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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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In a Quaint Move, the ECB Cuts Rates

by - May 2nd, 2013 8:02 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

You remember rate cuts right?  Aww, the good ole days of central banking.

This was as the market demanded expected.

The S&P fell to a key area yesterday, one that has been the main support (with one break) the entire rally.  Bulls will want to see this level re-established as useful.

 

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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Very Rough Day for Small Caps

by - May 1st, 2013 3:28 pm

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

The Russell 2000 is really taking it on the chin today with a bearish engulfing bar that has erased the last 5 sessions completely.  While we came in to the day overbought short term it is not an easy market when you can erase a week worth’s of gains in 1 session.  This has been the pattern of April – quick moves down followed by the V shapes up.    Unlike the DJIA, S&P and now NASDAQ we did not see a yearly high on the small cap index.

 

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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Fed Adds Word “Increase” to Statement

by - May 1st, 2013 2:06 pm

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

I mentioned two weeks ago a black swan for the fall is the Fed INCREASING QE – rather than the popular thought it will be tapering.  Today’s FOMC statement for the first time included the word “increase (or reduce)” asset purchases.  And so the groundwork begins…

“prepared to increase or reduce” level of asset purchase program,

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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ISM Manufacturing Slight Miss but Barely Expansionary at 50.7

by - May 1st, 2013 10:08 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

While this is a slight miss the bigger picture here is 50 is the dividing line between expansion and contraction.  Yesterday we had Chicago PMI that was contractionary – the worst reading since late 2009 in fact.  Today we have an expansionary U.S. ISM but just.    New orders are the only decent bright spot in a relative sense – employment stunk and prices are ‘deflating’ (good for the Fed I guess)  The market is up 7 out of 8 sessions so this could be a good excuse for some consolidation but the economic data has really slowed the past 6 weeks.

Full report here.

“The PMI™ registered 50.7 percent, a decrease of 0.6 percentage point from March’s reading of 51.3 percent, indicating expansion in manufacturing for the fifth consecutive month, but at the lowest rate of the year. The New Orders Index increased in April by 0.9 percentage point to 52.3 percent, and the Production Index increased by 1.3 percentage points to 53.5 percent. The Employment Index registered 50.2 percent, a decrease of 4 percentage points compared to March’s reading of 54.2 percent. The Prices Index registered 50 percent, decreasing 4.5 percentage points from March, indicating that overall raw materials prices remained unchanged from last month. Comments from the panel indicate a range of strong/steady growth, to flat/declining volumes, depending upon the particular industry.”

WHAT RESPONDENTS ARE SAYING …
  • “Business can be described as flat at best.” (Food, Beverage & Tobacco Products)
  • “Production is still strong; several new projects to support alternative energy.” (Primary Metals)
  • “Slight uptick in business, but overall continuing slowdown in defense due to budget/sequester.” (Computer & Electronic Products)
  • “We have concerns about safety of doing business in South Korea. Our largest customer and part owner is in South Korea.” (Electrical Equipment, Appliances & Components)
  • “Automotive demand remains firm.” (Fabricated Metal Products)
  • “Business continues at a steady pace.” (Machinery)
  • “General business conditions and industrial markets remain strong.” (Transportation Equipment)
  • “Seasonal pick-up underway in the office furniture industry.” (Furniture & Related Products)
  • “Market has slowed this month — weather in some parts of the country, also customers built inventory in anticipation of building increase, but the economy is still slow to pick up this spring.” (Wood Products)
  • “Overall, volume is steady or slightly declining. Q1 sales volume is lower

…
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There is a Rotation Afoot

by - May 1st, 2013 8:24 am

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

After breaking a key support trend line that connected the lows of November, December, February and April the S&P 500 has pulled off yet another “V shaped” upward move similar to so many others since 2009.  The index finished at new closing highs yesterday and is now up 7 of 8 sessions as we enter an economic and central bank heavy portion of the calendar.  The fact it has done this on the back of a slew of poor economic data the world over is even more head scratching impressive.  At this point nothing other than global central banker liquidity seems to matter.

We do have an encouraging thing happening under the surface.  One of the main “divergences” (that in the end did not matter since price ALWAYS has resolved upward in 2013) of the past few months has been the strength in defensive sectors and the general shunning of pro-cyclical sectors.   While one or two “growth” sectors has been in play (i.e. biotechnology of late) it’s generally been a market of utilities, consumer staples, and “broad healthcare exclusive of biotech” – the defensives.

This can be seen in the chart of 3 month performance of major sectors.

[please note the far left column is incorrectly labeled by stockcharts.com as "cyclicals" - this is actually the XLY ETF, which is consumer discretionary - i.e. retail.]

 

Now let us compare to the 1 week performance - completely opposite leadership

As you can see more of the “right” sectors are leading the market in this latest rebound off the April “correction”.  Now the fact it is happening off the back of a lot of bad data seems strange but it is what is happening whatever the logic.  It could be something as simple as a reversion to mean trade – i.e. as the market has exhausted itself to a degree  on the same old safety sectors, all this liquidity will go to the beaten down sectors “for a trade”.  Or as happens almost every turn of the year the past few years, it’s money anticipating a cyclical upturn.  Whatever the reason it is what is happening, and if it continues would have technicians far more comfortable with the broader price action.

