Guest View
User: Pass: | become a member
Archive for the ‘Chart School’ Category

Moving Averages: Month-End Preview

Courtesy of Doug Short.

Here is an advance preview of the monthly moving averages I track after the close of the last business day of the month. At this point, before the open on the last day of the month, three S&P 500 strategies are now signaling “invested” — unchanged from last month. Two of the five of the Ivy Portfolio ETFs, Vanguard FTSE All-World ex-US ETF (VEU) and PowerShares DB Commodity Index Tracking (DBC), are signal “cash” — also unchanged from last month.

If a position is less than 2% from a signal, it is highlighted in yellow.


Month-End Preview Note: My inclusion of the S&P 500 index updates is intended to illustrate a popular moving moving-average timing strategy. The index signals also give a general sense of how US equities are behaving. However, for followers of a moving average strategy, the general practice is to make buy/sell decisions on the signals for each specific investment, not based on a broad index. Even if you’re investing in a fund that tracks the S&P 500 (e.g., Vanguard’s VFINX or the SPY ETF) the moving average signals for the funds will occasionally differ from the underlying index because of dividend reinvestment, which is not factored into the index closes.

The Ivy Portfolio

The second of the three adjacent tables previews the 10-month SMA timing signals for the five asset classes highlighted in The Ivy Portfolio.

I’ve also included (third table) the 12-month SMA timing signals for the Ivy ETFs in response to the many requests I’ve received to include this slightly longer timeframe.


After the end-of-month market close, I’ll update the monthly moving average feature with charts to illustrate.

The bottom line, as I’ve pointed out earlier, is that these moving-average signals have a good track record for long-term gains while avoiding major losses. They’re not fool-proof, but they essentially dodged the 2007-2009 bear and have captured significant gains since the initial buy signals after the March 2009 low.





Accentuate the Positive: The Psychological Inflation of Quarterly GDP

Courtesy of Doug Short.

Pop Quiz! You just received your quarterly statement from the company that manages your 401(k). Which result would you prefer?

     A) Your portfolio is up 1.22% for the quarter.
     B) Your portfolio is up 4.97%* for the quarter.

Well, that’s certainly a no-brainer question. You’d definitely choose option B.

However, buried in the fine print of the document for option B is the footnote for that little asterisk:

     *Compounded Annual Percent Change

So this was a trick quiz question! The two answers are identical. To two decimal places, the quarter-over-quarter gain of 1.22% becomes 4.97% if we state it as the compounded annual percent change.

Of course, in the real world, no investment company would issue a 401(k), IRA or any other account statement reporting your quarterly returns at a compounded annual rate.

But that’s exactly the way the US Department of Commerce, via the Bureau of Economic Analysis, reports quarterly GDP. Here is the opening of the December 23, 2014 report for Third Quarter GDP:

Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 5.0 percent in the third quarter of 2014….

The 5.0 percent was actually 4.97% (answer B in our quiz question) rounded to one decimal. The quarter-over-quarter change was 1.22% (answer A).

Here’s a snapshot of real quarterly GDP over the past 25 years.

Here is a column chart showing the BEA’s preferred representation.

Here is the same data with the more intuitive percent change. Note that I’ve kept the same vertical axis as the chart above to illustrate the rather stunning difference between the two.

Here’s an even better way to illustrate the difference with a side-by-side comparison.

Click to View
Click for a larger image

Why does the BEA calculate GDP by compounding the quarterly percent change at annual rates? They do it “For ease of comparison”. They explain their rationale here. In a nutshell, it’s a technique that’s supposed to help you compare the latest quarterly growth with the previous annual growth.

My personal view is that quarterly real GDP should be stated as the percent change from…
continue reading





S&P 500 Snapshot: A Welcome Bounce

Courtesy of Doug Short.

A surprisingly good report on Weekly Jobless Claims didn’t halt an early dip in the S&P 500, which hit its -0.65% intraday low at mid-morning. But the trend then reversed, and the index trended higher at a fairly steady pace through the rest of the day. It closed with a 0.95% gain, a bit off its late afternoon 1.12% intraday high, but a welcome bounce after a nasty two-day selloff.

The potential market mover tomorrow will be the BEA’s Advance Estimate of Q4 GDP. See my analysis of the GDP forecasts of 65 economists surveyed by the Wall Street Journal. But also check out my commentary on the BEA’s policy of reporting real quarterly GDP as a Compounded Annual Percent Change.

The yield on the 10-year Note closed at 1.77%, up 4 bps from yesterday’s close.

Here is a 15-minute chart of the past five sessions.

Here is a daily chart of the SPY ETF, which gives a better sense of investor participation. Volume was above its 50-day moving average but lower than during yesterday’s selloff.

