Archive for January, 2010

Weekly Market Report

Weekly Market Report

(January 31st, 2010 – February 6th, 2010)

Courtesy of InTheMoneyStocks

 

The SPX continued to decline lower again for the third consecutive week. It closed below it’s weekly 20 moving average on very strong volume. This is the sharpest pullback in the SPX since June 2009. In the June to July pullback phase the SPX lost 87 points from peak to trough. Curently this January decline has given back 77 points from it’s recent 1150 top. The weekly support levels for the SPX are 1050.00 and 1000.00 should the decline continue. Since the March low the SPX has not had a single 10 percent correction. In order for a ten percent correction to occur the SPX would need to trade down to the 1035.00 level.

The U.S. Oil Fund (USO) pulled back again this week as the U.S. Dollar traded higher. Oil continues to remain is a sideways base or channel. Currently the low range can be bought and the high range can be sold. This range looks as if it can be bought at the low end and sold at the high end until the USO breaks out or breaks down of this channel. For the near term expect the 10 point range to be in play.    

The SPDR Gold Shares(GLD) sold off with most other commodities this past week as the U.S. Dollar increased. The weekly 105.00 support level held this past week for the GLD. Shoud the 105.00 level fail to hold the next major support level for the GLD will be 100.00 level. Please remember to monitor the U.S. Dollar as gold and the dollar generally trade inverse to each other. Gold is veiwed by many as a global currency and an option against the U.S. Dollar should it decline.

The U.S. Dollar index (DXY) climbed higher again this past week. In last weeks brief report we pointed out the 80.00 resistance level that is now in play and expected off of the current chart pattern. This resistance level should still be watched and possibly a little higher on the DXY. The weekly 200 moving average is currently at 80.58 and is likely the next target for the DXY. Often when price gets very close…
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Changing Ships

Changing Ships

Courtesy of Joshua M Brown, The Reformed Broker

Yeah, so health care didn’t work.  Now, Obama has gotten serious about finance reform.  Only problem is, the health care battle has taken a political toll and the stolen bonuses and lack of lending have been in full effect for another year.

One wonders "What’s the point now?"  Opportunity squandered, expect another America-crushing catastrophe sometime later this decade….it will start in the financial markets.

Cartoon by Mike O’Keefe/ Denver Post

 


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Understanding Market Cycles: The Art of Market Timing

Pharmboy, member of our team at PSW, has been writing a book on Technical Analysis.  Here is the first chapter for your enjoyment/educational experience. - Ilene  

Understanding Market Cycles: The Art of Market Timing

Courtesy of Pharmboy

Experts and the main stream media say that market timing is impossible.  That much is true, but when TA is used, timing market movement is very profitable on a consistent basis.  As a technical trader, the purpose is to find the best trades and to time the entry and exit points.  After all, any trader can find the best trade in the world, but if it is not timed well, it may turn into a loss.  Every stock or asset class goes through a classic market cycle.  Figure 1 is a diagram of the four stages of the market cycle:

Figure 1.  Four stages of the market cycle.

 

   

When looking at the charts of any stock or index, notice that it moves in cycles.  By observing cycles, what to expect next is easier to comprehend.  Figure 2 shows two stocks that have completed each of the four stages.

 

Figure 2a and b.  Market stages of two companies.  

2a. Amylin       

 

amln

 

 

2b.  MEMC 

 

 

For a long-term investor or trader, understanding market cycles can greatly benefit their portfolio.

Stages of a Market Cycle

  • Accumulation Phase – This is the bottom (or near the bottom) of a particular stock, sector, or general market.  At this stage, prices do not move upward but rather stay within a neutral trading range.  At this level, the smart money begins to buy up large blocks of shares to accumulate a large position for their portfolio.  They are patient enough to wait years, if needed, because it is difficult to determine how long a stock or sector will be in this stage.  Regular individual retail investors do not even consider buying at this level because, in most cases, they have recently sold into the lows.  At PSW, this is the stage where stocks are nominated to the Watchlist and the biggest discounts


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Durable Goods: More Guns Than Butter

Durable Goods: More Guns Than Butter

Courtesy of Adam Sharp of Bearish News

Haver Analytics gives us this chart/data:

military spending on durable goods

Military should be the first in line for budget slashing, but the opposite is taking place. While “defense” spending  does boost GDP, and preserve (politically important) jobs, it’s still a huge drag on the real economy.

