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Author Archive for Market Montage

Vertical Ascent

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

These rallies are becoming familiar.  In early July we saw a streak of 12 of 13 sessions in a row up,  early September 11 of 12, and mid October 11 of 13 (current streak).  It is a bit uncanny the similarities and how the escalator goes straight up in vertical ascent as we see indexes come out of mini corrections during QE.  So we are about at the same stage where the last two began to tire, so it will be interesting if this is similar or if the current consensus of the market that there is nothing to worry about until next year as the Fed and D.C. are both off the table and this 3% annual growth rate in earnings we are now seeing in the S&P 500 year over year deserves even more multiple expansion.   2013 has not been the year of significant earnings growth – it has been nearly all about multiple expansion.

Obviously with this sort of move we are not even sniffing the 10 day moving average.

Speaking of vertical, we are seeing the same signals in margin debt as in 1999 and 2007.  Doesn’t mean it will matter anytime soon as the Fed disengaged after Y2K and wasn’t at all involved like this in 2007, so we are in uncharted territory but people are certainly buying in – with leverage.

Margin levels, or the amount borrowed to purchase securities, climbed to a new record of $401 billion in September, according to NYSE Euronext data released this week. The monthly increase of 4.78 percent was also the largest gain since January. Prior to the financial crisis, debt margins peaked at $381 billion in July, 2007, three months before the S&P 500 hit an all-time high.

We had some high profile earnings moves last week such as Whirpool, Amazon, Microsoft,  and Flowserve as shorts are mostly getting roasted on earnings.  This week we’ll see Apple and Facebook – two of the most popular names in the market.

Economic reports have been completely ignored as there is not going to be any movement on the Federal Reserve with the 6.5% target and Yellen headed our way, and the holidays in between.  So last week’s data points didn’t move the markets at all.  So no reason to…
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Looks Familiar

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

We are in the midst of yet another V shaped rally and at this point there is no more surprise.  It has become the rule…the familiar.   This is episode #3 of the second half of 2013; and one can argue this is the most “vertical” of all 3.  I do not now show the 5 day moving average on the chart below but the index is as far above it as any time in 2013.  The only thing close was 9/18 which was the immediate afternoon sugar high from the “no taper” decision by the Fed.

Ironically these fools in D.C. have created an environment where the Fed won’t….ever….cut back QE.   After weeks of shutdown and wrangling all they could do was kick the can til January 2014?  So not only won’t the Fed even do a minor tightening now due to the economic impact of the govt shutdown and uncertainty, they also will have the same reasons for the first quarter (or two) of 2014.  And whose to say the next kick the can won’t be 6 months or something short enough that simply constantly created the uncertainty that the Fed wants to see recede.

Google provided a massive halo effect for all tech stocks Friday, and completely overwhelmed any bad feelings of the massive $1B revenue miss by IBM earlier in the week.  With QE almost permanently on hold and the last major issue of the year (D.C.) now off the table some now are calling for a 1999 melt up in the fourth quarter.

We have a heavy slate of earning reports this week and next – we’ll see if the hear no evil, see no evil but expand the multiple of the market (already up 2.5 this year alone) continues.  As for economic data due to the government shutdown some old reports should be resurfacing soon, including September’s employment data which is now set for release Tuesday.

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings





Short Term Extension of Debt Ceiling Talk Pushes Futures

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

The politicians can not agree on anything other than kicking the can down the road.  Word surfaced late yesterday the 2 parties may “agree” to kick the can down the road – solving nothing other than avoiding the debt ceiling limit as they work towards a broader “comprehensive” solution.  This is the exact same thing they have been saying the past half decade, and each time they try to work on something comprehensive the only thing that comes out of it, is more can kicking.  But that could be enough for markets.  Futures are jumping on the development and we always have to ask in the QE market is this sort of gap up is day 1 of a “V shaped” move.  It has now become common.  There is now a world of resistance to work through on the charts but the QE V shaped rallies never worry about resistance and just seem to slice through it as if it is no there.  We’ll know in a week or so if this is another one.