A Perspective on Drawdowns

Here’s a snapshot of selloffs since the 2009 trough. The S&P 500 is 3.32% off its record close on December 29th.

Click to View
Click for a larger image

For a longer-term perspective, here is a pair of charts based on daily closes starting with the all-time high prior to the Great Recession.

Click to View
Click for a larger image

Click to View
Click for a larger image





Household Income versus Family (Tax-Unit) Income

Courtesy of Doug Short.

My virtual acquaintance New Deal Democrat has posted an interesting article on real (inflation-adjusted incomes) based on annual IRS tax data through 2013. His discussion includes some comparisons between the Census Bureau’s median Household Income data and the Family Unit average income. A Family Unit is the term used for an IRS designated Tax Unit (e.g., a couple with dependents, or a head of household with dependents, or a single person).

At NDD’s suggestion, I’ve created a chart that overlays the annual data from 1967-2013, the timeframe for which we have annual data from both sources.

Click to View
Click for a larger image

The highest income series in the chart above is for the average (mean) household. It reflects the negative skew that high income households have on the median (e.g., the top 5%, 1%, 0.1%). The median (middle) household income closely matches the two IRS series. Interestingly enough, the median household income more closely matches Family Unit income including capital gains in the earlier years until the mid-1990s (aka the “roaring ’90s”), at which point the those cap gains formed twin peaks with the Tech and Financial bubbles. Since the turn of the century, the Median household income is a pretty close match to the IRS’s Family Unit.

We’re now into 2015, but it will be many months before we have official government data for 2014. The CB won’t publish the 2014 data until mid-September, and the IRS data won’t be available until months after that.

Fortunately, however, Sentier Research provides timely data for median household income on a monthly basis. See my latest analysis of their findings here. The good news is that the trend in 2014 has been upward.


NDD and I are indebted to Professor Emmanuel Saez of UC Berkeley for compiling the IRS data.





New Jobless Claims at 265K, Lowest Since April 2000

Courtesy of Doug Short.

Here is the opening statement from the Department of Labor:

In the week ending January 24, the advance figure for seasonally adjusted initial claims was 265,000, a decrease of 43,000 from the previous week’s revised level. This is the lowest level for initial claims since April 15, 2000 when it was 259,000. The previous week’s level was revised up by 1,000 from 307,000 to 308,000. The 4-week moving average was 298,500, a decrease of 8,250 from the previous week’s revised average. The previous week’s average was revised up by 250 from 306,500 to 306,750.

There were no special factors impacting this week’s initial claims. [See full report]

Today’s seasonally adjusted 265K came in well below the Investing.com forecast of 300K. The four-week moving average at 298,500 is now 19,500 above its 14-year interim low set eleven weeks ago.

Here is a close look at the data over the past few years (with a callout for the past year), which gives a clearer sense of the overall trend in relation to the last recession and the volatility in recent months.

Click to View
Click for a larger image

As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (the highlighted number) is a more useful number than the weekly data. Here is the complete data series.

Click to View
Click for a larger image

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).

Click to View
Click for a larger image

Because of the extreme volatility of the non-adjusted weekly data, a 52-week moving average gives a better sense of the secular trends. I’ve added a linear regression through the data. We can see that this metric continues to…
continue reading





Bearish Engulfing Patterns

Courtesy of Declan.

Today’s end-of-day losses were disguised by the relatively light declines at the close. Markets opened strong, but were unable to maintain premarket strength. The consolidations in place since the ‘Santa Rally’ are holding on, but markets can ill afford additional losses from here.

The S&P finished on the 38.2% Fib retracement of the ‘Santa Rally’. Aggressive longs may view this as a head-and-shoulder reversal; if this pr-oves to be the case then markets have to rally from the cash open. The S&P is a case in point.


The Nasdaq experienced a very wide day; opening above its 20-day and 50-day MA, but finishing well below these moving averages, and on channel resistance-turned-support. Volume climbed to register distribution.

The Russell 2000 experienced perhaps the most challenging loss.  In real terms, it doesn’t change the broader handle, and the individual action for the day is relatively minor, but it did succumb relatively easily to the decline. One to watch.

Keep an eye on these for Thursday. Indices will need a bright start if Winter conolidations are to tke hold.

You’ve now read my opinion, next read Douglas’ and Jani’s.





Long term Demand and Supply lines matter

Courtesy of Read the Ticker.

long-term-demand-and-supply-lines-matterAfter periods of extended trend, eventually price hits a very long term trendline, and this is where the other side of the trade are most likely to react. Risk increases.

Newmont fell through the demand line only to show it was a false break, good defense by the bulls (so far). This action forces shorts to cover.

