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Japan’s Nikkei Down 7%+, Chinese Flash PMI Contractionary, Thoughts on “Tapering”

by - May 23rd, 2013 7:15 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Some quick notes:

  • Futures down moderately after yesterday’s outside day.   The extreme overbought conditions on the weekly and monthly index charts are finally relenting some.   Even uber bulls would prefer solid entry points on stocks rather than chasing constantly.   The S&P 500 had not touched the 10 day moving average since May 2nd, until yesterday – a not common situation.   In theory the S&P 500 could go all the way down to 1597 – which was its primary breakout level – and still be in decent condition, but surely dip buyers trained in Pavlovian fashion wait much earlier.   In fact as I type they have already cut losses substantially.
  • The Nikkei has a lot of attention by the media as it was punished to the tune of 7%+ overnight.  The same media fail to mention it was up over 6% last week alone.  This drop knocks YTD gains down from 50% to 40%. So it seems like a major move but in the context of the mega rally it is relatively little.   It could drop another 10% next week and still be in a bullish position intermediate term.  It trades like Tesla nowadays. Probably more interesting is the sharp rise in Japanese bond rates.   In theory this is what the Japanese want since it would signal inflationary pressures – but controlling the pace of increase is not something easily done and it’s been a huge jump in a short amount of time. (essentially a double to the 1% range)
  • China’s flash PMI fell below 50.  Don’t know if it matters in this market as liquidity has trumped everything.
  • With the holiday, Tuesday is only 2 market days away – and we know markets are no longer allowed to go down on Tuesdays.
  • Ironically the “worse” any of this news is, the less likely there is any QE tapering, so it’s circular in logic.  The reason for the selling is QE tapering in theory but bad market reactions means QE tapering pushed off.
  • As to the word tapering people need to rethink the terminology.  It is more of plateauing.  To reach a stable level; level off.   The QE level is the new fed funds rate.  A move in any direction does not portend additional moves in

…
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Putting in a Bearish Outside Candle Today

by - May 22nd, 2013 3:24 pm

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

The indexes along with a host of stocks are putting in a bearish outside candle today (over yesterday’s highs and below yesterday’s lows).  Typically this is … well bearish.  But in the QE era when a technical signal screams bearish it has tended to be completely forgotten within a few days, causing those who follow it to get squeezed if you are short or left behind if you go to cash.  This is the difficulty of the current market – QE causes it not to behave as normal.  In the “old days” today would be a day to take major note of.

The RSI I noted at an extremely rare 75 this morning, is now down to 63 …

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/holdings/blog



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More History

by - May 22nd, 2013 12:13 pm

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Doing a lot of data mining as we watch this market go parabolic.

The S&P 500 is 13.4% over the 200 day moving average.  10%+ is considered overbought, and 12% is very rare.

The current Relative Strength Index (RSI) on the S&P 500 is 75.  Over 70 is generally overbought (below 30 oversold).  To put in perspective in 1999 the S&P touched 70ish a few times but never hit 75.   The NASDAQ in 1999 – early 2000 hit mid 70s a few days in July 99 and Mar 00.  Then in the parabolic move in November and December 1999 (NASDAQ gained over 1000 pts!) it sat between 70 and mid 80s for most of two months; of course that was a once in 40-50 year event but this is the level of history we are currently seeing.

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/holdings/blog



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History Being Made

by - May 22nd, 2013 9:03 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

One runs out of superlatives to describe the current market.

Every day or week a new record seems to be set.   A few of the current – yesterday was the 19th Tuesday in a row that the DJIA was up; the DJIA is now guaranteed to go without a 3 day losing streak for 100 days, breaking the 95 day record in 1927, the NASDAQ has had 17 days in a row of a new higher high, the best since Nov 1999, etc etc.  Meanwhile Japan is in the realm of 50% YTD gains as their currency is kicked in the teeth.

Definitely an era to keep in our memory banks as the action is abnormal.

