Moving Averages: Month-End Preview
by Chart School - December 30th, 2011 9:35 am
Courtesy of Doug Short.
Here is a preview of the monthly moving averages I track before the market opens on the last business day of the month. Two of the three S&P 500 and three of the five Ivy Portfolio ETF monthly moving averages are signaling "cash". The S&P 500 10-month exponential moving average (EMA) is a change from last month. The one Ivy change from last month is that VNQ, the REIT index, has flipped to "invested" after a one-month "cash" signal (another dreaded "whipsaw", the fourth in five months for this asset class).
Several of the signals (highlighted in yellow) are close to a trigger value, so today’s market closing prices could be difference makers.
The one clear observation in this month’s overview of moving averages is the relative strength of the US relative to the rest of the world (VTI versus VEU).
Note: My inclusion of the S&P 500 index updates is intended to illustrate a popular moving moving-average timing strategy. The index signals also give a general sense of how US equities are behaving. However, for followers of a moving average strategy, the general practice is to make buy/sell decisions on the signals for each specific investment, not based on a broad index. Even if you’re investing in a fund that tracks the S&P 500 (e.g., Vanguard’s VFINX or the SPY ETF) the moving average signals for the funds will occasionally differ from the underlying index because of dividend reinvestment, which is not factored into the index closes.
The Ivy Portfolio
The second of the three adjacent tables previews the 10-month SMA timing signals for the five asset classes highlighted in The Ivy Portfolio.
I’ve also included (third table) the 12-month SMA timing signals for the Ivy ETFs in response to the many requests I’ve received to include this slightly longer timeframe.
After the end-of-month market close, I’ll update the monthly moving average feature with charts to illustrate.
The bottom line, as we’ve pointed out earlier, is that these moving-average signals have a good track record for long-term gains while avoiding major losses. They’re not fool-proof, but they essentially dodged the 2007-2009 bear and captured significant gains since the initial buy signals after the March 2009 low.
Note: See the Timing Updates for interim updates throughout the month.
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DiggWords and Phrases We Hope Not To See Or Hear In 2012
by Zero Hedge - December 30th, 2011 9:34 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Via Peter Tchir of TF Market Advisors,
Rather than making some predictions, here is a list of words and phrases that were popular in 2011 that just annoy me. It would be nice if they become less popular in 2012, but I predict they will remain in use.
Bazooka
No self-respecting videogame would have a “bazooka” as the ultimate weapon. Bazookas just aren’t that powerful. Maybe Europe needs to search for a “nuclear” option, that at least sounds big enough to scare people. Or, just maybe, Europe needs a credible plan for debt sustainability rather than a “weapon”.
Unintended Consequences
No policy ever fails anymore, it just had “unintended consequences”. Unintended consequences sounds better than sloppy planning, but when a consequence is forseeable and likely, it is not unintended. Unwanted, yes, but unintended, no. If I punch someone in the face, and they punch me back and break my nose, that is not an unintended consequence. It is not the result I was looking for, but it is a completely logical outcome. We will never get to the point where decision makers admit that they made bad decisions or didn’t think things through carefully, but unintended consequences is not an excuse.
Black Swan
Not everything that is bad is a black swan. Black swans are things that no one thought could exist (based on some amount of analysis) that turn out to exist. The Fukushima plant was a disaster, but not a black swan. They just didn’t plan well enough for a likely possibility. It seems like small mistakes are covered up by being “unintended consequences” and big mistakes are covered up by saying they were “black swans”. Accountability would be much better.
Transitory
Transitory sounds much better than temporary. Maybe it is used because everyone knows what temporary means, but transitory is a little harder to nail down. The Fed in particular has embraced “transitory”. Anything that occurs that they don’t like is deemed as “transitory”. This is even better than talking about unintended consequences because it implies you have actually thought of everything and that the bad stuff will go away. Maybe that is why Ben really, really, really likes it. CPI was 3.4% over the last 12 months, that doesn’t exactly seem “transitory” to me.
…
Whirlpool Corporation Files Petitions Challenging Unlawful Trade Practices
by Insider Scoop - December 30th, 2011 9:30 am
Courtesy of Benzinga.
Whirlpool Corporation (NYSE: WHR) today filed anti-dumping petitions against residential clothes washers from South Korea and Mexico, and a companion countervailing duty petition against the same products from South Korea. Whirlpool filed these petitions seeking enforcement of United States and international trade laws. The company’s goal is to promote a fair and open global trading system, to protect American jobs and to ensure its ability to continue to innovate and invest in the United States.
For more Benzinga, visit Benzinga Professional Service, Value Investor, and Stocks Under $5.