America’s military is bloated, and much like the FIRE sector, it needs shrinking. Both are incredibly inefficient ways to grow/stimulate an economy. In their current state, both are a drain on American resources. And with their armies of lobbyists, this isn’t likely to change soon.

America faces a funding crisis like we have never seen. The U.S. remains the world’s lone superpower. That would still be the case if we cut military spending 30%.  Reducing the budget and shifting those jobs to more productive areas, like energy and manufacturing, would have immensely positive effects on the economy.

The question is – do our political leaders have the courage to cut spending before things get out of control? Based on what we’ve seen so far – the answer is clearly no.

*****

See also: Clinton presses China over Iran nuke sanctions, Mike "Mish" Shedlock

The country most responsible for the "Arms Race" is the United States of America. US troops stationed all over the world are a destabilizing force….

Earlier today I commented on a huge protest in Japan over US bases. Please see Thousands in Tokyo Protest Against US Troops in Japan for details.

The end of US global dictatorship is nigh. That is a good thing given that we cannot afford the cost.

 





Marcy Kaptur Busting Geithner’s Balls

Marcy Kaptur Busting Geithner’s Balls

Courtesy of Adam Sharp at Bearish News

I approve of this questioning by the Rep from Ohio:

On a related note, I’m almost done with Too Big to Fail — Andrew Sorkin’s insanely investigative bailout book. The stuff on AIG is fascinating. Apparently when the 100% payout was finalized, some pissed-off AIG guys saw some Goldman guys high-fiving each other, ecstatic about the deal.

 





Market Snapshot + Bear Flag Chart Pattern

Courtesy of Market Tamer 

Market Snapshot

ECONOMIC REPORTS

MONDAY 2/1 Personal Income, Personal Spending, Construction Spending, ISM Index

TUESDAY 2/2 Pending Home Sales, Auto Sales, Truck Sales

WEDNESDAY 2/3 Challenger Job Cuts, ADP Employment Change, ISM Services, Crude Inventories 

THURSDAY 2/4 Initial Claims, Continuing Claims, Productivity-Prel, Unit Labor Costs-Preliminary, Factory orders 

FRIDAY 2/5 Nonfarm Payrolls, Unemployment Rate, Average Workweek, Hourly Earnings, Consumer Credit

EARNINGS OF NOTE

MONDAY 2/1 ACV, APC, GCI, HUM, MNKD, PCL, SOHU, TUP

TUESDAY 2/2 AFL, ADM, CTRP, CMI, DHI, FISV, JDSU, MTW, MAN, MRO, MEE, MET, MYGN, NETL, PBG, SU, DOW, HSY, UPS, UNM, GRA, WHR

WEDNESDAY 2/3  AKAM, AMP, BDK, BRCM, CBG, CSCO, CMCSA, EFX, HMC, INSP, IP, MWW, NOV, NVLS, PFE, RL, BCO, TWX, V, WLT, YUM

THURSDAY 2/4  BEBE, BKC, CME, CI, DB, DO, GSK, HIT, K, MA, MCO, NOC, PENN, PBI, SLE, SNE, HOT, SUN, TM, UIS

FRIDAY 2/5 AET, AON, BZH, PC, TSN, WY


Stock Market Insights: The Cash Flow Statement

 

Cash is king!  Liquidity in the form of cash tells us that the company can meet its obligations.  The Cash Flow Statement is the third and last statement that we will touch upon.  The statement is filed quarterly and year over year in concert with the Profit and Loss and Balance Sheet.  The Cash Flow Statement is a measure of incoming and outgoing cash from its business operations for a specific point in time.  The statement further defines the cash flow of the company that is indicated on the Balance Sheet.  There are two methods of accounting that are used 1) accrual and 2) cash.  Most companies use the accrual method which accounts for goods delivered as sales regardless of whether they have been paid for or not.  The outstanding balance is shown on the Profit and Loss Statement under accounts receivable.

