I’ve been delayed in posting the next blog entry due to my current heavy work load, which is intensified by recent market conditions. This will happen occasionally. Our clients come first, and this blog will have to take a back seat when my daily workload becomes too intense.11

My target posting rate is one per month. There is no rush. The primary purpose of the blog is self-mastery, which is ultimately a long-term pursuit.

In addition, there are times when a blog post I’m working on just doesn’t come together well. As I write about a particular subject, inconsistencies cause me to rethink the premise. That is the purpose of the blog – to explore the nuances of what works in trading asset classes. I’m currently working on a half dozen blog posts in various forms, but with each I’ve hit stopping points where the logic is not complete.

Recently, Alex Golubev and I worked on the concept of divergences. Throughout my career I’ve taken notice of divergences when trading asset classes. When looking at past data we see a relationship between credit spreads and future S&P 500 returns, similar to what has been discussed in the news recently. I had hoped to generalize the concept to all sorts of risky asset classes, yet the data did not support that view. So perhaps, I may have to adjust my use of that concept in the future.

I also intended to write about using non-trend information to trade S&P 500 movements, such as valuation, sentiment, and cycles. In addition, I planned to write about back-testing issues associated with this sort of information. However, our work on divergences has caused me to reexamine the use of non-trend information. This is especially important because trend following has become so popular lately; there may be value in using these non-trend indicators in the future.

Due to the infrequency of blog posts, I highly encourage all readers to sign up for the automatic email notification system.

Have a prosperous 2016.

-Dennis

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