Note the last 2 times the S&P 500 broke a downtrend it led to a fast supercharged rally – but an eventual selloff.  At this point simply to break the current downtrend, the index would net to get over S&P 1680.  Also note the 50 day moving average is sloping downward for the first time in a long time; in fact the first time since late 2012.  In normal markets that is usually a cautionary signal but in a QE world these signals have not been as helpful.

 

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings





Janet Yellen – To No One’s Surprise – Nominated by Obama for Fed Head

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Once Larry Summers “exited” (i.e. was rejected) as a candidate, all eyes turned back to what was seen earlier as the obvious choice – Janet Yellen.  Yesterday after the close President Obama did what everyone expected and nominated her for the head job at the Federal Reserve.  Many consider her an uber dove… futures initially spiked on the news but not as much as one would expect, mostly because this was a surprise to no one.  But still considering the damage in the markets of late, you’d think it would have provided some more juice.  Perhaps the algos go to sleep after 4 PM.   Here are some blurbs from the WSJ, and Reuters.

  • The nomination will put Yellen on course to be the first woman to lead the institution in its 100-year history. The advocate for aggressive action to stimulate U.S. economic growth through low interest rates and large-scale bond purchases would replace Ben Bernanke, whose second term as Fed chairman expires on January 31.
  • If confirmed by the U.S. Senate, which is expected to endorse her, she would provide continuity with the policies the Fed has established under Bernanke. Analysts say she would move cautiously in reining in policies in place to shore up the world’s largest economy.

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings





Entire September Rally Now at Risk, Fibonacci Says

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

With the 61.8% retracement of the September rally now broken, the risk now opens for a complete retracement of the entire September rally which was topped off by the “no QE tapering” by Bernanke now nearly 3 weeks ago.

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings





Horrid Day for Momentum Stocks

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Until this week, a select group of about 40 stocks has held up quite well considering the 3% correction.   Today however we are seeing major selling in these names, even as the indexes don’t look “that bad”.  (NASDAQ is underperforming significantly)  Some samples of the damage as follows:

  • Yelp -6.8%
  • LinkedIn -5.9%
  • Sina -5.3%
  • Baidu -4.5%
  • Facebook -4.1%
  • Yahoo -3.7%

While these all are related to the internet we are seeing the same damage in other “hot” sectors such solar stocks and just about any biotech, which has been the market’s main winning group of 2013.  It is one of those days the indexes are not telling the tale because things like utilities are rallying.

Volatility has obviously increased substantially…

 

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings





Normal Song & Dance Around Political Sausage Making

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Friday markets rallied sharply on no real news – just the assumption / hope / fear by shorts, that a resolution would happen over the weekend and based on past precedent markets would rip higher with market bears punched in the nose.  This is one of those binary outcomes: no resolution = good chance those gains disappear, resolution = a V shape move up.  Today we are seeing the latter.

Looking at the index charts, we continue to see a wide divergence between NASDAQ and S&P 500.  With the S&P 500 this downward channel continues; the rally Friday took it to the top of the channel and any positive news would have us break out to the upside of it, which has led to power rallies through 2013.  But without any positive news, we will now just see a continuation of the pattern.  MACD has rolled over bearish and we see the 61.8% retracement of the September rally is in play.

The NASDAQ looks like a completely different animal.   There has only been a 38.2% retracement at worst and even that just barely for a session.  MACD is just now beginning to see a bearish crossover but if it reverses in a day or two it can be rendered meaningless.

Areas like biotech are really helping the NASDAQ.

So overall we know the story – there is more of a drop dead date nearer to the debt ceiling limit mid October.  For now it appears politicians are content to make sausage until then.

Last Friday we did not get the normal employment data and this week any government data will continue to be delayed.  The main items on the agenda will be the FOMC meeting minutes (“thankfully” the Fed will never shut down) Wednesday, and retail sales Friday – expectations for unchanged and +0.4% ex autos.

Earnings season also begins to hit the radar, although not in earnest until next week.

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings





Stuck in Purgatory

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

The markets remain stuck here as they await some form of resolution to this federal budget + debt ceiling situation(s).  Interestingly each of the 3 sessions this week we have seen a spike into the close as investors assume a deal is imminent each night, but thus far not so much.  It appears tomorrow’s employment data will also be delayed due to the shutdown, but the ADP data yesterday was not of the nature that would indicate any change coming from the Fed anytime soon.

