Leave long equity exposure is certainly warranted in case there is slightly better than expected outcome is achieved tomorrow. At which point, the S&P 500 will retest all time highs.

Oct 3rd

OK today didn’t play out exactly as I outlined last night.  However, the S&P 500 did get a bounce close to the 200 day moving average.  The index saw a low of 2,855 before a massive rally back above 2,900 to close at 2,910.  The tell today was rates getting absolutely smashed as after a bad ISM services number, as once again the Fed needs to cut in Oct and Dec. I personally dislike these types of rallies off greater Fed cuts on bad data.

Tomorrow we have the big jobs number, estimates are looking for around 120,000k.

Three scenarios for tomorrow: 

  1. Anything inline 90,000k to 140,000k the markets will hold steady and possibly move higher.
  2. If the number is a blowout 160,000k to 200,000k the market will initially rally with a reversal most likely as yields rise on stronger economic data. Possibly even giving all the 23 points the S&P gained today.
  3. Significantly weaker 60,000k to 80,000k markets pullback back to 2,888, yields crash lower and mid morning the markets go flat to green.

In the short term the S&P 500 has significant resistance at 2,940 and would sell some long exposure at this level.  One condition where investors will not want to sell into this level id off very constructive trade talks within the next few weeks.  I would not be surprised, without any new catalysts the S&P 500 could retest the 2,855 level.

Oct 2nd

Everyone just relax, this pullback is purely weak hands selling, that is it! The markets have recognized weak economic data for the past 12 months, excluding last months ISM services. We mentioned a few weeks ago we did want to sell into 3,030 on the S&P 500. The index only traded to 3,021.99, 8 points from our suggest level.  Maybe some of you reduced a little long exposure at that juncture.  If you did raise cash, now is the time we want to start thinking about reallocating that capital.  Today’s close was weak and I expect more downside in the morning. As we mentioned yesterday, a close below 2,940 in the index would cause a possible fast drop to 2,966.

Tomorrow we have the ISM services number which in my opinion is much more relevant than the ISM manufacturing number. A strong number that show expansion will in my opinion reverse the last two days losses.  If the number is in-line I would be a buyer at the 200 Day moving average at 2,837.   All bets are off if the data point comes in significantly weaker than estimated.

Oct 1st

Today was a more worrisome sell off then the trade war sell offs. Today the U.S. saw the worst manufacturing slowdown since 2009.  There is nothing the Fed can do with this as it is a result of the trade war.  Additionally, I believe the market sold off even more as Trumps reelection odds grow dimmer off of a weaker economic contraction.  The S&P 500 held a big level today at 2,940.  A close below this level could cause a rather fast drop to 2,866.  Any positive news on a trade deal will reverse the negative impact of today weak ISM manufacturing number.  Unfortunately, I don’t think that is on the horizon so soon. I would expect with no news overnight, tomorrow we test lower on the S&P 500 and buyers will step in to nibble.

Sept 24th

Hello everyone, its been a while as there really has been little reason to post as the S&P 500 has been working its all time highs.  In our last conclusion, we said 3,030 would be a good area to raise cash.  Unfortunately the index only reached 3,021.  If you didn’t reduce some exposure and raise cash, not a big deal at this juncture.  The markets are full of nosy geopolitical events and certainly the markets do not want to lose Trump regardless of the trade war.  However, the markets certainly will not want Warren as president and that is the great fear of the markets.  Trump said he will release the full transcript underacted by Friday.  I am not sure the market cares enough after the market was unable to hold the post rally off the back of this news late day.   At this point its going to be rather binary, back to old highs if the transcript is deemed harmless or the markets reprice to 2,800 or lower if the administration really tried to hid interference of a foreign government.  Its an impossible bet to make.

Sept 12th

While I am surprised that the S&P 500 close that important gap of 2,945 prior to Oct’s meeting, the market is certainly getting ahead of this Oct trade event.  In the last 4 years I don’t recall a 3 to 5 jump in the S&P 500 as seen below on Sept 5th.

While I have said this bull market is far from over many times in the commentary and expect a blow-off top before the end, I didn’t expect to see 3,130 before Oct’s trade deal meeting.  However, that is a very likely reality now.  If this market closes above 3,035, there is no resistance until 3,130. The systems (quants) know this and so do the human traders, they are going to cover their shorts and get long.

I am not even sure a hawkish Fed can stop the rally if an intermediate trade deal is completed in Oct.  Its going to be extremely interesting to see what happens with the Feds Septembers meeting.  Today CPI came in the hottest in 11 years close to 2.40%.  While that is not a trend, the Fed is going to pick that up.

