Could the positive Greek bailout news be bad for stocks? The Downgrade was good for stocks for a few weeks!
by Chart School - February 10th, 2012 8:40 am
Courtesy of Chris Kimble.
S&P Downgraded European debt on 1/17 and the Power of the Pattern reflected this could be good news for investments- (see post here) … Greek ETF(GREK) gained 40% and the National Bank of Greece(NBG) gained 100% in the three weeks after the downgrade-
Was bad news good for stocks? Could good news do the opposite to them?
CLICK ON CHART TO ENLARGE
Yesterday morning Greek Leaders announced that a bailout agreement is at hand. (see CNBC article) How interesting this news comes out as Investor bullish sentiment is hitting loft levels, tons different than 120 days ago (see post here)
Could this positive news out of Greece be bad news for investments? Will be tough to stop the positive momentum the market has… do make a little note on the calendar of todays news and lets see down the road if it was a key date like 1/17/2012 ended up being.
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DiggCould the positive Greek bailout news be bad for stocks? The Downgrade was good for stocks-
by Chart School - February 10th, 2012 8:40 am
Courtesy of Chris Kimble.
S&P Downgraded European debt on 1/17 and the Power of the Pattern reflected this could be good news for investments- (see post here) … Greek ETF(GREK) gained 40% and the National Bank of Greece(NBG) gained 100% in the three weeks after the downgrade-
Was bad news good for stocks? Could good news do the opposite to them?
CLICK ON CHART TO ENLARGE
Yesterday morning Greek Leaders announced that a bailout agreement is at hand. (see CNBC article) How interesting this news comes out as Investor bullish sentiment is hitting loft levels, tons different than 120 days ago (see post here)
Could this positive news out of Greece be bad news for investments? Will be tough to stop the positive momentum the market has… do make a little note on the calendar of todays news and lets see down the road if it was a key date like 1/17/2012 ended up being.
Treasuries Update: Operation Twist and the 30-Year Fixed Rate Mortgage
by Chart School - February 9th, 2012 7:35 pm
Courtesy of Doug Short.
Note from dshort: The weekly Freddie Mac update released today shows the 30-year fixed rate mortgage at the historic low of 3.87% for the second consecutive week. The goal of Operation Twist to lower long-term rates appears to have had the desired impact on mortgage rates. The impact on Treasuries is less clear.
The Federal Reserve officially announced Operation Twist on September 21 with the stated purpose of lowering longer-term interest rates. The yield on the 10-year note had been below 2.00% 5 of the 9 days prior to the much-rumored announcement, closed at a new low of 1.88% on the day of the announcement and reached the historic closing low of 1.72 the next day, September 22.
What has the 10-year note done since the “Twist” announcement? The interim high daily close was 2.42 on October 27. The interim closing low was the 1.82 on December 19th. Since that time, the 10-year has danced around the 2.00 level with the latest close at 2.04.
Here is a snapshot of selected yields and the 130-year fixed mortgage since the inception of Operation Twist.
Background Perspective on Yields
The first chart shows the daily performance of several Treasuries and the Fed Funds Rate (FFR) since 2007. The source for the yields is the Daily Treasury Yield Curve Rates from the US Department of the Treasury and the New York Fed’s website for the FFR.
Here’s a closer look at the past year with the 30-year fixed mortgage added to the mix (excluding points).
Here’s a comparison of the yield curve at two points in time: 1) today’s close and 2) the daily close on the market’s interim high on April 29th.
The next chart shows the 2- and 10-year yields with the 2-10 spread highlighted in…
Apple Computer and Newton’s Law of Gravity
by Chart School - February 9th, 2012 6:35 pm
Courtesy of Doug Short.
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
The Power of the Pattern suggested that Apple could run up to $500 on a breakout of resistance. See the first chart below, which I included in my January 20th post here.
Newton’s law of gravity hasn’t worked to well on Apple of late. Apple was at $358 when the chart above was made, and today Apple has traded as high as $496 a share. APPL is up over $70 a share since the last breakout illustrated above at line (1).
This is an excellent example of why it can pay to follow breakouts!
Apple is now reaching the top of its rising channel…. A bad idea to harvest some gains right now? Could Apple at resistance impact the broad market?