European Stocks Surge As Sovereigns Slump
by Zero Hedge - December 30th, 2011 9:01 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Something strange is happening in European risk markets this week. While that sentence is entirely ‘normal’ for what has become a diverging/converging flip-flopping correlation microstructure but the clear trend this week has been European Sovereign derisking and European Stock rerisking. The Bloomberg 500 index (that tracks a broad swathe of European stocks) is up 0.75% from Christmas Eve (and 1.6% from yesterday’s lows) while 10Y sovereign spreads are wider by 10 to 30bps in the same period. France stands out as one of the worst performers – more than 25bps wider this week alone. Only Spain is notably improved on the week (-17bps) but all 10Y sovereigns are well off their best levels as stocks make new highs. Whether this is a front-run on asset rotation into the new year or expectations of the same risk-on ramp-job we saw on the first trading of this year is unclear – we do remind those front-runners that mutual fund cash levels are significantly lower this year than last. It is clear that yet another ‘sensible’ correlation (such as BTPs to equities) has broken but when volumes return and the reality of the huge supply calendar we face in the next month alone sinks in, perhaps equity ebullience will pull to bond bereavement. If stocks are reacting to a quasi-QE from the ECB, why wouldn’t sovereigns who are the direct beneficiaries in that surreal LTRO-driven-carry trade.
The highly correlated relationship between European stocks and sovereign risk has decoupled in the last week or so – and not in a good LTRO-carry-trade-driven way.
Stocks are up nicely this week…
but sovereigns are all (except Spain for now) wider on the week post Christmas. The French 10Y is the stand-out to us though – quietly widening almost 26bps this week (from 105bps to 131bps) or 25%…and BTPs are 36bps wide of their tights from Wednesday. Hardly a reassuring signal from the markets – even with the ECB rumored to have been buying this week.
Charts: Bloomberg
Final Friday – Entering the Mayan’s Final Year
by Phil - December 30th, 2011 8:48 am
It’s fun reading everyone else’s predictions.
You would think, coming into what the Mayan’s may have predicted to be the final year for this planet, that people would want to make sure they get things right but no – most people just predict for next year a variation of what they thought would happen this year – no matter how wrong they were in 2011.
Last January, the Dow was under 12,000 and we had Russell leadership as they tested the 800 line, now the Dow is the leader at 12,287 and the Russell is struggling at 745 but both in such a tight range that we could have pretty much skipped the whole year and we wouldn’t have missed anything.
Although constantly asked, I do not like to make arbitrary predictions just because the year is winding down on the calendar. The dirty little secret to my accurate prognostications is I WAIT until I actually see something that’s very likely to happen before I mention it. This annoys many people who interview me, who are used to getting a prediction on pretty much anything they ask a guest, no matter how clueless that person is.
That being said, last year, on December 19th, I wrote "It’s Never too Early to Predict the Future" and among other brilliant observations I noted: "I’d be gung-ho bullish now if I wasn’t worried the Euro will collapse as that is the fly in the ointment." Here we are a year later and we survived that, as well as a nuclear catastrophe in Japan and revolutions in the Middle East and none of that caused the World to end, nor did it push oil over $100 for more than a short while, nor did it ever get gold to that magic $2,000 level.
So what’s it going to take? What would it finally take to topple the now $60Tn global economy where EVERY Nation on Earth has proved that they are ready, willing and able to create Trillions of new Dollars/Euros/Francs/Yen/Yuan and drop them into the mix – until they find the recipe to make the Global Economy start to rise again. Will too many cooks spoil the broth or is it just that a watched pot never boils and we are all a bit too impatient as we have to wait for the economic yeast to rise?…
China Zenix Announces Open Market Stock Purchases of 15K Shares by Management
by Insider Scoop - December 30th, 2011 8:44 am
Courtesy of Benzinga.
China Zenix Auto International Limited (NYSE: ZX) today announced that deputy chief executive officer and chief sales and marketing officer, Mr. Junqiu Gao, purchased 15,000 common shares of the Company’s stock at an average price of $3.30 per share in open market transactions during December.
Additionally, Mr. Yuzhou Wang, deputy financial controller, made several recent purchases totaling 5,000 shares of the Company’s common stock in open market transactions at prices as high as $5.00 per share.
For more Benzinga, visit Benzinga Professional Service, Value Investor, and Stocks Under $5.
Previewing Today’s Market Ghost Town
by Zero Hedge - December 30th, 2011 8:11 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
The only thing of note today (there are no economic announcements at all, just the Fed disclosing the latest Op Twist schedule at 2 pm) is that while the bond market closes at 2pm, stocks will be left unsupervised for two hours of sheer idiocy between then and their normal closing time of 4pm by which point there will be nobody left trading, just some GETCO algo lifting every offer then dumping it all having made money over VWAP and suckered in the momos, as happens every single day on no volume levitation.
As for the big picture, for those three people who care, here is Stone McCarthy‘s explanation:
Even as the trend is still higher for Treasury prices (lower for yields) since the October lows, it can be argued that a significant deceleration in this trend is underway. Specifically, while there is always the possibility that Treasury prices can overshoot their December highs on thin flows during the trend deceleration process in the days ahead, the multi-year CFTC COT-related extremes and diverging weekly momentum that preceded the 12/19 price highs increase the likelihood that any move to new price highs would be short-lived. In addition, despite the fact that it has occurred during the quietest 2-week period of the year, recent gains by the S&P 500 offer structural potential for further gains of roughly 2.5% to 3.9% (SPX 1293 to 1311) from current levels over the near-term, as long as SPX 1229 holds during the current equity correction.