Sept 11th

The last 2 days have been complete devastation in the momentum space, the stocks with the greatest 12 month returns within the safety trade like staple and REITS have been sold off hard. Example MCD, HSY and AMT as a few. Why? Bonds were massively overbought with AGG reading a -88 on our counter trend on the fears of a trade war and recession. Risk came back into the market once the trade talks were reportedly back on for Oct and our S&P 500 rating value jumped from 3 to 5.  Statistical arbitrage funds bought value stocks that had the largest negative performance vs. the greatest return momentum stocks (staples, REITS, Tech). The most shorted stocks were being covered, sparking a rally in energy and financials. Additionally, volatility target funds and other investors sold interest rate sensitive names and defensive stocks as yields jumped from 1.47 to 1.73%.

Can this last?  I think Financials and energy could on the short term to Oct rally, but this will be a false rally breakout as Oct will be a sell the rally on trade talks.  Rates really started to stabilize and rally on the hopes of a trade deal resolution. I think the most beaten down momentum names given another few days could be picked up after more downside as money will flow into the names again after the trade talks.


We said on Sept 5th to reduce some exposure at 2,945, now the S&P had made strong technical progress.  The next level will be a rest of all time highs of 3,030, which would be another level to sell some into (never ever go to all cash).  While I think no meaningful progress will be made in Oct’s trade meeting, a small chance will be a positive bias.  This positive bias could cause a breakout to 3,130. 

Sept 5th

Welcome back and we hope you had a good summer. Back on August 28th, we said, “Conclusion: Today’s move by China is a. nothing new b. is an attempt to push back Sept 1st tariffs.  I would still be reducing “some” long equity exposure at 2,945, NOT ALL.  If Trump removes Sept tariffs completely, we will see 3,000 in a hurry.  

Last night we filled the 2,945 gap in the futures after trade talks are to resume. The futures hit 2,968 which if we can close above this level, the old highs can be in reach.  I personally, do not believe a deal will be reached in Oct, but neither do most market participants. If you didn’t reduce exposure at 2,945, let’s give the market some time to see if momentum can build into next months meeting.  If the S&P 500 runs into Oct meeting, reducing exposure at 3,000 and above seems logical.

August 28nd

The S&P 500 swung in a 700 point cumulative range in August as the index traded between 2,829 to 2,930 like a well-played pinball game. Below is a recap of August’s major market catalysts along with Trowbridge Capital’s proprietary S&P 500 model’s current reading, as well as August performance for the Dynamic Alpha and Dynamic Low Volatility strategies.

  • Consumer Data: Retail sales surge to 0.7% MoM (+0.3% exp) – the biggest gain in four months.
  • Fed Communication: Powell provided some clarity on the future rate outlook for September. Here are two key bullets from his speech:
    • Carefully Watching Developments For Impact On U.S. (China/US Trade)
    • We’ve Seen Further Evidence Of A Global Slowdown
  • Big Decline in Rates: 10 Year Yield dropped in August from 2.012% to 1.457%
  • Inversion: 2/10’s yield curve closed the month inverted: (2’s) 1.50% to (10’s) 1.457%
  • Another Tweet: S&P 500 closed down 82 points as Trump tweets, “the vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..”
  • Dividend Yield Backstop: 8/29/2019: S&P 500 yield for the first time since 2009 has a greater yield than the 30 Year Treasury
  • Olive Branch or Decoy?: 8/29/2019 Chinese government indicated on Thursday that it wouldn’t immediately retaliate against the latest US tariff escalation announced by President Trump a week ago. Gao Feng stated, “We firmly reject an escalation of the trade war and are willing to negotiate and collaborate in order to solve this problem with a calm attitude”.

Conclusion: Today’s move by China is a. nothing new b. is an attempt to push back Sept 1st tariffs.  I would still be reducing “some” long equity exposure at 2,945, NOT ALL.  If Trump removes Sept tariffs completely, we will see 3,000 in a hurry.  

August 21st

The U.S. consumer seems rather strong and as we all know 3/4 of GDP is the consumer.  WMT & TGT are two examples of this strength.  However, investors are fighting mixed signals of the inverted yield curve. Historical data have proven on average the U.S. sees a recession 16 months after an inversion even if the curve uninverts, but is this time different? I personally never like to invest based on this time is different.  However this time may be different. There is so much global liquidy from central bank easing, the money needs to find a home.  Many global bond yields are zero in large domestic economies, so Treasuries seem like a logical home creating a lot of demand on the mid to long-end.

As I mentioned several days back 2,945 is a sizable resistance level if we can close here on a weekly basis, once again we will see the shorts cover and many programs get net long. This could create a retest of the old highs.  However, since we cant possible to read into the future, reducing long exposure at the 2,945 level seems prudent.   We will evaluate the situation once we get there.

August 20th

Once again the volatility “especially” in the bond market continued today.  As I mentioned yesterday, we are far from out of the woods at this juncture.  However, I am surprised the market sold off 23 points today heading into the very politicized Fed meeting in Jackson hole.  I can see trading in this 2,777 to 2,930 zone for a while, until we get greater clarifty on rates, China and next earnings.  So conclusion, this is really a traders market for now within a 200 point S&P 500 range.