 

The Cash Flow statement typically divides the accounting for cash into
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Understanding Market Cycles: The Art of Market Timing

Pharmboy, member of our team at PSW, has been writing a book on Technical Analysis.  Here is the first chapter for your enjoyment/educational experience. - Ilene  

Understanding Market Cycles: The Art of Market Timing

Courtesy of Pharmboy

Experts and the main stream media say that market timing is impossible.  That much is true, but when TA is used, timing market movement is very profitable on a consistent basis.  As a technical trader, the purpose is to find the best trades and to time the entry and exit points.  After all, any trader can find the best trade in the world, but if it is not timed well, it may turn into a loss.  Every stock or asset class goes through a classic market cycle.  Figure 1 is a diagram of the four stages of the market cycle:

Figure 1.  Four stages of the market cycle.

 

 

When looking at the charts of any stock or index, notice that it moves in cycles.  By observing cycles, what to expect next is easier to comprehend.  Figure 2 shows two stocks that have completed each of the four stages.

 

Figure 2a and b.  Market stages of two companies.  

2a. Amylin       

 

amln

 

 

2b.  MEMC 

 

 

For a long-term investor or trader, understanding market cycles can greatly benefit their portfolio.

Stages of a Market Cycle

  • Accumulation Phase – This is the bottom (or near the bottom) of a particular stock, sector, or general market.  At this stage, prices do not move upward but rather stay within a neutral trading range.  At this level, the smart money begins to buy up large blocks of shares to accumulate a large position for their portfolio.  They are patient enough to wait years, if needed, because it is difficult to determine how long a stock or sector will be in this stage.  Regular individual retail investors do not even consider buying at this level because, in most cases, they have recently sold into the lows.  At PSW, this is the stage where stocks are nominated to the Watchlist and the biggest


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Front-Running the Markets And the Sickness Unto Death

Front-Running the Markets And the Sickness Unto Death

Courtesy of Jesse’s Café Américain 

Financial Information

And that is the nature of Goldman. Gather up as many customers as possible, aggregate the available information to achieve a superior market view and then relentlessly extract rents from the marketplace. Better yet, tell yourself you’re smarter than everyone else and you’ve earned the rents from the symbiosis."

James Rickards, former General Counsel of Long Term Capital Management

This is a nice, concise, albeit somewhat simplified description, from a more mainstream and highly credible source, of how the markets are operating today to the extreme disadvantage of the public and the real economy. Between front-running and naked short selling the banks have things pretty well under their control.

The market makers are the Wall Street banks are the prop trading desks, trading at high frequency slightly ahead of the markets while peeking into your accounts, gaining just enough unfair advantage to defy the odds of winning and losing in a fairly regulated market.

From James Rickards, The Frog, The Scorpion, and Goldman Sachs:

"Now consider another example of data mining, not done by retail firms, but by giant investment banks such as Goldman Sachs. These banks have thousands of customers transacting in trillions of dollars in stocks, bonds, commodities and foreign exchange daily. By using systems with anodyne names like SecDB, Goldman not only sees the transaction flows but some of the outright positions and whether they are bullish or bearish. Data mining techniques are just as effective for this market information as they are for Google, Amazon, Wal-Mart and others. It’s not necessary to access individual accounts to be useful. The data can be aggregated so that the bank can look at positions on a portfolio basis without knowing the name of each customer.