Mr. Dudley (NY Fed) spoke yesterday and sounded quite dovish noting he did not know if the next step for the Fed would be to decrease OR increase bond purchases.  Bernanke speaks at 10 AM, FOMC minutes at 2 PM.  Outside of the central banks changing course we appear stuck in this zombie like state.

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/holdings/blog



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Status Quo Redux…

by - May 20th, 2013 8:49 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Again, not much to add to this market in terms of analysis – nothing matters other than central banks.  Last Wednesday/Thursday there were some 9 economic reports, 7 of which were disappointing or could be considered as such and all it got was one rare day down, and then new highs Friday.  Markets are up 10 of the past 12 sessions and 17 of 21.   Friday’s move to 1666 was an exact 1000 point rally from March 2009′s 666 bottom.  Since this most recent leg of the move has been medium fast rather than a huge spike ala 1999, things are not necessarily overbought on the daily chart but we are seeing extremely rare action on the monthly and weekly chart, due to a lack of any correction this year.   Aside from being above the monthly upper bollinger band the S&P 500 is some 12.5%+ over its 200 day moving average; over 10% is rare.  The DJIA has been up 18 Tuesdays in a row.  Etc etc.

It is a quiet week economically – a few housing reports and such but again last week the market ignored all the bad economic news and two mildly positive reports Friday were celebrated.  It’s that sort of market.  All that matters are central banks and on that end Bernanke visits Congress Wednesday at 10 AM – with the FOMC minutes of the last meeting that afternoon.  The normal clucking about tapering begins and that is about the only thing the market sees as a reason to selloff for nowadays.  Of course the FOMC just added language at the last meeting about “reducing OR increasing” bond purchases so the taper talk is ironic.  Expect hours of analysis about nothing ahead of Bernanke.

In terms of sector rotation last week was all about financials…

… but over the past month all the ‘right’ groups have taken charge, along with small caps regaining strength.  (to remind “cyclicals on he far left = consumer discretionary/retail).  Not much to poke holes at in this market about other than any lack of pullback and weekly/monthly overbought conditions and seemingly no reaction to any news for more than an hour before a resumption of the melt up.

Not much more else can be said about this market.

Disclosure Notice

…
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SPX Reaching Historical Extremes on Weekly/Monthly Chart

by - May 15th, 2013 1:09 pm

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

We are starting to see some very extreme readings on our monthly and weekly index charts since there has been no correction this year.  I posted below first the monthly chart of the S&P 500 going back 15 years showing bollinger bands – rarely do we get above the upper one, and never have we been this far above.  Then below that I posted (with 4 charts of 4 years each) the weekly data and you can see we are at a rare time we are above the weekly bollinger band as well.  This non stop rally is getting very historical.

Monthly – we’ve never been this far above the upper bollinger band in the S&P 500 and that includes the 1999 stock market bubble (which more more NASDAQ focused of course!)  Only thing similar is 2006-2007 where there were a few months we skimmed just over the upper bollinger but nothing to the current degree in May 2013.

Weekly – this level of extreme does happen every few years but rare.

Mid 2009 – Mid 2013

Mid 2005 – Mid 2009

Mid 2001 – Mid 2005

Mid 1997 – Mid 2001

 

For reference I did a 15 year monthly chart for Japan’s Nikkei which is in its own universe right now – so yes it can get more crazy I suppose.

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/holdings/blog



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Status Quo…Again

by - May 13th, 2013 8:39 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Very little change from last week.  Whatever the news it is good news for the market – the economy is not strong enough to stop QE, but not weak enough to worry anyone.  We are in this perpetual 1-2% type of GDP, with job growth just above population growth each month and little inflationary pressure in figures the Fed cares about.  It remains all about central banks – the twin powers of Japan and U.S. continue to plow ahead unabated (with the yen decimated even further last week).  Last week a bevy of central banks joined in easing – Australia, South Korea, Poland, among a few others; again just last week alone.  This morning Israel joined the party; it has essentially been a bank a day this past week.   There really is no other discussion than the global action by central banks; it dominates everything in these markets.   Late Friday, the Fed talking head at the WSJ, Hilsenrath, wrote a story about a “plan for a plan” (Fed Talks Exit blah blah) to slow down easing in the future but it has nothing to do with anything in the near future.  An exit of any proportion is so far in the future considering the QE lever will now be used rather than interest rates – i.e. rather than $85B a month it might be $65B or $50B but then in the next recession heck it could jump to $110B)