August 19th

It has been a wild ride, with the S&P 500 trading 200 points in 5 days.  2,817 held and we never saw the 2,777 that I was expecting to see for a test.  We are not out of the woods yet.  However, this morning the futures are rallying 31 points as we have three positive catalysts:  1. Germany is out discussing stimulus 2. China discussing rate reform 3. Trump administration giving Huawei another 90-day reprieve.  Rates are popping and the 10 yields jumped almost 4.40% to 1.62% but have backed off.

I am uncertain if today’s gain will hold or not, the news-driven Algo traders typically keep a bid underneath the market.  2,945 is a major level to retest at this point.

The blended model is now sitting at 4, close to the 0 line we wrote about previously.

Trowbridge Capital Partners

For those of you who would like to outsource a piece of your total investments you can call or email me regarding our Dynamic Low Volatility Strategy at 917.653.3153  or

Here are the highlighted details as of August 19th 1:12 EST.

August 14th Post Market

  • We closed below 2,850 which will bring more selling tomorrow, this is not a big support level on a longer-term basis.  However, it seems like we will test 2,777 in the futures as we mentioned.
  • The yield curve as of 6 PM EST has reinverted.  We have all read the statistics that on average after the 2/10 curve inverts the U.S. economy hits a recession.  So I do believe after any correction, investors will get an opportunity at higher prices than the current level.
  • 2,820 is a solid level on a daily chart, I would expect it to fail and test 2,777 in the short term. 

August 14th Pre-Market

A lot going on in the markets lets take a recap.

  1. August 13th the S&P 500 rallied 50 handles to 2,926 as Trump delayed Sept 10% on $300 million additional tariffs on goods/services.
  2. This morning the S&P 500 futures are down 43 handles as the 10-year yield inverted 1.59 below the 2-year note of 1.601.  However, the yield has uninverted for as of 8:31 am.
  3. My conclusion is pretty obvious, impossible to trade around this and investors should be lighter on equities, higher on cash allocations. I think at this point the blended S&P 500 model will reach the 0 line and until the model starts to increase in value again, I remain short term cautious. Additionally, the Strong Buy to Strong Sell indicator needs to uninvert to the positive side.  I think 2,777 lows from the last week in the futures seems likely.

August 8th

Wow the last two days have been beyond impressive.  Our August 5th support level held very nicely at 2,777, but impossible to take advantage of the recovery unless you are trading overnight S&P futures.   I did think the S&P 500 model would see zero, but right now it has only declined to 23.  Today the S&P 500 close above that important 2,930 level we broke last week.  The next major resistance level on a closing basis is 2,970 then we will consolidate to new all-time highs.  As I mention on July 17th and several times prior, I am in the camp that the S&P 500 will have one major blow-off top before the greatest bull run in 80 years is over, possible taking the in ext to 3,200 to 3,400.

Conclusion, I think we will consolidate to possibly back and fill right now, maybe even a retest of 2,777, which will be bought. Right now the futures are trading down 18 handles.

August 7th

Global Yields imploding this morning and that is scaring equity markets.  S&P 500 futures reversed almost 32 points this morning.  The 10-year yield was down at one point 4.3% to 1.63 but has rallied off the lows a little. This is concerning as there is no major risk-off catalyst.  For risk-averse investors, buying the dip at this level is not warranted.

August 6th

A very powerful rally from last night lows from around 2,775, close to our second support level.  The reason is the PBOC (Peoples Bank of China) issues statement that the yuan won’t keep falling and they set it slightly higher than originally feared”.

Will this hold, I think we have a good chance as long as there is no further escalation with China.  However, Goldman Sachs is out this morning saying there will not be a Trade Deal before 2020, which seems very logical.

August 5th


Almost impossible to handicap the trade war events. China has no intentions to work on a deal, so what is going to change the current sentiment.  I think more impatient investors will exit and raise cash and there is no visibility on a clear path to getting a deal done. You have two short term levels to watch, 2,808 and then 2,777.   At this point, I would expect to see the blended S&P 500 model get close to the 0 line.

Post-Treasury Announcement 

2,808 was breached in the futures around 6:00 as Treasury Secretary Steven Munchin labeled China as a currency manipulator, the first time in 25 years.  We will see what tomorrow brings for this 2,808 level and then 2,777.  If the index doesn’t close above 2,777, 2,725 is the next stop.  Let’s see what tomorrow brings, I think if the futures see the 2,777 level, buyers will step in, without any new negative trade war news.


Quick note:  Friday we did hold the 2,933 level, however, this morning the futures are trading at 2,886 as the yuan plunges to a 7 year low against the dollar and yields are imploding.  The issue is many funds will start to go net short on a daily basis if the S&P index closes below 2,888.  The next support level is 2,877, which unless the trade war rhetoric doesn’t come to a head quickly will not hold.

