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Archive for 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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Pensions Regain Faith in Hedge Funds?

Courtesy of Leo Kolivakis

Submitted by Leo Kolivakis, publisher of Pension Pulse.

Sam Jones and Kate Burges of the FT report that Pension schemes regain faith in hedge funds:

The number of pension schemes looking to invest money with hedge funds doubled during 2009, according to a leading investment consultancies.

 

Hewitt Associates has seen inquiries from clients increase sharply as pension fund trustees scrabble to find high-performing investment strategies to help recoup losses

suffered in 2008.

 

“A lot of institutional investors have got over the emotional block that hedge funds are risky products that they should be scared of. Clients are much more comfortable with the asset class,” Guy Saintfiet, a senior hedge fund researcher at Hewitt told the Financial Times.

 

Other consultants – which play a crucial role as intermediaries in guiding pension funds’ investments – also report a change in attitudes towards hedge funds. According to Damien Loveday, a senior investment consultant at Towers Watson, pension fund trustees had become more sophisticated. Most UK schemes were now looking to allocate up to 15 per cent of their portfolio to hedge funds, Mr Loveday said.

 

Pension fund managers are also looking to make allocations directly to hedge fund managers. In the past, institutional investors have preferred exposure via a fund of funds, which pools money and makes diversified investments.

 

Several of the largest pension funds have already indicated that they are looking to make significant direct allocations to hedge fund managers. The £28bn University Superannuation Scheme – the UK’s second largest pension plan – said on Tuesday it expected to invest with as many as 30 managers during the next two years. Its investments will add up to £1.4bn.

 

In the US, Calpers, the world’s largest pension scheme, said in its end-of-year statement that it had conducted due diligence on 66 hedge funds. Like many of its peers, it has yet to make any investment.

 

According to BarclayHedge, the industry data provider, inflows into hedge funds have only just returned to pre-crisis levels.

 

“The inflow of $54bn [£34bn] in the latest four months reversed only a small portion of the redemptions of $402bn from September 2008 through July 2009,” said Sol Waksman, BarclayHedge chief


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Asian Selloff Picks Up Where America Left Off

Courtesy of Tyler Durden

Asia greets February with a lot of red ink. Futures in the US are green… just because. If you are within camera distance of the 9th floor of 33 Liberty, we would love to know how many lit up offices/Bloomberg terminals are visible and churning away.

Hang Seng Futures down 1.8%

Shanghai Composite down 2.0%

 





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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Check To Obama: Lloyd To Get $100 Million Bonus

Courtesy of Tyler Durden

Now that’s some serious pocket change you can believe in. If correct, Blankfein’s 2009 bonus will be over 30% greater than his $68 million take home in 2007, the previous all time record year for Wall Street. Check to you, Mr. President: surely this will merit some more populist rhetoric and even more decisive complete lack of action on your behalf. From the Times of London:

Goldman Sachs, the world’s richest investment bank, could be about to pay its chief executive a bumper bonus of up to $100 million in defiance of moves by President Obama to take action against such payouts.

Bankers in Davos for the World Economic Forum (WEF) told The Times yesterday they understood that Lloyd Blankfein and other top Goldman bankers outside Britain were set to receive some of the bank’s biggest-ever payouts. “This is Lloyd thumbing his nose at Obama,” said a banker at one of Goldman’s rivals.

Goldman Sachs is becoming the focus of an increasingly acrimonious political and financial showdown over the payment of multimillion-pound bonuses.Last week the US President described bonuses paid out by some banks as “the height of irresponsibility” and “shameful”.

“The American people understand that we have a big hole to dig ourselves out of, but they do not like the idea that people are digging a bigger hole, even as they are being asked to fill it up,” he said last week.

If indeed the bonus number is correct, this is a slap not only in the face of the president, of Volcker, not to mention the other clowns in the economic advisory circle, but all of America’s taxpayers.