Not much “analysis” really means anything anymore – we have all sorts of records being bested or matched;  the longest streak to begin a year without a 5% correction in many years; the longest streak without 3 consecutive down days in the DJIA since 1958, margin debt back at records, etc etc.   Hedge fund manager Doug Kass gave his mea culpa last week, noted economist Nouriel Roubini threw in the towel saying go long for another 2 years before it all bursts and so on and so forth.  No one wants to fight the central bankers.  There has been very little in terms of earnings growth, it is all about PE multiple expansion – just in the first 5 months alone the forward looking P/E has risen by 1.5.  Markets that go up on P/E rather than earnings are impossible…
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Status Quo

by - May 6th, 2013 8:36 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Friday was pretty typical of the year – when a key technical level was needed to be broken it happened in premarket.  There were 3 economic data points, 2 (including ISM Non Manufacturing) missed, but all that mattered was the employment report.  More broadly speaking with 5-6 weeks of weakening economic data all the market really did was go sideways in a wide range.  And that ended Friday with the break out of the S&P 500; even the lagging Russell 2000 joined in.

At this point there just appears no reason to do analysis anymore – the central banker liquidity seems to have bid up nearly every market and whatever the news it only matters for hours or at most days until the next wave of buying comes in.   We saw a bunch of high volume distribution days over the past month; that used to matter – but no more.  Breaks of technical support – doesn’t matter.  At this point it has to be put on the table that a 1999 scenario awaits, although not so concentrated in one index (NASDAQ) as 1999 was.  Everything high end is soaring  - art, collectibles, farmland, equities, bonds.  So this worldwide QE seems to be inflating anything ex gold and some commodities which are still Chinese dependent; considering what is being done globally makes Greenspan’s 1998 (LTCM bailout) and 1999 (Y2K prevention) actions seem like a pittance it appears Tepper has had it right all along.   Already 2013 is the first year in 17 without a 5% correction in the first four months, and the DJIA has not had a 3 day losing streak this year – the longest streak to begin a year since 1958… so we now just sit and watch to see what other records break.  Economic data quiets down this week after a heavy dose last week, but again – it appears moot anyways.

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/holdings/blog



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New Highs on Good Employment Report

by - May 3rd, 2013 8:47 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

One of the genuinely decent economic reports of the past 6 weeks this morning as April’s data beat expectations AND prior months had significant revisions up.  The participation rate was flat (at very low rates) but the unemployment rate did tick down.  Average workweek ticking down 0.2 is the major wart today but most only read the headlines and don’t worry about details so just a wart for economists not the market.  Anyhow we have breached to new highs and a resistance top that has been here for two weeks on the S&P 500 in the premarket, and will be back to overbought in the near term assuming the premorning pop holds.  It is good to see this data point is diverging from a lot of the others which has weakened considerably – hopefully not something that gets revised down in future months.  ISM Services at 10.

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/holdings/blog



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180 Degree Reversal from Yesterday

by - May 2nd, 2013 11:54 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

The S&P 500 is bouncing well off that new/old support which had held since November (see previous post), with the exception of the one break middle of last month.  This is positive in the fact it reinforces it as a useful line to follow.   Markets were in decent form this morning but then a news report that some ECB members were wanting “bolder” measures created a new leg up – essentially it’s all about central bankers right now and until that changes it is status quo.  Yesterday’s bad economic data is already an afterthought.  Tomorrow we have employment and ISM Non manufacturing – the weekly claims figures have actually improved quite nicely so it is a bit of a surprise that the monthly data has not done better.