July 31st

As we said on July 29th the risk was too great and we thought the markets would be disappointed and that is exactly what happened. What caused the S&P 500 to correct 32.80 points today was the Fed referencing a “Mid Cycle” move.  Implying that this was not a new easing cycle and leaving the future of more cut uncertain.  As the S&P 500 fell 52 points Powell slightly took back this statement.

The next level of support on the S&P 500 is around 2,933 on a daily level.  If we can bounce off this 2,933 level, the market has a real chance of regaining the old highs to push higher.

Click to enlarge. 

July 29th

Just one small note for Wednesdays Fed statement on rates.  Conventional wisdom has rallied the S&P 500 almost 11% since June 1st because the Fed is going to ease.  While the blended S&P 500 model is not that extended/overbought. I think the market is going to be disappointed on Wednesday unless the Fed moves 50 bps and explains that they don’t see downside risk to the economy, which is unlikely.  I think the risk is just too great for any investor who is not long term and not risk-averse.   The Fed may use a shock and awe approach and do .50bps, but ultimately they are backed into the corner regardless.

A look at why Morgan Stanley thinks the Fed needs to cut .50bps and won’t matter. 

As Morgan Stanley credit strategist Matthew Hornbach writes, one needs to look at the first cut in 2007 without the benefit of hindsight – meaning, the Fed’s decision to cut 50bp had nothing to do with the coming financial crisis. It was about lessening downside risks coming from tighter financial conditions. Fast forward to today when it’s about downside risks coming from global growth and trade uncertainty.

Almost all U.S. domestic data today 2019 is worse than 2007 excluding the unemployment rate.

July 23rd

I have little insight to report at this juncture as the Fed is on a quiet period until next Wed the 31st.  I think the market will be disappointed if the Fed cuts the projected .25% and says they will leave the window open. Morgan Stanley was out last week and believe the Fed needs to move .50% because the economic conditions globally are getting much worse than anyone realizes.  On the contrary, this earning season, I personally have not heard/seen many CEO’s on earnings transcripts that downbeat.

Voting Fed member Eric Rosengren was interviewed last week on CNBC and clearly doesn’t see the need to cut at all and said he is watching this Fridays GDP closely.  I think a strong GDP is going to impact Wednesday’s Fed decision.

July 17th

Since our last post on July 5th, the S&P 500 hit a high of 3,017.  For those investors who want to be tactical, raising some cash at this level would be warranted.  I can’t remember the last time we suggested raising some cash.  While I still believe the market will see a major blow-off top (3,200 to 3,400) before the greatest bull market rally is over, however, I think we can add some cash for better opportunities.

We are at a level on the S&P 500 model that is a make or break for a greater rally or failure in the shorter term, which leads me to be slightly cautious. 

Recap of developments:

  • The Fed is going to move to cut regardless of seemingly stronger retail sales and unemployment data.  The question is, will it be a .25%, .50% or .75% cut?
  • Trump tweeted yesterday a trade deal is far from complete (7.16.2019)
  • Lastly, we are just starting earnings and the biggest bell-weather names have yet to report.  My feeling is earning have been low balled.
  • Daily support for the S&P is 2,931.

July 5th

We have been saying for several weeks now that the market was much too optimistic that the Fed was going to ease.  This morning we got monthly payrolls and it came in much stronger than expected.  The 10-year yield jumped 4.06%, significantly reducing the odds of a 50 bps cut in July.  The market is still smelling a .25% for July. I personally, don’t like markets that go up on multiple expansion vs earning expansion.

Our June 16th Big Bull case of 3,000 was achieved in the futures on July 4th hitting 3006.  I don’t think this bull run is over just yet.  I believe the longest expansion in history will end with a massive blow-off top, which could be a long way off. However, I think the markets will see lower pricing in the near term as the markets become worried about the Fed’s rate path.

July 1st

As we mentioned on June 26th, “If a deal were to be finalized, the odds will significantly diminish that the Fed will move to cut in July and that means more pain within Staples, Utilities, and REITs”. 

While no deal came out of the G-20, there was a cease-fire and a small positive as Trump extends and an olive branch with Hawaii.  However, how does the Fed really cut in July with the S&P 500 making a new all-time high and the trade war deal getting closer?  The market is going to push any cuts out further, I think the risk is increasing as the market is overly optimistic on a cut in July.

June 26th

Today was very interesting for a few reasons.  Crowded interest rate sensitive sectors like REITs, Utilities, and Staples were hammered today.   While it’s impossible to time the potential mean reversion within these sectors, they were crowded as the 10-year yield plunge below 2% from Dec 2.90% level.