There still remain a group of stocks acting well in this market, but the indexes sure are interesting – we are getting 2 different stories on the S&P 500 and NASDAQ.   Of course eventually they will begin to move more in concert but right now the biotech/tech heavy NASDAQ is acting fine while the S&P 500 is in more of a corrective state.  Interestingly the Russell 2000 is acting like the NASDAQ while the DJIA is acting even worse than the S&P 500.  So a very selective market.

The S&P 500 broke through the 50 day intraday Monday before recovering it, and that has been the floor the past 2 sessions.  MACD has crossed over bearish but this can sometimes quickly reverse itself.  Meanwhile the NASDAQ on Monday only fell to its 20 day moving average and aside from 1 session has bounced repeatedly off its 10 day moving average during this correction.

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings





ISM Manufacturing at 56.2 v Estimate of 55 and Previous 55.7

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Positive news from the ISM Manufacturing index at 56.2 vs 55 – not much effect on the market as the government overhang remains the focus.   New orders were not very good however in this report; employment did look good.  Full report here.

 

“The PMI™ registered 56.2 percent, an increase of 0.5 percentage point from August’s reading of 55.7 percent. September’s PMI™ reading is the highest of the year, leading to an average PMI™ reading of 55.8 percent for the third quarter. The New Orders Index decreased in September by 2.7 percentage points to 60.5 percent, and the Production Index increased by 0.2 percentage point to 62.6 percent. The Employment Index registered 55.4 percent, an increase of 2.1 percentage points compared to August’s reading of 53.3 percent, which is the highest reading for the year. Comments from the panel are generally positive and optimistic about increasing demand and improving business conditions.”

WHAT RESPONDENTS ARE SAYING …
  • “Global sales generally trending moderately higher.” (Textile Mills)
  • “Slight increase in demand. Forecast looks better. 4Q looking better than 3Q — should begin to see demand increase in October/November.” (Food, Beverage & Tobacco Products)
  • “Raw materials shortages continue. General trends are up, which enhances shortage issues.” (Wood Products)
  • “Overall business is flat to down across the board.” (Machinery)
  • “Housing continues to improve, resulting in improved conditions for our industry.” (Furniture & Related Products)
  • “Rising costs of China labor has us re-evaluating our current position in that country.” (Computer & Electronic Products)
  • “Steady increase in work this month.” (Primary Metals)
  • “Overall business is picking up.” (Transportation Equipment)
  • “Outlook remains strong with housing market and customer orders.” (Electrical Equipment, Appliances & Components)
  • “Labor rates along the Gulf Coast are rising with the increased activity of construction and maintenance projects.” (Chemical Products)
MANUFACTURING AT A GLANCE
SEPTEMBER 2013

Index

Series
Index
Sep
Series
Index
Aug
Percentage
Point
Change

Direction

Rate
of
Change
Trend*
(Months)
PMI™ 56.2 55.7 +0.5 Growing Faster 4
New Orders 60.5 63.2 -2.7


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We’ve Seen this Game Before

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

As no budget resolution came to pass this weekend (surprise surprise) futures are solidly down in the U.S. and most world markets are following suit.   Even before this morning’s drop the S&P 500 had dropped about 2% straight in a slow steady drip since a week ago Wednesday when euphoria was at its highest post Fed announcement.  It has been a strange month – the S&P 500 was up 11 of 12 days in a row up, through that Wednesday and barring a big reversal later today will be down 7 of 8 sessions. Technically we have a bearish MACD crossover in the S&P 500 here.

Bigger picture, the S&P 500 has moved a lot since early July but with an open in the 1670s will have gone almost nowhere in the past 3 months

The NASDAQ has performed much better of late (as has the Russell 2000) so certainly an interesting divergence in the short term charts.

