Guy Cerundolo, CMT, founder & president of Cerundolo Investment Research, reveals the latest buy signals from his propriety capital-flow model. He discusses several markets, and highlights two stocks in particular, in this interview with Brian Price. Filmed on January 10, 2018.
Watch more Real Vision™ videos: http://po.st/RealVisionVideos
Subscribe to Real Vision™ on YouTube: http://po.st/RealVisionSubscribe
Start a 14-day free trial: https://rvtv.io/2Frr4o7
About Trade Ideas:
In this series we meet with an array of the best and brightest analysts and traders in the financial markets. They discuss their favorite trade ideas of the moment in short 5-15 minute videos that are bursting with actionable content. The presenter will explore the key points of each trade, asking questions or providing signposting as required. Particularly important are discussions about risk/reward and position sizing. New episodes are filmed every week to keep the content topical, relevant, and fresh.
About Real Vision™:
Real Vision™ is the destination for the world’s most successful investors to share their thoughts about what’s happening in today's markets. Think: TED Talks for Finance. On Real Vision™ you get exclusive access to watch the most successful investors, hedge fund managers and traders who share their frank and in-depth investment insights with no agenda, hype or bias. Make smart investment decisions and grow your portfolio with original content brought to you by the biggest names in finance, who get to say what they really think on Real Vision™.
Connect with Real Vision™ Online:
Modeling The Flow (w/ Guy Cerundolo) | Trade Ideas | Real Vision™
Welcome to Real Vision's Trade Ideas. I am Brian Price, joined today by Guy Cerundolo, founder and president of Cerundolo Investment Research. Guy, great to have you with us.
Pleasure to be back.
So you joined us back in November. You were shorting the Nikkei. Turned out to be a good call. Walk me through what you saw, and walk me through how you applied your proprietary trading model to this move.
Sure. So the clients that I work with are long term oriented. So the analysis for the Nikkei actually started back in 2011. It's the money flow unit analysis that I use. It's used on not only the short term time frames but long term. And back then, I had projections of an upside target of 24,500 on the Nikkei.
We had hit it twice last year, and then as the indicator started to show that there was a money flow bearish unit developing, that's when I acted on putting out a bearish call. And since then, it's down 12%.
So with this money flow units in mind, what are you looking at right now?
Well I cover a lot of global equity markets, as well as currencies, commodities, and what have you. But in my Tuesday pitch book that I send out to clients, I highlighted back in the end of the year that a number of the global markets were giving distributive top patterns. So I saw that not only US markets, but also in Europe.
And so the latter part of 2017 into January of last year, there was a development of a bearish money flow unit, and it was triggered on February 13. And that's when they put sells on Germany's DAX, the CAC in France, and Spain's IBEX.
So let's drill down on what you're seeing within your money flow units right now with those ideas in mind.
Sure. So once the money flow units are developed on that larger frame, I start getting downside projections. So back in February, as I had these negative calls on these markets, I had downside projections for both of those indices in the neighborhood of 20% to 25%. And they were both achieved in the last three weeks. So in the case of both the DAX and the CAC, they came into their target zones. The CAC was just shy by a couple of percent. So I started upgrading these indices about 3 three weeks ago.
The other thing that really caught my eye is on a momentum basis, these two indices were actually making a higher momentum low, which also I thought was a positive thing. So for the portfolio manager that's allocating billions of dollars, because the range of people I work with is anywhere from $1 to $70 billion, they need to have a good understanding of where the possibilities are of a low taking place. And that's what I'm seeing in those two indices.
So now I've gone on the bullish side. I think this is the first innings of-- it's hard to say how sustainable the advance is. It may be months or years in duration. But to help a portfolio manager start to allocate capital in what I believe are the first innings of a turn is really what I try to do. And I use the money flow analysis with that.
You were bearish back since February on this, so this is a recent--