Today the 10-year yield jumped 3.14% while the 5-year yield jumped 4.10% off the back of a totally miss read headline. However, the news-driven algo’s got a hold of the news as a positive for yields and a hawkish Fed. CNBC reported that Munchin said the U.S. was 90% close to completing a deal.  Unfortunately, he was referencing the past, that the U.S. was “previously 90%” at a completed trade deal.

If a deal were to be finalized, the odds will significantly diminish that the Fed will move to cut in July and that means more pain within Staples, Utilities, and REITs.  I think these sectors could be interesting after a trade deal and they see more downside.

As for now, having a higher than normal level of cash is warranted as Trump XI will meet on Sunday.

June 22nd

The July Fed Funds forecasted early June was pricing in a .25bps cut by 80% helped to fuel the S&P 500s gains shortly after the Mexico trade deal.  Even though by the time the Fed announced its statement on Wednesday the 19th with a 100% Fed funds rate cute, the markets continued to rally another 1% after the Fed’s decision.  Why?  Jerome Powell sited more concern over the headwinds caused by the trade war coupled with an overwhelming decision from the Fed governors agreeing a cute was likely.

The three cases listed below on July 16th seem to fall between 1 and 2, however, we won’t know until the G-20 this week.  I think once again the markets are a little too optimistic that anything will get gone this week.  I do, however, think if the market is disappointed this week with the g-20 outcome investors will buy the dip in the 2,900 level as the Fed will move in July.

June 16th

Big week coming up, let me stress big.  The market remained bid up all week as expectations for the Fed to move in July are being priced in by 80% according to fed fund futures.  Additionally, G-20 is upon us and Trump will potentially meet Xi.

My best guess for the most bullish, mildly bullish and bearish outcomes are as is follows:

  1. The Big Bull case could take the S&P 500 to 2,960 to 3,000 if the Fed removes the word patient form their language and signals they are cutting a .25% in July.  Additionally, Trump meets Xi and both parties agree on moving forward on a deal.
  2. The mildly bullish case could take the S&P 500 to 2,950.  The Fed removes the word patient form their language and signals they are cutting .25% cut in July.  However, no progress on the trade deal materializes with no new information.
  3. Lastly, the Bearish case 2,680 to 2,725.  The Fed remains patient and no cut in July coupled with Xi not meeting Trump at the G-20.   I think this would be an amazing opportunity to buy here as Trump will start to cave to weak risk assets and the Fed will cut in Sept from further trade tension.  I am not even sure this scenario would play out to 2,725 as the market already knows both the Fed and Trump will most likely folding to the equity markets.

June 10th

Not much to discuss except the obvious trace with Mexico tariffs, for now, that was announced after the close on Friday.  The S&P futures intraday rallied 30 points to 2,905.75 before reversing to close at 2,888.   The next level of major resistance is around 2912, a close above that once again will get short to panic and take the index to 2,966.

Amazingly, if you said the market is pricing a 30% chance of a rate cut in July and 50% in Sept and the 10-year yield is trading at 2.14% down from this year high of 3.24% and the S&P 500 is only 60 points from an all-time high I would say your crazy.  As I mentioned on Friday I think we do retest those highs as everyone is positioned wrong or defensive and a lot of the bad news is priced in at this point.  The Fed needs to turn more hawkish or Trump doesn’t meet Xi for the S&P 500 to retest 2,725.  I think the market might just trade in this wide zone for the next month.  The bottom line is the Fed continues to keep asset prices lofty, but investors can keep taking advantage if they can control their risk.

June 7th

Note:  June 4th commentary: Correction below meant 2,839 not 2,739 as next major resistance level 

  • Three big positive catalysts today taking the S&P 500 to a high of 2,885 for a close at 2,873.34. Here are the catalysts:
    • The Fed is in play as the jobs number came in weak, missing estimates by almost 110,000 jobs.  This was largely expected to be a miss, but not this large. My feeling is that we are at full employment and this is not a signal for real economic contraction, but I digress. The market believes growth is contracting and has been for the last 2 months and wants the Fed to cut.  This, in my opinion, was not the reason for the 30 point rally, however.
    • The majority of the rally was caused by the Administration’s announcement shortly after the jobs numbers:
    • Then lastly Mexico showed yet another act of good faith on Thursday – freezing the bank accounts of 26 alleged human traffickers.
  • Conclusion: We are only 2.5% from the all-time high on the S&P 500’s “2,954.13”.  I believe with investors currently positioned in defensive mood and whipsawed in May, that there is a good chance the S&P 500 will retest 2,954.  2,954 will be the hardest trade in a long time once or IF we can get there.  The reason is, as I mentioned in my email to everyone “expect the unexpected”.  If we can make new highs and breakout, it will be dependent upon the Fed coupled with China.  The really challenging part will be if there is a trade deal, rates will spike with the curve possibly uninverting and the Fed “might” change their easing policy.  The bottom line is we just can’t forecast this possible outcome until we get closer.