But corporate profits are based on lean corporations with productive work bases – not hiring a slew of workers…especially as revenue growth is a major struggle.  So what is good for Wall Street isn’t necessarily going to be seen in an employment report.

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/holdings/blog



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Zero Hedge

Japan Has Officially Gone Insane

May 23rd, 2013 10:05 pm

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

On one hand:

  • BOJ OFFERS TO BUY 300B YEN DEBT WITH MORE THAN 10YR MATURITY
  • BOJ OFFERS TO BUY 600B YEN IN 5-10YR GOVT DEBT

and on the other

  • ABE SAYS BOJ ISN’T DIRECTLY BUYING GOVERNMENT DEBT

We give up: absolute schizophrenia is now required by anyone who wishes to follow the daily lies these central bankers spew with impunity.

...

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Option Review

Weekly Options Constructive On Home Depot

May 23rd, 2013 9:38 pm

Today’s tickers: HD, IMAX & DOV

HD - Home Depot – Shares in the home improvement retailer are trading lower on Thursday, off the lowest levels of the session but still down 1.25% at $78.69 as of 11:50 a.m. ET, amid a down day for U.S. stocks. Trading traffic in newly issued weekly options on Home Depot suggests some traders are taking advantage of the dip today and positioning for shares in the name to resume hitting record highs next week. The stock yesterday rallied as much as 3.6% to touch an all-time high of $81.56 after the company reported better-than-expected first...



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Chart School

S&P 500 Snapshot: Rethinking the Risk QE Tapering

May 23rd, 2013 6:35 pm

Courtesy of Doug Short.

The pre-market anxieties were little changed by this morning's slightly better-than-expected unemployment claims. The eurozone indexes were all down 2% to 3% when the US markets opened. The S&P 500 promptly plunged to its -1.20 intraday low in the first nine minutes of trading. But the index trimmed its losses in an irregular trend to its afternoon intraday high at 2:50 PM, when the market was just a hundredth of a point from break even. This was in contrast to eurozone, where the STOXX 50 closed its session down 2.05%. The S&P 500 saw some selling in the final hour and finished the day at -0.29%, well off its morning low. Presumably the abated selling suggests generally reduced fears about the Fed tapering QE in the near term.

Here is a 15-minute loo...



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Phil's Favorites

Medallions & State-Mandated Scarcity

May 23rd, 2013 4:56 pm

Medallions & State-Mandated Scarcity

By Ilene 

Why is your NYC taxi fare is so expensive?

The price is high due to NYC's limited supply of Medallions.

The taxicabs of New York City, with their distinctive yellow paint, are a widely recognized icon of the city. Taxicabs are operated by private companies and licensed by the New York City Taxi and Limousine Commission (TLC). It also oversees over 40,000 other for-hire vehicles, including "black cars", commuter vans and ambulettes. "Medallion taxis," the familiar yellow cabs, are the only vehicles in the city permitted to pick up passengers in response to a street hail. Wikipedia....



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All About Trends

Mid-Day Update

May 23rd, 2013 1:40 pm

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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Market Montage

Japan's Nikkei Down 7%+, Chinese Flash PMI Contractionary, Thoughts on "Tapering"

May 23rd, 2013 7:15 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Some quick notes:

  • Futures down moderately after yesterday's outside day.   The extreme overbought conditions on the weekly and monthly index charts are finally relenting some.   Even uber bulls would prefer solid entry points on stocks rather than chasing constantly.   The S&P 500 had not touched the 10 day moving average since May 2nd, until yesterday – a not common situation.   In theory the S&P 500 could go all the way down to 1597 – which was its primary breakout level – and still be in decent condition, but surely dip buyers trai...