(c) Kimble Charting Solutions
blog.kimblechartingsolutions.com
S&P 500 Snapshot: Another Fractional Gain
by Chart School - February 9th, 2012 5:35 pm
Courtesy of Doug Short.
The S&P 500 today was quite similar to yesterday. It traversed about a nine-point range to the morning low and slowly rallied to an early afternoon high and then drifted down in the last two hours of trading for a fractional gain of 0.15%. Nevertheless, today’s close sets a new 2012 high — up 7.50% year-to-date and only 0.86% below its interim high at the end of April 2011.
From an intermediate perspective, the S&P 500 is 99.8% above the March 2009 closing low and 13.6% below the nominal all-time high of October 2007.
Below are two charts of the index, with and without the 50 and 200-day moving averages.
For a better sense of how these declines figure into a larger historical context, here’s a long-term view of secular bull and bear markets in the S&P Composite since 1871.
For a bit of international flavor, here’s a chart series that includes an overlay of the S&P 500, the Dow Crash of 1929 and Great Depression, and the so-called L-shaped “recovery” of the Nikkei 225. I update these weekly.
These charts are not intended as a forecast but rather as a way to study the current market in relation to historic market cycles.
Apple reaches $500 Power of the Pattern target…Time to do a little harvesting?
by Chart School - February 9th, 2012 3:01 pm
Courtesy of Chris Kimble.
The Power of the Pattern reflected that Apple could run up to $500 on a breakout of resistance- (see post here)
CLICK ON CHART TO ENLARGE
Newtons laws of gravity hasn’t worked to well on Apple of late. Apple was at $358 when the chart above was made and today Apple has traded as high as $496 a share. APPL is up over $70 a share since the last post/breakout above line (1) above.
An example of why it can pay to follow breakouts!
CLICK ON CHART TO ENLARGE
Apple is now reaching the top of its rising channel…A bad idea to harvest some gains right now? Could Apple at resistance impact the broad market?
Could Apple reach $500 update…
by Chart School - February 9th, 2012 3:01 pm
Courtesy of Chris Kimble.
The Power of the Pattern reflected that Apple could run up to $500 on a breakout of resistance- (see post here)
CLICK ON CHART TO ENLARGE
Newtons laws of gravity hasn’t worked to well on Apple of late. Apple was at $358 when the chart above was made and today Apple has traded as high as $496 a share. APPL is up over $70 a share since the last post/breakout above line (1) above.
An example of why it can pay to follow breakouts!
CLICK ON CHART TO ENLARGE
Apple is now reaching the top of its rising channel…A bad idea to harvest some gains right now? Could Apple at resistance impact the broad market?
The ”Non-Bounce” in Non-Revolving Credit
by Chart School - February 9th, 2012 10:35 am
Courtesy of Doug Short.
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Joe Weisenthal writing for Business Insider reports Consumer Credit Demolishes Expectations, Grows $19 Billion.
It’s hard to think that the economy is going into any kind of recession with numbers like these. For the second straight month we just got a HUGE number on consumer credit.
Consumer credit expanded by $19 billion in December. That’s far more than the $7 billion that was expected by economists.
This chart from Reuters’ Scotty Barber basically tells it all.
The data on which that chart was produced was the Consumer Credit – G.19 government report.
Demolishing the Revolving Credit Side of the Story
Lance Roberts of Streettalk Live demolishes the revolving credit side of Weisenthal ‘s story (a $4 billion December rise) in an excellent perspective Consumer Credit and the American Conundrum.
Demolishing the Non-Revolving Credit Side of the Story
My job is to demolish the non-revolving side of Weisenthal’s story, and it’s an exceptionally easy task to do.
Non-Revolving credit rose $11.8 billion in December. However, $8.8 billion of that is growth in federal government loans (which just happens to be where student loans are parked).
Here are some charts I put together stripping out federal government loans.
Non-Revolving Loans Minus Government Loans
Non-Revolving Loans Minus Government Loans Detail
True Bounce in Percentage Terms
Note that the year-over-year “bounce” has not even gotten back to the zero-line in spite of exceptionally easy comparisons.