Lastly, many of you have entrusted us to manage your money at Trowbridge Capital Partners and we have been honored and take the responsibility very seriously.  We understand for those investors managing risk is vital.   We wanted to highlight out Dynamic Low Volatility strategy for those who are heading into retirement or are retired.   The product’s benchmark is the Equity hedge index as it is a low beta product that can raise a lot of cash.

Month of May

Dynamic Low Vol (Advisor):            -0.24%
Equity Hedge Index (HFRXEH)           -2.02%
Variance:                                              +1.78%

S&P 500                                                -6.35%
Variance:                                              +6.11%

If you would like to speak to me about this strategy please call me at 917-653-3153 or email me at

S&P 500 Monthly Returns have been calculated using Morningstar S&P 500 TR and Yahoo Finance Daily data. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. The performance figures are net of fee performance for a subadvisor fee of .35%.  Actual investment advisory fees incurred by clients may vary.  Since inception, all return on capital has been partners allocations of capital and has been solely managed by Trowbridge’s Chief Investment Officer.

June 4th

Correction below meant 2,839 not 2,739 as next major resistance level 

  1. As we mentioned 2,725 needed to hold on the S&P, yesterday the index tested a low of 2728.
  2. As we mentioned we thought -17 the index would start to find buyer, however, the index bounced today off of -6.
  3. Three positive catalysts today propelled the S&P 500 to 2,803 up 58.80 points.
    • China softens its trade war rhetoric by saying they are willing to talk, but the U.S. has to realize they must see they are not 100% right.  While this doesn’t seem extremely bullish, it is extending an olive branch.
    • Mexicos prime minister said today they believe a resolution can be achieved on border issues.
    • Lastly and equally important was Fed Chairman Powell coming across more dovish today, by saying he is open to unconventional measures.  One statement from Powell’s statement, We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.
  4. Conclusion, the economic data has been contracting both domestically and globally.  For one data point as an example, as Global manufacturing PMI contracts to a 7 year low.  As far as the inverted yield curve stands as an economic indicator, I am putting less credence into the inversion based on global trade concerns. However, these trade wars can not linger or I believe it will really show up in q3 earnings.  The next major test of the S&P is 2,739 (2,839).  Tomorrow we have Mexico coming to Washington and I believe some of today’s rally was built on a bullish outcome.

May 31st

What we know:

  1.  China PMI economic data came in weaker than expected, global growth looks to be declining more.
  2.  The yield on the 10 years is approaching Sept 2017 lows of 2.04%
  3.  Credit spreads are approaching Dec 2018 levels
  4.  Our S&P 500 model feel from our risk off 90 reading to 12 on Friday, tomorrow will be updated, we will see where the model is tomorrow.   As I mentioned yesterday, I think around -17 the S&P 500 will start to find buyers.
  5.  2,725 needs to hold or the flood gates will cause sellers to pressure the index to 2,655.

Have a good weekend and I will update the commentary over the weekend during this period of uncertainty.

May 29th

Saved at the 200-day moving average at 2,776.  As most of you know, we don’t put too much validity into the 200 day.  It’s just not that significant.  I still remain cautious as the rhetoric out of China is increasing.  Mike Wilson, Chief investment strategist at Morgan Stanley who has been rather good over the last 2 years was out with a note today.  He said regardless of a truce in the trade war, the odds of a recession is still high.   I personally don’t like to pile on after the fact, so let’s just keep watch on pure price for now.

Back on May 13th, I said,

“I can’t handicap this trade war, but what I do know is there is a lot of new information that the markets did not have priced in.  When momentum breaks this bad off a 90 reading, it doesn’t stop and reverses that quickly for a U-turn.  What next, the market needs to hold 2780 on a daily close or we could see 2,725.  While I don’t know if we can close below 2,780, I don’t see any clarity on getting a deal done at this point. Once the market stabilizes semi’s will be an area of opportunity”.

I am now looking for a retracement to 0, at which time semi like SMH ETF might be an opportunity.  Of course, we won’t know what tomorrow brings.


May 28th

While I said in my last post I believe the markets are trying their best to hold out hope for the G-20 meeting, I don’t think the markets are right.  I now am starting to see cracks in the yield curve, regardless if this is a long lagging indicator the equity markets will get scared.  The yield curve is now inverted against the 3 month and the 10 Year yield is at the lowest level since Oct 2017.  I think there is more pain ahead as China is not going to bend and nor will Trump.   A close below 2,789 is going to cause real pain, so be careful trying to deploy capital.  Additionally, today was the first day in a while even defensive sector lagged beta like technology in a market sell off.

May 22nd

I have been keeping the posts very light as I have very little on market visibility with the current developments of the trade war.  As I mentioned before, China completely redlined the entire agreement that was in place according to the New Times.  Trump I had believed wanted a deal for reelection, but at this point, I believe he will use a none deal to his advantage for his campaign.