All in all, we’ve seen this game before – there will be a lot of herky jerky movements to this or that news break or politician comment.  Then at some day in the future the politicians will have kicked the can (and solved nothing) but the market will skyrocket as that uncertainty is now off the table.  Rinse ,wash, repeat.
Aside from those hijinks we have ISM reports Tuesday and Thursday and the employment data Friday.  If there is no government one wonders if there will be a jobs report.  Hmm…

But all eyes will focus on D.C. this week unfortunately.

 

 

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings





 

Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

All About Trends

Mid-Day Update

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Zero Hedge

Living The Grecovery Dream: Two Jobless Parents, Two Kids, One Cat All Living In A Car

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Via KeepTalkingGreece blog,

Squeezed between steering wheel, handbrake, door and dashboard, Katerina reads in her history book, takes notes for school. Next to her, on the driver’s seat, cat Eddy stares right in the camera lens. It may look like a cute snapshot on a sunny day, if it wasn’t for a sad detail: a withering spring stuck in a roll of toilet paper.  A distinctive memory of a former normal life that turned into a grim reality for a family of four.

At night the seat where Katerina sits during the day turns into...



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Phil's Favorites

Chinese Growth Forecasts Crashed to a Paltry 3.9% and are Going Even Lower - One Chart

Chinese Growth Forecasts Crashed to a Paltry 3.9% and are Going Even Lower - One Chart

Courtesy of ZeroHedge

Up until a few years ago, conventional wisdom was that China would grow at nearly double digits as long as the eye could see. Then, however, something happened, and China's 9% growth became 8%, then 7% and even lower, as suddenly the Politburo made it quite clear China would not chase growth at any cost, especially when the cost is trillions in bad debt and other NPLs, as we have explained time and again. The collapse in Chinese growth expectations is shown best on the following formerly hockeysticking chart of IMF's revised Chinese growth projections which has completely collapsed in the past few years.

...



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Chart School

A New Look at the Total Return Roller Coaster

Courtesy of Doug Short.

Note from dshort: I received a recent email on historical total returns that prompted an update to my Roller Coaster Return series. I've updated the charts below based on monthly data through the September close.

Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles.

Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation?

The purchasing power of your investment has increased to $19,967 for an annualized real return of 13.91%.


...



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OpTrader

Swing trading portfolio - week of October 20th, 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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Insider Scoop

UPDATE: Bank Of America Reiterates On ITT Educational Services As Shares Surge But Risks Remain

Courtesy of Benzinga.

Related ESI Urban Outfitters Drops On Q4 Profit Warning; Mead Johnson Nutrition Shares Spike Higher ITT Educational Services Shares Soar On Preliminary Results

In a report published Monday, Bank of America analyst Sara Gubins reiterated an Underperform rating on ITT Educational Services, Inc. (NYSE: ESI), and raised the price target from $7.00 to $8.00.

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Market Shadows

Falling Energy Prices: Sober Look takes a Sober Look

Falling Energy Prices: Sober Look takes a Sober Look

What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices?  In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...



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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's this week's Stock World Weekly. Just sign in with your PSW user name and password. (Or take a free trial.)

#457319216 / gettyimages.com

 

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Sabrient

Sector Detector: Semiconductors get slammed as investors scramble to protect profits

Courtesy of Sabrient Systems and Gradient Analytics

Volatility continues to increase in the stock market and many of the leaders are breaking down. In particular, semiconductors took a rather big hit when one of the bellwethers warned of weakening global demand. Nevertheless, despite the significant headwinds, I do not think this spells the end of the bull market. But the technical damage to the charts is severe, particularly to the small caps, which are in full-blown correction mode. The large caps must show leadership and rally immediately -- or it will put at risk the critical and widely-anticipated year-end rally.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up ...



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Option Review

Release Of Fed Minutes, Icahn Tweet Boost Shares In Apple

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Digital Currencies

Bitcoin Has Been Getting Obliterated

Joe has found a place for Bitcoins, and if you hold a lot of them, you won't like it.

Bitcoin Has Been Getting Obliterated

Courtesy of 

Remember Bitcoin?

There's not much to say about it, except that it's doing TERRIBLY.

Here's a chart going back to earlier this summer. Charts don't get uglier than this.

Bitcoinwisdom

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Promotions

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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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