Click for popup. Clear your browser cache if image is not showing.
Nem

We can most likely expect similar action with US Dollar DXY index, a bust through and some volatility (code word for correction). The US dollar is in the zone where corporate America will be hurting, and therefore calling senators to  motivate a change.

Click for popup. Clear your browser cache if image is not showing.
Dollar



NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net

Investing Quote…

..”Nothing new ever occurs in the business of speculating or investing in securities and commodities.”..

Jesse Livernore Trading Rule


..”A market is the combined behavior of thousands of people responding to information, misinformation and whim”..

Kenneth Chang








Sharp Reversals on Economic News

Courtesy of Declan.

It has been a while since something other than Central Banks have moved the market. This time, it was the turn of old fashioned Durable Goods to upset the party. The loss was big, but it’s still noise within the bounds of the ‘Santa Rally’.  Consolidation breakouts remain in play, although volume climbed to register distribution.

The S&P crossed below its 50-day MA, but it’s a flatlined moving average. Technicals are mixed.


The Nasdaq repeated the action of the S&P. The MACD edged a break of declining resistance, although there was a bearish cross between -DI and +DI.

The Russell 2000 had a relatively quiet day. Selling action in the S&P and Nasdaq didn’t really impact on the Russell 2000. This is good news for bulls, even if today didn’t look it.  Technicals for this index are all net bullish.

Tomorrow is another day, but at worst the consolidations which had formed since Christmas are negated, but those December ‘Santa Rally’ support and resistance levels remain, and will continue to be in play until we have some real *heavy* selling/buying.

You’ve now read my opinion, next read Douglas’ and Jani’s.





RTT browsing latest..

Courtesy of Read the Ticker.

rtt-browsing-latestPlease review a collection of WWW browsing results.

Date Found: Tuesday, 13 January 2015, 01:43:37 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: Ouch! See the last point of demand between $60 and $70 In Dec at resistance, now strong selling, Large pattern forecast sees a price under $40

Date Found: Tuesday, 13 January 2015, 06:54:16 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: Coffe ETF bounces off support, minor spring, if get some strength to $40, a trade may be on!

Date Found: Friday, 16 January 2015, 02:28:29 AM

Click for popup. Clear your browser cache if image is not showing.
Comment: XLU is not going down with SPY, defensive stocks are a relative strength winner.Yeah this is healthy! Yeah right!

Date Found: Friday, 16 January 2015, 02:45:31 AM

Click for popup. Clear your browser cache if image is not showing.
Comment: Dave Kranzler a sharp analyst worth a listen video:http://youtu.be/2UFmnDeynn8:

Date Found: Friday, 16 January 2015, 02:51:55 AM

Click for popup. Clear your browser cache if image is not showing.
Comment: More on the Swiss Franc unpegging. Truth they fear massive pringing by ECB

Date Found: Friday, 16 January 2015, 01:03:56 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: Apple forming a continuation stepping stone, all the better if suppor holds at $105

Date Found: Friday, 16 January 2015, 01:06:40 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: Yhoo still holding above $45, a sharp move up back to $50 would be spring action and very bullish, watch! Stepping stone still healthy.

Date Found: Friday, 16 January 2015, 01:10:28 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: JNJ mid range between $100 and $110, stay away from it, has best to wait till price hits support or resistance, mid range price is vulnerable to a push either way.

Date Found: Friday, 16 January 2015, 01:30:11 PM…
continue reading





Forecasting Q4 GDP: A Look at the WSJ Economists’ Collective Crystal Ball

Courtesy of Doug Short.

The big economic number this week will be the Q4 Advance Estimate for GDP on Friday at 8:30 AM EST. For some perspective on quarterly GDP so far this year, Q1 was negative at -2.1%, followed by a strong rebound to 4.6% in Q2 and a drift higher in Q3 to 5.0%. The standard explanation for the Q1 contraction is the economic impact of an unseasonably cold winter.

What do economists see in their collective crystal ball for Q4 of 2014? Let’s take a look at the GDP forecasts from the latest Wall Street Journal survey of economists conducted earlier this month.

Here’s a snapshot of the full array of WSJ opinions about Q4 GDP. I’ve highlighted the values for the median (middle), mean (average) and mode (most frequent). In the latest forecast, the median and mean were an identical to one decimal place at 3.0%. The mode (seven of 65 forecasts) was a tad higher at 3.2%, and the second most frequent value was a higher 3.4%.

As the visualization above illustrates, despite the matchup of the median and mean, the latest WSJ survey had it outliers, ranging from a grimly pessimistic 1.4% to a trio at 4.0% and an even more optimistic forecast of 4.2%.

Investing.com aligns with the median & mean WSJ economists with its 3.0% forecast. The Briefing.com consensus goes with the WSJ mode at 3.2%, but its own estimate is for a higher 3.4%.