A bumper payout for Mr Blankfein would come after discussions by Goldman’s rivals in Europe to limit executive pay in order to appease politicians and the public failed last week. Joseph Ackermann, the chairman of Deutsche Bank, floated the idea of a remuneration cap at a private meeting of top bankers in Davos on Thursday, but failed to gain sufficient support. Last night it appeared that Deutsche had abandoned the plan and decided to pay some of its own top executives bonuses of millions of pounds.

The possibility of a bonus cap was discussed at a recent meeting between Alistair Darling, the Chancellor,


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Foreign Central Bank Treasury Holdings At The Fed Decline In January For The First Time In Years

Courtesy of Tyler Durden

The last thing that the fixed income market needs now, with ever greater uncertainty out of European bond land,  is weakness where it hurts the most: the US balance sheet. Yet last Thursday’s H.4.1 report indicated something which could be more troubling than even Greece’s credit crisis morphing into a liquidity one, namely, that foreign central banks’ UST holdings at the Fed declined for the first time in over two years.

What could be precipiating this? Quite a few factors have emerged recently:

1) A seemingly endless supply of Treasuries (especially the 2,5, and 7 Y) for which the indirect bid continues to be over 50%. This alone is confusing in light of the custody decline.

2) Concerns over developed country sovereign risk: last week S&P downgraded it Japan outlook and issued a scathing report on UK sovereign and financial risk.

3) Kansas Fed’s Hoenig dissent on tightening monetary policy. This is the proverbial first shot across the Fed’s bow. Hoenig’s “believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.”

4) Economic conditions have taken a decidely bearish tone. JPM’s EASI index of economic surprises (lower means greater amount of negative surprises) just took a dramatic turn lower.

5) Flattening and outright inversion in a variety of financial corp spreads in the 5s10s bracket.

6) AAA CMBS spreads widened by 30 bps. If sovereign risk is in question, why should insolvent REITs be any better?

Regardless of which specific set of news may have precipitated the January Treasury effect, this is truly a scary observation, which however does not jive with the indirect take down continuing to be as strong as ever: if indeed the custody data is correct, then all the indirect bid data has to be taken with not just a dash of salt, but as Rosenberg says, an entire salt shaker.





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.

 





Investor Sentiment: I Am Surprised

Courtesy of thetechnicaltake

From the highs three weeks ago to the lows of this past week, the S&P500 has slid about 7%. This is not as great as the mid-June to mid- July, 2009 swoon, which saw the S&P500 lose about 10%. So maybe investors are right in not being too concerned about the pace of the current downdraft, and when looking at the sentiment indicators this week, that is exactly what we see: complacency amongst the “dumb money” and indifference by the “smart money”. Despite any short term gains over the next week, this still is not a high reward, low risk investing environment.


The “Dumb Money” indicator, which is shown in figure 1, looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2) Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio. The “Dumb Money” indicator shows that investors remain extremely bullish.

Figure 1. “Dumb Money” Indicator/ weekly
*****

The “Smart Money” indicator is shown in figure 2. The “smart money” indicator is a composite of the following data: 1) public to specialist short ratio; 2) specialist short to total short ratio; 3) SP100 option traders. The Smart Money indicator is neutral to bearish.

Figure 2. “Smart Money” Indicator/ weekly
*****

Figure 3 is a weekly chart of the S&P500 with the InsiderScore ”entire market” value in the lower panel. Due to the start of earnings season, insider trading volumes remain light.

Figure 3. InsiderScore Entire Market/ weekly
*****

Figure 4 is a weekly chart of the S&P500. The indicator in the lower panel measures all the assets in the Rydex bullish oriented equity funds divided by the sum of assets in the bullish oriented equity funds plus the assets in the bearish oriented equity funds. When the indicator is green, the value is low and there is fear in the market; this is where market bottoms are forged. When the indicator is red, there is complacency in the market. There are too many bulls and this is when market advances stall.

Currently, the indicator is red and the value exceeds 58%. In other words, greater than 58% of the assets are in bullish funds (leveraged and non leveraged) relative to all of the equity funds. There is


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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 Shadows

Canary In the Yen Shaft: $10 trillion JGBs; No Bids!

Two guest authors, David Stockman and long-time contributor John Rubino, write about Abenomics. 

