Sabrient Risers – 4/30/2011
by Sabrient - April 30th, 2011 12:00 am
Top 5 Risers |
||||
| Stock | Rating | Analysis | ||
| TKR | BUY | Many analysts are expecting higher than previously expected long term growth from Timken, and its near-term earnings outlook is also improving. | ||
| CLUB | BUY | Town Sports is one of the top candidates projected to achieve both higher than previously projected earnings in the short run and a higher earnings growth rate in the long run. | ||
| SSRI | STRONGBUY | The projected value for Silver Standard is still rising quickly even though past earnings have already improved significantly. | ||
| EROC | BUY | Many analysts are expecting higher than previously expected long term growth from Eagle Rock, and its near-term earnings outlook is also improving. | ||
| AAPL | STRONGBUY | Apple is one of the top candidates projected to achieve both higher than previously projected earnings in the short run and a higher earnings growth rate in the long run. | ||
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DiggMonthly Moving Averages: April Update
by Chart School - April 29th, 2011 11:35 pm
Courtesy of Doug Short
The S&P 500 closed the month of April 2.85% above the March close. All three S&P 500 monthly moving averages we’ve been tracking are signaling an equities position. See the specifics here.
The Ivy Portfolio
Here is a table with the current signal for the 10-month SMA for the five ETFs featured in The Ivy Portfolio. I’ve also included a table of 12-month SMAs for the same ETFs for this popular alternative strategy.
Backtesting Moving Averages
Over the past few years I’ve used Excel to track the performance of various moving-average timing strategies. But now I use the backtesting tools available on the ETFReplay.com website. Anyone who is interested in market timing with ETFs should have a look at this website. Here are the two tools I most frequently use:
- Backtest an Individual ETF
- Backtest an ETF Portfolio
(requires a paid subscription)
Background on Moving Averages
Buying and selling based on a moving average of monthly closes can be an effective strategy for managing the risk of severe loss from major bear markets. In essence, when the monthly close of the index is above the moving average value, you hold the index. When the index closes below, you move to cash. The disadvantage is that it never gets you out at the precise top or back in at the very bottom. Also, it can produce the occasional whipsaw (short-term buy or sell signal), such as we’ve experienced this summer.
Nevertheless, a chart of the S&P 500 monthly closes since 1995 shows that a 10- or 12-month simple moving average (SMA) strategy would have insured participation in most of the upside price movement while dramatically reducing losses.
The 10-month exponential moving average (EMA) is a slight variant on the simple moving average. This version mathematically increases the weighting of newer data in the 10-month sequence. Since 1995 it has produced fewer whipsaws than the equivalent simple moving average, although it was a month slower to signal a sell after these two market tops.
A look back at the 10- and 12-month moving averages in the Dow during the Crash of 1929 and Great Depression shows the effectiveness of these strategies during those dangerous times.…
A Fairy Tale Ending?
by Zero Hedge - April 29th, 2011 10:07 pm
Courtesy of Leo Kolivakis
Over two billion people around the world watched the royal wedding on Friday. My hunch is that the overwhelming majority were women (guys aren’t that into fairy tales). I have to admit I caught a glimpse of the royal wedding as it ended this morning and thought they were a beautiful couple. Kate looked so poised while William looked a bit nervous but happy.
The royal couple looks very much in love, which along with health is the most important thing in life. Without love and health, all the money in the world is meaningless. Whenever I look at William and Harry, I’m reminded of their mother and the summer of 1997. She died a couple months after I was diagnosed of multiple sclerosis (MS) and while her death was tragic, it helped distract me from my diagnosis and gain some perspective on life.
Opinions are divided on the royal wedding. Cynics will claim that it’s a major distraction, opium for the masses to divert attention from the harsh reality of austerity in England. Royal watchers will claim that it’s all about tradition and being proud of the royal family. I’m somewhere in between and look at it for what it is a boon for tourism.
But what’s really amazing is how fast London has bounced back after the 2008 financial crisis, leading Brett Arends of MarketWatch to ask if it’s the world’s hottest real-estate market?:
I hesitate to use the overplayed word “bubble.” But in the case of London property, it’s hard to avoid.
What’s happening here is absolutely ridiculous.
Markets are being impacted by housing-sales data along with fears over northern European economies and a stronger Japanese yen.
Look in the window of any real-estate agent here and you think people have gone crazy — and then you realize that the prices are in British pounds, and that to convert to dollars you have to add another 60%.
Half a million pounds ($800,000) for a one-bedroom condo with a small garden on the southern, unfashionable side of the river Thames? Really? And $2 million for a modest two-bedroom condo in Chelsea?