GDP in 2015

Friday’s release of the Advance Estimate for Q4 GDP is, of course, a rear-view mirror look at the economy. The WSJ survey also asks the participants to forecast GDP for the four quarters of 2015. Here is a table documenting the median, mean and extremes for those forecasts.

Interestingly enough (or should I say “boringly enough”), the median to one decimal place is unchanged at 3.0% for the next four quarters, and the mean oscillates by a fractional 0.1%.

GDP: A Long-Term Historical Context

For a broad historical context for the latest forecasts, here a snapshot of GDP since Uncle Sam began tracking the data quarterly in 1947. The Q3 WSJ median and mean forecasts are above the 1.6% 10-year moving average and just a tad below the 3.3% Quarterly GDP average since its inception in 1947.


continue reading





 
 
 

Zero Hedge

The Future of Medicine? Forget Private Doctor Appointments, Group Medical Visits are Coming

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

According to the American Academy of Family Physicians, around 10 percent of family doctors already offer shared medical appointments, sessions that bring together a dozen or more patients with similar medical conditions to meet with a doctor for 90 minutes. With pressure from the government and insurers to bring down the cost of care while treating the increasing number of people with health insurance, patients can expect group ...



more from Tyler

Chart School

Moving Averages: Month-End Preview

Courtesy of Doug Short.

Here is an advance preview of the monthly moving averages I track after the close of the last business day of the month. At this point, before the open on the last day of the month, three S&P 500 strategies are now signaling "invested" -- unchanged from last month. Two of the five of the Ivy Portfolio ETFs, Vanguard FTSE All-World ex-US ETF (VEU) and PowerShares DB Commodity Index Tracking (DBC), are signal "cash" -- also unchanged from last month.

If a position is less than 2% from a signal, it is highlighted in yellow.


Note: My inclusion of the S&P 500 index updates is intended to illustrate a popular moving moving-average timing strategy. The index signals also give...



more from Chart School

Phil's Favorites

Greece Will Not Accept Bailout Extension or Deal With "Rottenly Constructed" Troika; Mish's Game Theory Math

Courtesy of Mish.

Greece Will No Longer Deal with ‘Troika’

It now strongly appears as if Greece, Germany, and the nannycrats in Brussels are all on one hell of a collision course. Both sides have dug in, and the war of words has escalated in all corners.

For example, please consider Greece Will No Longer Deal with ‘Troika’, Yanis Varoufakis Says
Greece will no longer co-operate with the “troika” of international lenders that has overseen its four-year bailout programme, the country’s finance minister said.

Yanis Varoufakis also said Greece would not accept an extension of its EU bailout, which expires at the end of February, and without which Greek banks could be shut off from European Centr...



more from Ilene

All About Trends

Mid-Day Update

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...

more from David

Sabrient

In the News: An ETF Rush to Bet on Insiders

Courtesy of Sabrient Systems and Gradient Analytics

(ETFTrends.com by Todd Shriber): "Betting on insider buying is again proving to be an efficacious strategy as the Direxion All Cap Insider Sentiment Shares (NYSEArca: KNOW) has been noticeably less bad than the S&P 500 to start 2015. Add to that, investors are warming to the merits of KNOW's insider sentiment strategy." [Editor's note: KNOW tracks the Sabrient Multi-cap Insider/Analyst Quant-Weighted Index (SBRQAM)]. Read article

...

more from Sabrient

Market Shadows

What Would You Do?

What Would You Do?

Courtesy of Paul Price

Suppose you had the technical ability and raw materials to print up counterfeit dollars, euros or yen that were identical to the real things. Assume you could spend them as fast as you could create them with no fear of any repercussions.

Would you prudently print up only as much fresh currency as you needed for your current lifestyle? Would you create just a bit more than that to help relatives or those in need?

It is most likely you’d have your printing press running 24 hours a day, seven days a week. Becoming the richest person in the world would confer great power upon you.

You could rationalize this action because you plan to use the money for good purposes. Imagine the warm feeling you’d get by giving every person in America one million do...



more from Paul

OpTrader

Swing trading portfolio - week of January 26th, 2015

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 ...



more from OpTrader

Digital Currencies

Jitters After Bitcoin Exchange Suspends Services

So as I was saying yesterday (Bitcoin: The Biggest Clown Show In History?), Bitcoin has several obstacles on the path to potential success as an alternative currency. But I forgot to mention hacking and theft at Bitcoin exchanges and other technical problems. This is related to the lack of government backing and the fact that the value of Bitcoins is based entirely on confidence.  

Jitters After Bitcoin Exchange Suspends Services 

By 



more from Bitcoin

Pharmboy

2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



more from Pharmboy

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.

Click here and sign in with your user name and password. 

 

...

more from SWW

Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



more from Caitlin

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!




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...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>