Canary In the Yen Shaft: $10 trillion JGBs; No Bids!

By  

This one matters a lot. Abenomics was predicated on a lunatic notion—namely, that the economic ills from Japan’s massive debt overhang could be cured by a central bank bond buying spree that was designed to be nearly 3X larger relative to its GDP than that of the Fed. Yet anyone with a modicum of common sense and market experience long ago ...



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Chart School

Historical Market Comparisons Are Meaningless

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

As Chief Strategist for STA Wealth Management, I start each and every day by consuming copious amounts of a heavily caffeinated beverage and a data feed from a litany of web and blog sites. Over the last couple of days in particular, they have been numerous articles on whether the market is currently in a bubble. Here are a few as an example that I just grabbed from RealClearMarkets.com:


Is This a Bubble Market? There's One Way to Tell

...



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Zero Hedge

Guest Post: Liberty Movement Rising

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Brandon Smith of Alt-Market.com,

"Freedom had been hunted round the globe; reason was considered as rebellion; and the slavery of fear had made men afraid to think. But such is the irresistible nature of truth, that all it asks, and all it wants, is the liberty of appearing."  - Thomas Paine

The label of “fringe” is a common one used by statists, bureaucrats and paid shills in order to marginalize those who would stand against government corruption. The primary assertion being sold is that the “majority” joyously supports the establishment; and the majority, of c...



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Option Review

Wild Ride For Chipotle

Shares in Chipotle Mexican Grill Inc. (Ticker: CMG) opened higher on Thursday morning, rising more than 6.0% to $589.00, after the restaurant operator reported better than expected first-quarter sales ahead of the opening bell. But, the stock began to falter just before lunchtime on concerns the burrito-maker will increase menu prices for the first time in three years. The price of Chipotle’s shares have since fallen into negative territory and currently trade down 3.5% on the session at $532.89 as of 1:50 p.m. ET.

Chart – Shares in Chipotle cool by lunchtime

...

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Phil's Favorites

The Best of TRB 2014 - Investing and Psychology

 

The Best of TRB 2014 – Investing and Psychology

Courtesy of 

This week I’m in Disney World with the family, our first proper vacation all together in years. As such, I’m off the grid and away from computers of any kind (I’m trying to stay married, you guys). But while I’m gone, I’ve left you some stuff to catch up on…

These were the biggest posts – as read and shared by you – during the first quarter of this year. The theme of today’s collection is good investing and understanding the psychological forces at work when we commit capital. No matter how long I’m doing this...



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All About Trends

Mid-Day Update

Reminder: David 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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Sabrient

What the Market Wants: Positive News and Stocks at Bargain Prices

Courtesy of David Brown, Sabrient Systems and Gradient Analytics

Last week’s market performance was nasty again, especially for the Small-cap Growth style/cap, down 4%.  Large-caps faired the best, losing only 2.7%.  That’s ugly and today’s market seemed likely to be uglier today with escalating tensions over the weekend in Ukraine. 

But once again, positive economic trumped the beating of the war drums. Retail Sales jumped up 1.1% over a projected 0.8% and last month’s tepid 0.3%, which was revised up to 0.7%.  While autos led, sales were up solidly overall.  Business inventories were about as expected with a positive tone.  Citigroup (C) handily beat estimates to add to the morning’s surprises.  As a result, the market was positive through most of the day, led by the DJI, up 0.91%, and the S&P 500, up 0.82%.  NASDAQ had a less...



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Digital Currencies

Facebook Takes Life Seriously and Moves To Create Its Own Virtual Currency, Increases UltraCoin Valuation Significantly

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...



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OpTrader

Swing trading portfolio - week of April 14th 2014

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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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here is the new Stock World Weekly. Please sign in with your user name and password, or sign up for a free trial to Stock World Weekly. Click here. 

Chart by Paul Price.

...

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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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Pharmboy

Here We Go Again - Pharma & Biotechs 2014

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

Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.

And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference.  Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014?  The Biotech ETF beat the S&P by better than 3 points.

As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...



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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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