As John McEnroe used to say at Wimbledon,
…
How to Help Protect Yourself From Low-Level Radiation
by Zero Hedge - April 29th, 2011 9:07 pm
Courtesy of George Washington
As everyone knows, exposure to high levels of radiation can quickly sicken or kill us. Here’s an illustration from Columbia University:
But as I’ve previously noted, even low level radiation can cause big problems. Columbia provides an illustration:
Lower doses of radiation can sicken or kill us by directly damaging cells:
Or indirectly … by producing free radicals:
Indeed, some radiation experts argue that the creation of a lot of free radical creation is the most dangerous mechanism of low level ionizing radiation:
During exposure to low-level doses (LLD) of ionizing radiation (IR), the most of harmful effects are produced indirectly, through radiolysis of water and formation of reactive oxygen species (ROS). The antioxidant enzymes – superoxide dismutase (SOD): manganese SOD (MnSOD) and copper-zinc SOD (CuZnSOD), as well as glutathione (GSH), are the most important intracellular antioxidants in the metabolism of ROS. Overproduction of ROS challenges antioxidant enzymes.
Scientists from the Institute of Nuclear Science claim in the Archive of oncology:
Chronic exposure to low-dose radiation doses could be much more harmful than high, short-term doses because of lipid peroxidation initiated by free radicals.
***
Peroxidation of cell membranes increases with decreasing dose rate (Petkau effect).
(See this for more on the Petkau effect. Similarly, the Bulletin of Atomic Scientists reported that one of the best-known scientists of the 20th century – Dr. John Gofman – also believed that chronic low level radiation is more dangerous than acute exposure to high doses. Gofman was a doctor of nuclear and physical chemistry and a medical doctor who worked on the Manhattan Project, co-discovered uranium-232 and -233 and other radioactive isotopes and proved their fissionability, helped discover how to extract plutonium, led the team that discovered and characterized lipoproteins in the causation of heart disease, served as a Professor Emeritus of Molecular and Cell Biology at the University of California Berkeley, served as Associate Director of the Livermore National Laboratory, was asked by the Atomic Energy Commission to undertake a series of long range studies on potential dangers that might arise from the “peaceful uses of the atom”, and wrote four scholarly books on radiation health effects).
Countering free…
Getting Technical: Weekend Update
by Chart School - April 29th, 2011 8:35 pm
Courtesy of Doug Short
The S&P 500 broke a resistance on strong but near-resistance momentum and on average volume for the week. It is now in a triangle formation similar to April 2010.
Note: For newcomers to technical analysis, here are brief explanations for the two key indicators that Serge features:
How Goldman Sachs Created the Food Crisis
by ilene - April 29th, 2011 7:38 pm
BY FREDERICK KAUFMAN
Demand and supply certainly matter. But there’s another reason why food across the world has become so expensive: Wall Street greed.
It took the brilliant minds of Goldman Sachs to realize the simple truth that nothing is more valuable than our daily bread. And where there’s value, there’s money to be made. In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known henceforth as the Goldman Sachs Commodity Index (GSCI).
For just under a decade, the GSCI remained a relatively static investment vehicle, as bankers remained more interested in risk and collateralized debt than in anything that could be literally sowed or reaped. Then, in 1999, the Commodities Futures Trading Commission deregulated futures markets. All of a sudden, bankers could take as large a position in grains as they liked, an opportunity that had, since the Great Depression, only been available to those who actually had something to do with the production of our food.
Full article here: How Goldman Sachs Created the Food Crisis – By Frederick Kaufman | Foreign Policy.
Guess Who Just Got Invited To The Printer Party…
by Zero Hedge - April 29th, 2011 7:16 pm
Courtesy of Tyler Durden
One clue: Exhibit A
More on this tomorrow.
Doug Casey: Precious Metals Vs. The USD
by Zero Hedge - April 29th, 2011 7:12 pm
Courtesy of Tyler Durden
An interview with Karen Roche of The Gold Report
Doug Casey: Precious Metals vs. the USD
One sure upshot of the quantitative easing money flooding the stock market will be further distortions, chaos and unpredictability that make the value-investing proposition difficult, if not impossible, according to Casey Research Chairman Doug Casey. On the eve of a sold-out Casey Research Summit in Boca Raton, Florida, Doug returns to The Gold Report. In this exclusive interview, he warns, “Like it or not, you’re going to be forced to be a speculator.”
The Gold Report: When the average investor turns on the news, even on financial channels, they hear that the U.S. economy is in the best shape it’s been in for three or four years. While the experts say the recovery is slower than anticipated, they expect its slow recovery will equate to a long, slow growth cycle similar to that after World War II. You have a contrary view.