One need not be a market expert to imagine the power of this information. You can see which way the winds are blowing before the storm hits. You get a sense of when momentum is draining out of a trade so you can get out of it before the market turns. You can see when bullish or bearish sentiment reaches extremes, suggesting it may soon turn the other way. This use of information is the ultimate type of insider trading because it does not break the law;


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The First Year of Obama’s Failed Economic Policies: The Worst May Yet Be Avoided

The First Year of Obama’s Failed Economic Policies: The Worst May Yet Be Avoided  

Courtesy of Jesse’s Café Américain  

"The banks must be restrained, the financial system reformed, and balance restored to the economy before there can be any sustained recovery."

We have been saying this for some time. The report below from Neil Barofsky says essentially the same thing.

"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," Barofsky wrote.

The US is heading towards a double dip recession, and the next leg down may be more fundamentally damaging than before.

The reason for the decline will be the abject failure of the Obama Administration to address the roots of the problem, instead wasting trillions to prop up a banking system that is a useless distortion.

Worse than useless really, because it actually presents a huge negative influence by stifling the recovery, channeling funds to the crony capitalists and non-producing wealth extraction sector, who tax the people like feudal lords under license of a corrupt government.

So far, Obama has failed the people, but preserved the banks. A source of his failure has been his weakness in listening to Larry Summers and Tim Geithner, the Rubin-Clinton wing of Democrats, who have well established their incompetence and inability to act at a level suitable to their positions. They are captive to special interests, locked into the ways of thinking that brought the world to the point of crisis.

In response to the next leg down, Bernanke will monetize debt at an even more furious and clever pace, perhaps in alliance with the Bank of England and Bank of Japan. The ECB resists, and all who balk will be chastised by the monied powers and their demimonde, the ratings agencies and global banks. This is modern warfare of a sort.

We do not expect the corruption of the world’s reserves to be so blatant that the inflation will immediately appear, except in more subtle manner. At some point it may explode, especially if Ben is particularly good at concealing its subtle growth.

Monetary inflation is the growth of the money supply in excess of the demands of the real economy, not nominal growth of the supply. The US has been shifting…
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“Wait, Why Am I in AIG Again?”…The Buy Anything Phase is Over

Joshua Brown says its time to disgorge oneself of one’s garbage. Maybe idiots made from this rally will finally be right. - Ilene

“Wait, Why Am I in AIG Again?”…The Buy Anything Phase is Over

Courtesy of Joshua M Brown, The Reformed Broker

Waking Up to Messiness

So you gorged yourself on garbage, chased the china plays, munched on materials and binged on beta…

Now that everything on earth is breaking 50 and 200 day moving averages, your junk food holdings are producing the inevitable tummy ache.

The good news is, you’ve got company.  Fight the urge to rationalize these holdings before they do more damage.

With the big leadership like Apple ($AAPL) and US Steel ($X) under enormous pressure, what hope do the trashiest stocks really have right now?  The answer is that they will be sold even faster than they were bought should this market continue to sell off on both good and bad news.

Greater Fool had worked fairly consistently for months as traders learned that each afternoon, regardless of the news, positions could be turned over to their new owners at ever-higher prices.

The mantra was "follow price" and "it’ll work until it doesn’t work" and "don’t fight the tape".  This led to a broadening rally that rewarded the worst of the merchandise – from small caps to functionally insolvent entities like $AIG, $FNM, $FRE to emerging spec stories to developmental biotech and cleantech companies.

Sitting in more defensive plays like Waste Management ($WM) and Wal-Mart ($WMT) and remaining disciplined with some cash made you look (and feel) like a chump while the dashing trader on the other side of the desk played Chilean fertilizer names or Peruvian silver mining names for triple digit gains on a regular basis.  The temptation to say f&*% it and get in the game was pervasive.

If you dabbled in junk and were then caught blindsided by the change in this tape that began 12 days ago, consider this weekend your chance to make things right.  Even if this just proves to be a dip and the rally resumes through February, at least this will have been your chance to take a hard look at some of the junk you’ve accumulated.

Without having a…
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Zero Hedge

Bitcoin 'Crashes' To 1-Week Lows - The Difference Between Fear And Concern

Courtesy of ZeroHedge. View original post here.

Bitcoin dropped over $900 from its record high at $2760 on Thursday in the last 48 hours, but has bounced back to remain up 17% week-over-week.