I do believe the markets will hold up rather well leading into the G-20 which will be a complete disappointment. The trade war keeps getting worse as many U.S. companies are restricted to do business with Huawei.  The latest blow was Google on Sunday was restricted to provide the Android operating system to the company.  However, the market rallied yesterday as Google was given a reprieve for 6 months until Huawei found a new operating system.  Maybe I will be wrong about the G-20 and be pleasantly surprised some progress will be made.  For those Apple lovers, be cautious because if the trade war really heats up, China will come after Apple.  The only defense Apple has which is a big one is 2 million employees in China and China does not want to lose those workers to another country.

While I do believe it is vital for the U.S. to protect its IP and the country’s edge in technology, it could eventually be the nail in the coffin for the U.S. expansion if this is prolonged.  We have not even seen many Semiconductor companies guide lower yet, which they will have to.

Even perceived safety trades are getting expensive from defensive play like utilities and REITs, but with further risk, I assume these sectors will hold up.

Note: Many ChartLabPro members have trusted us with their hard earned money and invested in Trowbridge Capital Partners.  We are honored and take this responsibility very seriously to help protect and grow their assets.  For those of you who want an investment solution that will help you sleep at night, the Dynamic Low Volatility portfolio makes a lot of sense.   I provided some details below based on 5.15.2019 12:00 EST.

The DLV strategy is benchmarked against the Equity Hedge Index as the two strategies historical beta align rather closely.  Yet, their correlation to each other is about .41, which means DLV could be a good diversifier away from investors equity hedge allocation.

If you would like to speak with me about the DLV portfolio please call me at 917.653.3153 or email me at

S&P 500 Monthly Returns have been calculated using Morningstar S&P 500 TR and Yahoo Finance Daily data. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. The performance figures are net of fee performance for a subadvisor fee of .35%.  Actual investment advisory fees incurred by clients may vary.  Since inception, all return on capital has been partners allocations of capital and has been solely managed by Trowbridge’s Chief Investment Officer.

S&P 500 Monthly Returns have been calculated using Morningstar S&P 500 TR and Yahoo Finance Daily data. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. The performance figures are net of fee performance for a subadvisor fee of .35%.  Actual investment advisory fees incurred by clients may vary.  Since inception, all return on capital has been partners allocations of capital and has been solely managed by Trowbridge’s Chief Investment Officer.

May 13th

Just wow, talk about investors being blindsided.  The deal was 100% priced in and in reality, the deal wasn’t even 50% complete.  Who knows the truth if China really backed away, it doesn’t matter, we now need to deal with the hand we were dealt. What matters is nothing is going to happen for a few months.  The odds of a pullback were high as we all know, the blended S&P 500 model was reaching 90 plus.  When the model approaches 90 plus, investors will get scared with any negative catalyst as they do not want to be the last bag holder.

I can’t handicap this trade war, but what I do know is there is a lot of new information that the markets did not have priced in.  When momentum breaks this bad off a 90 reading, it doesn’t stop and reverses that quickly for a U-turn.  What next, the market needs to hold 2780 on a daily close or we could see 2,725.  While I don’t know if we can close below 2,780, I don’t see any clarity on getting a deal done at this point. Once the market stabilizes semi’s will be an area of opportunity.

May 5th

Sunday night we have the futures down 54 points as of 9:00am EST.  The catalyst is the obvious, President Trump threatening China with an additional 15% tariffs on the $200 billion.

Take away:

  • 2,882 on the S&P 500 is a big level on the daily chart, this needs to hold on the day.
  • Trump has some strong ammunition for bargaining, strong economic data and a market at all-time highs.
  • I believe his tactic is close to the deal and bring China over the 1-yard line.  He knows he needs to get this deal done.  I find it very hard to believe he is going to let China go at this point.
  • 2,882 is the support I am looking for to hold tomorrow.

May 3rd

Better than expected job number with wage inflation coming in less than expected gave the market a lift.  The S&P 500 closed 0.43 point from an all-time closing high at 2,945.40.

Next week we will possibly get a China deal with is 99% price in and a 40 point rally in the S&P 500 should be an opportunity to reduce long exposure.   This will take the index to 2,980 to 3,000.

April 30th

  • Apple boom Google bust, neither in my opinion really make that much of a difference in the direction of the overall market.  However, Apple is the second largest weight in the index at 3.60%, which has the S&P futures tonight at an all-time high.   Earnings overall have been rather good and for the stocks that have corrected off of earnings were up 20% to 30% Q over Q.
  • I have very little insight other to say that I still believe that the S&P 500 will reach an overbought level on the counter-trend of -69 and or above a 90 on the blended model.  The next big level is only 30 points away at 2,980.