Doug Casey: The only things that are doing well are the stock and bond markets. But the markets and the economy are totally different things – except, over a very long period of time, there’s no necessary correlation between the economy doing well and the market doing well. My view is that the market is as high as it is right now – with the Dow over 12,000 – solely and entirely because the Federal Reserve has created trillions of dollars, as other central banks around the world have created trillions of their currency units. Those currency units have to go somewhere, and a lot of them have gone into the stock market.
As a general rule, I don’t believe in conspiracy theories, and I don’t believe anything’s big enough to manipulate the market successfully over a long period. At the same time, the government recognizes that most people conflate the Dow with the economy, so it is directing money toward the market to keep it up. Of course, the government wants to keep it up for other reasons – not just because it thinks the economy rests on the psychology of the people, which is complete nonsense. Psychology is just about the most ephemeral thing on which you could possibly base an economy. It can blow away like a pile of feathers in a hurricane.
TGR: So, you’re saying…
The ECRI Weekly Leading Index: Down Fractionally
by Chart School - April 29th, 2011 5:35 pm
Courtesy of Doug Short
The Published Record
The published ECRI WLI growth metric has had a respectable record for forecasting recessions and rebounds therefrom. The next chart shows the correlation between the WLI, GDP and recessions.
A significant decline in the WLI has been a leading indicator for six of the seven recessions since the 1960s. It lagged one recession (1981-1982) by nine weeks. The WLI did turned negative 17 times when no recession followed, but 14 of those declines were only slightly negative (-0.1 to -2.4) and most of them reversed after relatively brief periods.
Three other three negatives were deeper declines. The Crash of 1987 took the Index negative for 68 weeks with a trough of -6.8. The Financial Crisis of 1998, which included the collapse of Long Term Capital Management, took the Index negative for 23 weeks with a trough of -4.5.
The third significant negative came near the bottom of the bear market of 2000-2002, about nine months after the brief recession of 2001. At the time, the WLI seemed to be signaling a double-dip recession, but the economy and market accelerated in tandem in the spring of 2003, and a recession was avoided.
The Latest WLI Decline
The question had been whether the WLI decline that began the the Q4 of 2009 was a leading indicator of a recession. The published index has never dropped to the -11.0 level in July 2010 without the onset of a recession. The deepest decline without a recession onset was in the Crash of 1987, when the index slipped to -6.8. The ECRI managing director correctly predicted that we would avoid a double dip. The latest GDP for Q4 of 2010 confirms the ECRI stance.
The WLI Versus Other Macroeconomic Indicators
For additional perspective on the performance of this indicator, see Comparing the ECRI Weekly Leading Index with Two Key Competitors, which highlights the curious behavor of the WLI following the 2008 Financial Crisis.
The ECRI Weekly Leading Index appears to be more sensitive to upturns than either the Philly Fed’s ADS Business Conditions Index (ADS) or the Chicago Fed’s Current Activity Index.
A Letter To Congress
by Zero Hedge - April 29th, 2011 5:13 pm
Courtesy of Tyler Durden
from reader T. Willerson
Letter to congress
Dear Congressman:
It’s here: Your moment at the plate. You’ve whiffed more than a few … and, yes, we’re counting. But you’ve been gifted another at-bat, and the President’s tired. Seventh inning stuff is coming out of his teleprompter, and this full-count fastball will be straight, level, and slow. You won’t see another one like this for five years.
An embattled first term president is faced with an outcome that he must, at all costs, prevent, and he’s done very little ground work ahead of it. He is about to become the first President in American history to preside over a default on the national debt, unless you vote to let him raise the limit on the financial burden we leave our children. He would ultimately be crazy to deny any reasonable option, absolutely anything, rather than live with the outcome of his refusal. Politically speaking, he’s whispered a prayer to the Greek God of Imprudence and Fiscal Insanity, raised a one-finger salute to the nation’s savers through the sunroof of a stolen golden Beemer, and revved it toward the draw-bridge that you were elected to control.
Graphic by John Lohman
America’s debt has been moving straight up since the early 1980s. In the beginning it was ok. Debt is not, in itself, a bad thing, and a reasonable amount of leverage on the balance sheet can be positive for any entity, including the United States. But we’re well past that threshold. Researchers Reinhart and Rogoff, in their exhaustive recent work, This Time Is Different: Eight Centuries of Financial Folly, show that, historically, when debt in an economy gets above .9x, or 90% of GDP, the interest burden creates a negative cycle from which nations struggle to recover. If we include the unfunded liabilities we’ve committed to in order to support programs like Medicare and Social Security, the United States of America’s financial obligations represent 8.7x, or 871% of GDP, almost 10x the amount that Reinhart & Rogoff determined lead to ultimate economic failure. In terms that are much easier to identify with, this comes to a debt of $1,386,340 for every family in the US! When you consider the average family’s ability to pay, it all begins to rhyme with those 2007 no – doc mortgages, doesn’t it? In fact, if the US…
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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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