A 30% drop from Thursday's highs...

But Bitcoin is still up around 140% year-to-date...

While the volatility is unprecedented, ...



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ValueWalk

Pakistan Is The Key To Better Iran And Saudi Arabia Relations

By Polina Tikhonova. Originally published at ValueWalk.

The Pakistani Chief of Army Staff is reportedly making an urgent trip to Iran as tensions are rising. After Iran fired five mortar shells into Pakistan last Sunday in response to Islamabad’s participation in a summit led by U.S. President Donald Trump and hosted by Iran’s rival Saudi Arabia, cracks in their decades-long friendship deepened.

Photo by Uzairmaqbool (Pixabay)

Pakistani Chief of Army Staff (COAS) General Qamar Javed Bajwa is ...



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Phil's Favorites

Ben Carlson on Market Breadth

 

Ben Carlson on Market Breadth (Video)

Courtesy of Joshua Brown, The Reformed Broker

Ben had a hit on Bloomberg TV last night talking about his recent piece on market breadth and why it’s perfectly normal to see the market being led higher by some very big winning stocks. His research shows that this is always the case during bull markets and that broader measures of the internals are healthy, not sick.

Check this out:

…and you can read his expanded thoughts on ...



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Digital Currencies

Bitcoin Is Crashing (Again)

Courtesy of Zero Hedge

While Bitcoin is still up 13% on the week (its 8th weekly ruse of the last 9), the dollar price of the virtual currency is collapsing again in US trading (after a big rebound during the Asian session)...

Just as with yesterday, there is no immediate news catalyst for the flush.

Meanwhile, the huge arb with South Korea bitcoin pricing remains, and as of this moment is still nearly $1000.

Today's drop ...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

U.S. stocks scale new peaks on retailer results; oil falls (Reuters)

Two top U.S. equity indexes scaled record peaks on Thursday after strong earnings reports from retailers, outpacing European shares which were little changed, while oil prices plunged after top crude producers extended output cuts for a shorter period than expected.

Hedge Funds Squeezed by World's Highest Rents Are Moving Out (Bloomberg)

Benjamin Fuchs raised eyebrows five years ago when he opened his hedge fund next to a place selling live chickens in Hong Kong’s hustling, bustl...



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Chart School

S&P Breakout on Higher Volume Accumulation

Courtesy of Declan.

While I expected the Dow Jones to be the breakout flyer, instead it was the S&P which led the charge on higher volume accumulation.  Technicals are all in the green with a return of the MACD trigger 'buy'.



The Dow did manage to break past 21,000 with a MACD trigger 'buy' but it's still contained by all-time high resistance at 21,200. The index is still well positioned for a larger breakout, but this is the sixth day of consecutive gains for the index so some pullback can be expe...

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Members' Corner

Robert Sapolsky: The biology of our best and worst selves

Interesting discussion of what affects our behavior. 

Description: "How can humans be so compassionate and altruistic — and also so brutal and violent? To understand why we do what we do, neuroscientist Robert Sapolsky looks at extreme context, examining actions on timescales from seconds to millions of years before they occurred. In this fascinating talk, he shares his cutting edge research into the biology that drives our worst and best behaviors."

Robert Sapolsky: The biology of our best and worst selves

Filmed April 2017 at TED 2017

 

p.s. Roger (on Facebook) saw this talk and recommends the book ...



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OpTrader

Swing trading portfolio - week of May 22nd, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Biotech

Beyond just promise, CRISPR is delivering in the lab today

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Beyond just promise, CRISPR is delivering in the lab today

Courtesy of Ian HaydonUniversity of Washington

Precision editing DNA allows for some amazing applications. Ian Haydon, CC BY-ND

There’s a revolution happening in biology, and its name is CRISPR.

CRISPR (pronounced “crisper”) is a powerful technique for editing DNA. It has received an enormous amount of attention in the scientific and popular press, largely based on the promise of what this powerful gene e...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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