Also I’d note completely out of the…
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Zero Hedge

CBO - US Economy Set to Soar On Obamacare?

May 18th, 2013 8:02 am

Courtesy of ZeroHedge. View original post here.

Submitted by Bruce Krasting.

 

The Congressional Budget Office put conservative economic thinkers on their ass this week. In this Report (pdf), the CBO concluded that the US budget deficit is about to collapse to insignificance. The improvement in the deficit outlook is so large that it has lead liberal thinkers to start calling for more stimulus spending. If it were not for the three scandals brewing for Obama (Benghazigate, IRSgate and APgate) I think there would be calls to spend some more government money.

The CBO assessment of the deficit profile relies on every trick in the book. The assumption is that all of the...



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Insider Scoop

Benzinga Market Primer: Tuesday, May 14

May 18th, 2013 12:00 am

Courtesy of Benzinga.

Futures Slightly Lower on Mixed European Data

U.S. equity futures traded slightly lower in early pre-market trade following mixed economic data out of the eurozone. The moves follow basically flat trading on Wall Street from Monday after futures rallied into the open following weaker than expected Chinese data.

Top News

In other news around the markets:

  • The German ZEW Economic Sentiment Index rose to 36.4 in May from 36.3 in April but missed expectations of a gain to 38.3. The current conditions index was also weak and over 77 percent of respondents said they do not expect another rate cut in the next six months.
  • Industrial Productio...


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Chart School

Getting Technical: Weekend Update

May 17th, 2013 10:35 pm

Courtesy of Doug Short.

Here's the latest weekend update from Serge Perreault, a Chartered Professional Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.

The S&P 500 continued its ascension, on 0.3% below-average volume and on mixed & near-resistance momentum.

Note also that:

  1. Since December 2012, RSI has been in overbought territory 85% of the time; in February 2011, a similar pattern had led to a correction of 17.6% within the next 6 months.
  2. Since March 2009, the index increased by 144% or 34%/year.

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Phil's Favorites

Don’t Drink Market’s Kool Aid

May 17th, 2013 3:59 pm

Courtesy of Vitaliy Katsenelson.

Here is a joke that I heard from Warren Buffet years back.

A very successful oilman dies. He faces Saint Peter, who says, “You’ve been a good man and normally I’d send you to heaven, but heaven is full. We only have a place in hell.” The oilman says, “Any chance I could talk to other oilmen who are in heaven? Maybe I can convince someone to switch places with me?” Saint Peter says, “It’s never happened before, but sure, I don’t see any harm in it.” The oilman goes to heaven, finds an oilmen convention and yells, “They found a huge oil discovery in hell!” Oilmen are stampeding out of heaven to hell, and our oilman is running with them. Saint Peter asks him “Why are you going to hell with them? I have a spot in heaven, you can stay.” The oilman answers – “Are you kidding, what if it’s true?”

The morale of the story: don̵...



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All About Trends

Mid-Day Update

May 17th, 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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Sabrient

Sector Detector: Investors stay focused on their Silver Linings Playbook

May 16th, 2013 2:08 am

Courtesy of Sabrient Systems and Gradient Analytics

It seems that every Tuesday in 2013 since January 8 has been positive on the Dow. And this past Tuesday was no exception. Now that sounds like a trend to put money on -- buy the SPDR Dow Jones Industrial Average ETF (DIA) at the close each Monday and close out the position late on Tuesday.

The Dow and S&P 500 both hit new all-time highs once again on Wednesday, while the Nasdaq hit its highest level since November 2000. The “risk on” allocation of new investment capital into cyclicals continues, although Wednesday saw leadership from defensive sectors Consumer Staples, Utilities, and Telecom, along with Financials. Nevertheless, ConvergEx reports that the average correlation of the ten S&P business sectors to the overall index averaged 82% last month. While that is below the 86% averag...



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Option Review

Busy Day For Bristol-Myers Options As Shares Sprint Higher

May 15th, 2013 8:46 pm

Options brief will resume May 20th, 2013.

Today’s tickers: BMY, TIBX & WM

BMY - Bristol-Myers Squibb Co. – Shares in drug maker, Bristol-Myers Squibb Co., are ripping higher today, up 6.5% at $44.94, the highest level in more than a decade, ahead of the release of the American Society of Clinical Oncology (ASCO) 2013 Annual Meeting abstracts tonight. The ASCO Annual Meeting begins on May 31st in Chicago. Options on BMY are far more active than usual today, with overall volume topping 64,000 contracts by 12:25 p.m. ET, versus average daily volume of around 11,400 c...



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Market Montage

SPX Reaching Historical Extremes on Weekly/Monthly Chart

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 a...



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OpTrader

Swing trading portfolio - week of May 13th, 2013

May 13th, 2013 1:11 am

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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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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Stock World Weekly

Stock World Weekly

May 12th, 2013 1:23 am

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

Here's the new Stock World Weekly newsletter. Please sign in with your user name and password for PSW, or sign up for a free trial. Thanks! 

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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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IRA Strategy/Income Trader

Virtual Portfolios Update - 11/18/2012

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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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