Middle-Aged Borrowers Pile on Student Debt
Reuters reports Middle-Aged Borrowers Pile on Student Debt
Educational borrowing is up for every age group over the past three years, but it has grown far more quickly among those between 35 and 49, according to the analysis of more than 3 million credit reports provided to Reuters by the credit score tracking site CreditKarma (CreditKarma.com). That group saw its school debt burden increase by a staggering 47 percent, according to the analysis.
The average student loan debt for those aged 38 to 41 was the biggest of that group — about $12,000, up from just under $9,000 in 2009. Young people still carry…
Weekly Unemployment Claims Down by 15,000
by Chart School - February 9th, 2012 9:35 am
Courtesy of Doug Short.
The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 358,000 new claims is a 15,000 decrease from an upward adjustment of 6,000 for the previous week (373K, previously 367K). The less volatile and closely watched four-week moving average came in at 366,250, the 13th week below 400K after 29 consecutive weeks above that benchmark. Here is the official statement from the Department of Labor:
In the week ending February 4, the advance figure for seasonally adjusted initial claims was 358,000, a decrease of 15,000 from the previous week’s revised figure of 373,000. The 4-week moving average was 366,250, a decrease of 11,000 from the previous week’s revised average of 377,250.
The advance seasonally adjusted insured unemployment rate was 2.8 percent for the week ending January 28, an increase of 0.1 percentage point from the prior week’s unrevised rate.
The advance number for seasonally adjusted insured unemployment during the week ending January 28, was 3,515,000, an increase of 64,000 from the preceding week’s revised level of 3,451,000. The 4-week moving average was 3,498,000, a decrease of 33,000 from the preceding week’s revised average of 3,531,000.
Today’s seasonally adjusted number came in below the Briefing.com consensus estimate of 370K and likewise Briefing.com’s own estimate of 370K.
As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (shown in the callouts) is a more useful number than the weekly data.
Occasionally I see articles critical of seasonal adjustment, especially when the non-adjusted number better suits the author’s bias. But a comparison of these two charts clearly shows extreme volatility of the non-adjusted data, and the 4-week MA gives an indication of the recurring pattern of seasonal change in the second chart (note, for example, those regular January spikes).
Because of the extreme…
Applying Fibonacci to Stock Market Patterns
by Chart School - February 8th, 2012 9:49 pm
Applying Fibonacci to Stock Market Patterns
It's easier than you might think!
By Elliott Wave International
Patterns are everywhere. We see them in the ebb and flow of the tide, the petals of a flower, or the shape of a seashell. If we look closely, we can see patterns in almost everything around us. The price movements of financial markets are also patterned, and Elliott wave analysis gives you the tools to interpret those patterns.
The Fibonacci sequence is vital to Elliott wave analysis — as a matter of fact, R.N. Elliott wrote that the Fibonacci sequence provides the mathematical basis of the Wave Principle. Once you understand the Fibonacci sequence, it's easy to apply it to the markets you trade.
The following excerpt is from a new eBook from Elliott Wave International Senior Tutorial Instructor Wayne Gorman: How You Can Use Fibonacci to Improve Your Trading. Wayne explains how the Fibonacci sequence is derived and how it can be used to understand market behavior.
Learn how you can download the entire 14-page eBook below.
The Golden Ratio and the Golden Spiral
Let's start with a refresher on Fibonacci numbers. If we start at 0 and then go to the next whole integer number, which is 1, and add 0 to 1, that gives us the second 1. If we then take that number 1 and add it again to the previous number, which is of course 1, we have 1 plus 1 equals 2. If we add 2 to its previous number of 1, then 1 plus 2 gives us 3, and so on. 2 plus 3 gives us 5, and we can do this all the way to infinity. This series of numbers, and the way we arrive at these numbers, is called the Fibonacci sequence. We refer to a series of numbers derived this way as Fibonacci numbers.
We can go back to the beginning and divide one number by its adjacent number — so 1÷1 is 1.0, 1÷2 is .5, 2÷3 is .667, and so on. If we keep doing that all the way to infinity, that ratio approaches the number .618. This is called the Golden Ratio, represented by the Greek letter phi (pronounced "fie"). It is an irrational number, which means that it cannot be represented by a fraction of whole integers. The inverse of .618 is…
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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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