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Sabrient

Sector Detector: Fed tries to refill bulls’ fuel tank as cyclicals lead

May 23rd, 2013 1:52 am

Courtesy of Sabrient Systems and Gradient Analytics

The market went through some gyrations on Wednesday in reaction to Fed Chairman Bernanke’s testimony before the Joint Economic Committee. He first defended continued quant easing by warning, “A premature tightening of monetary policy could lead interest rates to rise temporarily but also would carry a substantial risk of slowing or ending the economic recovery.” Stocks dutifully rallied and all major indexes hit new intraday highs.

But alas, consensus is apparently not a given over the longer term. The minutes hinted that a tapering off could start sooner, “A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth.” So …...



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Insider Scoop

Long Setup in Herbalife Still Attractive; Stock Breaks Out as New Auditor Hired

May 23rd, 2013 12:00 am

Courtesy of Benzinga.

Few stocks have attracted more news over the last six months than nutritional supplement maker Herbalife (NYSE: HLF).

Even casual market observers are aware of the circumstances surrounding the the initial bout of extreme volatility in the name back in December 2012. The shares went into free-fall at the end of the year after hedge fund manager Bill Ackman revealed in typical sanctimonious fashion that his firm Pershing Square Capital Management was short around $1 billion worth of the stock.

Amid much pomp and circumstance, Ackman laid out his short thesis at a New York investment conference and...



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OpTrader

Swing trading portfolio - week of May 20th, 2013

May 19th, 2013 11:38 pm

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

Optrader 

...

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Stock World Weekly

Stock World Weekly

May 19th, 2013 1:09 am

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

Here's the latest Stock World Weekly! Just sign in with your PSW user name and password, or sign up to try it out. 

...

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IRA Strategy/Income Trader

The IRA portfolio

May 15th, 2013 7:35 pm

Reminder: Craigzooka is available to chat with Members regarding his virtual portfolio performance, comments are found below each post.

By Craigzooka

I am going to share with you how I manage my IRA and the power of reducing your cost basis.  My goal each year is a 20% return in my IRA.  Sometimes I make it and sometimes I don't, but I believe that all of my success is due to reducing my cost basis.  To illustrate the power of reducing your cost basis here are some trades we did last year.  These trades are taken from an educational portfolio we ran in a paper-trading account for a little more than a year.

  • We bought RIG on 5/15/2012 for $44.13, sold it on 1/18/2013 for $46 but booked a profit of $1,154.
  • We bought MT on 1/4/2012 for $19.24, sold it on 12/21/2012 for $15 but booked a profit of $454.
  • We bought CHK on 1/27/2012 for $21.93, sold it on 10/19/2012 for $18 b...


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ETF Selector

Stock Market Gets Big News After Friday’s Close

May 12th, 2013 7:23 am

Courtesy of John Nyaradi.

Stock market posts another record setting week, but the big news came after Friday’s close.

Courtesy of NASA

The stock market put on another record setting show with the Dow Jones Industrial Average (NYSEARCA:DIA) closing at a record high 15,118 and the S&P 500 (NYSEARCA:SPY) closing at 1633.70, another all time closing high.

For the week, the Dow Jones Industrial Average (NYSEARCA:DIA) gained 1%, the S&P 500 (NYSEARCA:SPY) climbed 1.2%, the Nasdaq Composite (NYSEARCA:...



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Pharmboy

Give Them an Inch, They Will Take a Mile

January 21st, 2013 8:09 pm

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

Well, well, well....it is good to know that there are others in the scientific arena who believed that YMI Bioscience's data (cough - Gilead) is a better drug than Incyte's Jakafi.  Now, the definitive data are still unknown, but there was enough evidence from a Phase 2 trial to take a small risk for a huge reward.  So, let's forget about Apple (AAPL), and do nothing but biotechs from now until Congress passes universal health care coverage for prescriptions....and drive the prices down so that research and development is no longer feasible to conduct in the US. Even Seattle Genetics (SGEN) has been on a tear as of late...



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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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Ilene is editor and affiliate program coordinator for PSW. She manages the Favorites backup site (blogroll, archives, more). Contact Ilene to learn about our affiliate and content sharing programs.

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