The conclusion is the same as April 23rd:

I now think it’s very possible to see the S&P 500 model at 90 to 95.  If “we – members” were lucky enough to see a 95 reading on the S&P model, reducing significant long exposure would be warranted. 2,980 is the next major resistance level for the S&P 500.

April 27th

  • GDP came in 90bps higher than expected, hitting 3.5% for Q1.  But this is backward looking so I wouldn’t read too much into it.
  • Yields took a dive lower, which is either the market saw no inflation in GDP or doesn’t believe that number won’t be revised lower.  Either way, the Fed is screwed as the markets do not believe even if the economy runs hot that the Fed will increase rates.  This ultimately will be the downfall of the market just like Q4 2018. When this happens who knows and at what levels, but eventually it will be very painful.
  • Intel which is a great market tell got smoked 10% as the company saw weaker demand and sees weaker pricing on memory.  This is certainly not encouraging as Semis lead recovery and lead to economic weakness.
  • We closed at a new all-time high of 2,939.88
    • Like I said on April 7th, we would correct or we would get a parabolic push to 90 which. Currently, we are at 85 on the S&P 500 model.
    • Like I said on April 16th it was likely we would see 2,940 before a China Trade Deal.
    • Like I said on April 23rd I now think it’s very possible to see the S&P 500 model at 90 to 95.  If “we – members” were lucky enough to see a 95 reading on the S&P model, reducing significant long exposure would be warranted. 2,980 is the next major resistance level for the S&P 500.

April 23rd

Now the hard part!

It really has not been hard to put your neck out and call for a retest of all-time highs over the last month or two.  Now is the hard part!  The S&P 500 closed at an all-time high today at 2,933.68 above the previous closing high of 2,929.67.

  • On April 16th I said, “pain is going to be a massive short squeeze higher”.  I believe this is going to be the case as earnings season kicks in and the China deal is another month away.
  • On April 7th I said, “the S&P 500 model will either start to finally correct here or jump to the 90 level for one large parabolic push higher.  While we have no idea what tomorrow will bring, we are going into earnings season with low ball estimates and it won’t be hard to beat this quarter”.


I now think it’s very possible to see the S&P 500 model at 90 to 95.  If “we – members” were lucky enough to see a 95 reading on the S&P model, reducing significant long exposure would be warranted. 2,980 is the next major resistance level for the S&P 500.

April 16th

Once again nothing has changed in the last 7 trading days. The S&P 500 model is now at 79.30 and at this juncture, I think the pain is going to be a massive short squeeze higher if the model remains above 80.  While I would expect profit taking on a final china deal as I mentioned on April 7th, although, 2,940 at this point seems likely before a deal is achieved.

This is the biggest V shape rally I have personally seen and that the model has seen going back to 1992.

April 7th

One quick note as very little has changed since April 1st.  The blended S&P 500 model is now at a 75.  This is make or break time for the S&P 500.  As seen below, the model will either start to finally correct here or jump to the 90 level for one large parabolic push higher.  While we have no idea what tomorrow will bring, we are going into earnings season with low ball estimates and it won’t be hard to beat this quarter.  I am leaning towards a deal with China that takes the S&P 500 to 2,940 and then sells off on the deal announcement.  If the market doesn’t sell on a China deal then the model could propel to 90 and take the index to 3,000.  While this is not an investment strategy, this is my current thought based on the models reading.


April 1st

The market has had every opportunity to sell off and has been relentlessly strong. The market realizes the economy is weak and any good economic data will help push the market higher, with the exception of stronger inflation.

Today, we got better than expected manufacturing from China and the U.S., however, Germany continues to be weak.  Retail sales in the U.S. were rather weak.  The yield curve uninverted on Friday and really steepened today with the 10-year yield jumping 3.39%.  I don’t think the yield curve is a viable trading signal because it lags so much anyway.

I think we can all see that at this point the S&P 500 without any negative news is going for the 2,910 and 2,943 level.  I find it hard to believe the market has rallied from 2,400 to 2,867, 70 points from all time high and not going to test it.

My original assessment of reaching 2,888 if we closed above 2,815 seems like a reality this week, if not tomorrow.  Remember, when you make new all-time highs there is very little supply of overhead resistance since we have never been there before.  This means the markets could hit an air pocket to the upside with a large push higher.  While it’s hard to fathom the market could rally 600 S&P points or 25% in 4 months, it is now not out of the realm of reality.

March 27th

Unfortunately, I don’t have much to discuss since our last post on March 22nd except the obvious.  Yields continued to get crushed.  The 10 Year yield is now sitting at 2.38% vs the 3 MTH at 2.44%.  The 10-year yield is now at Dec 2017 lows.  There has been a lot of debate regarding how the negative yield curve and how long it needs to be inverted and how long a recession happens once the curve inverts.  I have yet seen any meaningful research regarding the viability of a good investment signal that warrants discussing.