As we noted on Wednesday, the trend that had been driving Treasury prices lower (yields higher) since the early part of last week was neutralized during Wednesday’s rally, resulting in a more rangebound outlook for Treasury prices. Currently, the active 10-Yr contact is working in the direction of the high-end of this range near 131-05. This will remain the case until a sustained intra-day breach of 130-13+ opens the door to the low-end of the range near 129-30
ARCA biopharma Announces Additional Patent Issued for Methods for Treatment with Bucindolol Based on Genetic Targeting
by Insider Scoop - December 30th, 2011 8:00 am
Courtesy of Benzinga.
ARCA biopharma, Inc. (Nasdaq: ABIO) today announced that the U.S. Patent and Trademark Office (USPTO) has issued a patent on methods for treating patients with bucindolol based on genetic targeting and focused on a specific genotype – homozygous wildtype for Deletion 322-325 in the alpha-2C adrenergic receptor. The patent (USP# 8,080,578) entitled “Methods for Treatment with Bucindolol Based on Genetic Targeting,” provides protection in the United States for this novel approach to treating patients with bucindolol.
“We are obviously pleased with the USPTO’s issuance of this patent, which we believe extends our pharmacogenetic intellectual property protection around bucindolol,” said Michael R. Bristow, President and Chief Executive Officer of ARCA. “Chronic cardiovascular diseases continue to be a major health care problem, and among the challenges to improving care is the uncertainty of patient responses to drug treatment. We believe new therapies that include a simple test to identify a substantial subpopulation of patients more likely to benefit have the potential to alleviate some of the problems encountered with the current standard of pharmacotherapy, where all members of a disease cohort, including those who will not respond, are treated. A unique pharmacologic property of bucindolol is norepinephrine lowering, and bucindolol’s heart failure clinical responses demonstrated in a large Phase 3 clinical trial (BEST) were modulated by this important effect. The degree of norepinephrine lowering by bucindolol is under genetic control by alpha-2C 322-325 Insertion/Deletion adrenergic receptor polymorphisms (Circulation: Heart Failure 3:21-28 2010). Accordingly, we believe prospective knowledge of the alpha-2C 322-325 genotype allows for prediction of the degree of norepinephrine lowering by bucindolol in an individual patient.”
For more Benzinga, visit Benzinga Professional Service, Value Investor, and Stocks Under $5.
From Earlier: Otter Tail Corporation Sells E.W. Wylie
by Insider Scoop - December 30th, 2011 7:57 am
Courtesy of Benzinga.
Otter Tail Corporation (Nasdaq: OTTR) yesterday announced it has sold its trucking business, E.W. Wylie, to Walden Smokey Point, Inc., a holding company based in Dallas, TX. Walden’s operating company, Smokey Point Distributing, is a leader in flatbed/heavy haul trucking based in the Pacific Northwest.
For more Benzinga, visit Benzinga Professional Service, Value Investor, and Stocks Under $5.
Foreigners Dump Record Amount Of US Treasurys In Past Month
by Zero Hedge - December 30th, 2011 7:32 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
With year end fund flows making absolutely no sense for the most part, thank you global central planning, as the euro plunges and the market refuses to follow, with risk assets rising on speculation the ECB (and/or Fed) are about to restart printing yet gold collapsing (on one or two hedge funds liquidating, yet econ PhDs already rewriting their theses on why the “gold bubble has popped”), and finally with Treasurys soaring to near all time highs (10 Year under 1.9% yesterday even as stocks surged on data from the National Advertisers of Realtors, aka NAR, of all fraudulent and corrupt entities), here is the latest observation to make the confusion complete. As the Fed’s critical H.4.1 weekly update shows (which is leaps and bounds more accurate than the Treasury’s TIC international fund flow data), in the week ended December 28, foreign investors sold the second highest amount of US bonds in history, or $23 billion, bringing total UST custodial holdings to $2.67 trillion, a level first crossed to the upside back in April. This number peaked at $2.75 trillion in mid-August, and as the chart below shows the foreign holdings of US paper have been virtually flat in all of 2011, something which is in stark contrast with what the price of the 10 Year would indicate vis-a-vis investor demand. And going back further, the last week is merely the latest in a series of Custodial account outflows. In fact, in the last month (trailing 4 weeks), foreigners have sold a record $69 billion in US paper, a monthly outflow that was approached only once – in the aftermath of the US downgrade (when erroneously it is said that a surge in demand for US paper pushed rates lower – obviously as the chart shows nothing could be further from the truth).
So here is the conundrum for today: did China continue to dump US paper in the year end, something we saw started with the October TIC data, or was it French banks continuing to sell off any non-EUR assets, and in the process repatriate proceeds, keeping the EUR higher. We don’t know, nor frankly, in this uber-centrally p(l)anned market, do we care much any longer.
Chart 1 – total UST holdings in Fed custody:
Chart 2 – monthly (trailing 4 week) change in UST holdings:
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
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