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"Deflationary" Ball Game?

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


Well October is almost here and it’s time for the baseball post season to start today. Speaking of baseball, is a “New Deflationary Ball Game” starting in a variety of assets?

This 5-pack reflects that a variety of long-term support and resistance line breaks are taking place.

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Click for a larger image

The U.S. Dollar (upper left) is pushing above a 9-year resistance line recently. At the same time the TR commodity index, Gold, & Silver are each breaking a support line that has been in place for over a decade. Crude is attempting to break a 5-year support line at this time.

Are we seeing the beginning of a whole new price game for these key global assets?

It is still early in this process. Should the US$ keep pushing higher, these other assets could find themselves a good percentage below current prices.

I have shared for the past two years that Silvers downside target that I am interested in comes into play around the $15 zone, which is fast approaching.

Kimble Charting Solutions
For information, send an email to services@kimblechartingsolutions.com.





Consumer Confidence Drops

Courtesy of Doug Short.

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through September 18. The headline number of 86.0 was a surprising decline over the revised August final reading of 93.4, an upward revision from 92.4. Today’s number was well below the Investing.com forecast of 92.5. The current level is a four-month-low.

Here is an excerpt from the Conference Board press release.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence retreated in September after four consecutive months of improvement. A less positive assessment of the current job market, most likely due to the recent softening in growth, was the sole reason for the decline in consumers’ assessment of present-day conditions. Looking ahead, consumers were less confident about the short-term outlook for the economy and labor market, and somewhat mixed regarding their future earnings potential. All told, consumers expect economic growth to ease in the months ahead.”

Consumers assessed current conditions less favorably in September compared to a month ago. Their view of business conditions was virtually unchanged: those saying conditions are “good” fell minutely, from 23.5 to 23.4 percent, while those claiming business conditions are “bad” held constant at 21.3 percent. Consumers’ appraisal of the job market declined more appreciably, with the proportion stating jobs are “plentiful” falling from 17.6 percent to 15.1 percent. Those claiming jobs are “hard to get” was barely changed, at 30.1 percent versus 30.0 percent in August.

Consumers’ optimism about the short-term outlook declined considerably in September. The percentage of consumers expecting business conditions to improve over the next six months fell from 20.8 percent to 18.6 percent, while those expecting business conditions to worsen rose from 9.9 percent to 12.0 percent. Consumers’ outlook for the labor market likewise took a downturn. Those anticipating more jobs in the months ahead fell from 17.8 percent to 15.2 percent, while those anticipating fewer jobs rose from 15.2 percent to 17.8 percent. The proportion of consumers expecting growth in their incomes rose in September to 16.8 percent, compared to 15.5 percent in August. However, the proportion

Putting the Latest Number in Context

Let’s take a step back and put Lynn Franco’s interpretation in a larger perspective. The…
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Exclusive Today! Richard Bernstein Live on Playing the Bond Market

Courtesy of Doug Short.

Members of APViewpoint can attend today’s upcoming live webinar/Q&A session with Richard Bernstein. Not a member of this free, secure, online advisor-only community from Advisor Perspectives? Sign up today!


Beyond Smart Beta: Global Opportunities in Equities and Bonds

Tuesday, September 30, 2014
4:15pm EST

Smart beta is a hot topic among advisors these days, but smarter beta management is far more important, according to Richard Bernstein Advisors CEO and former Merrill Lynch Chief Investment Strategist Rich Bernstein. In this webinar, he’ll present his views of the global equity and fixed income markets, and offer insights into the importance of beta management when constructing portfolios that seek to help investors meet longer term goals with a focus on risk management.


This event will offer plenty of time for Q&A. If you’re an APViewpoint member, sign up by logging in to APViewpoint and clicking on “APVIEWPOINT EVENTS” on the home page.

If you’re not an APViewpoint member, you can attend the event by joining APViewpoint today.

Note from dshort: Highly recommended!





Moving Averages: Month-End Preview

Courtesy of Doug Short.

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

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.





Weekly Gasoline Price Update: Unchanged

Courtesy of Doug Short.

It’s time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny, Regular and Premium were both unchanged. Regular and Premium are both up 16 cents from their interim lows during the second week of last November.

According to GasBuddy.com, only one state (Hawaii) has Regular above $4.00 per gallon, unchanged from last week, and no states are averaging above $3.90. South Carolina has the cheapest Regular at $3.08.

How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here’s a visual answer.

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Click for a larger image

The next chart is a weekly chart overlay of West Texas Intermediate Crude, Brent Crude and unleaded gasoline end-of-day spot prices (GASO). WTIC closed today at 94.32, up from 90.67 this time last week.

The volatility in crude oil and gasoline prices has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). For additional perspective on how energy prices are factored into the CPI, see What Inflation Means to You: Inside the Consumer Price Index.

Click to View
Click for a larger image

The chart below offers a comparison of the broader aggregate category of energy inflation since 2000, based on categories within Consumer Price Index (commentary here).

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Here are some additional commentaries related to gasoline prices:





Friday’s Bullish Picture Holds Despite Mild Selling

Courtesy of Declan.

Friday’s buying volume was disappointing, but indices held on in the face of today’s distribution. Today’s lows mark the new support level for stops, although moving averages are also playing as a broad brush of support.

The S&P finished with a doji on its 50-day MA.  Technicals remain mixed with a bearish slant in MACD, On-Balance-Volume, and ADX, but with momentum on the bullish side.  The index is tied below 1,987 resistance, but is positioned for a challenge of this level tomorrow.

The Nasdaq opened at the ‘bear trap’, but was able to rally to keep shorts on the wrong side of the trade (along with a close above 50-day MA).

The Russell 2000 trades near August swing low levels. It will soon find itself up against minor channel resistance established in September, although resistance at converged moving averages would seem a more natural stumbling block for an advance.

Meanwhile, the Dow played to a squeeze between 17,121 and the 50-day MA: intraday traders can have fun between these levels, but longer term players would be best to wait for a comprehensive break of one.

The one index to break the bearish action of the day was the Semiconductor Index. It closed with a bullish engulfing pattern (on a previous bullish day). With the 50-day MA nearby to offer support, which has managed to do twice so far in September, it could soon be mounting a challenge on the recent ‘bull trap’.

Bears were unable to capitalize on morning weakness, which suggests bulls are well placed to add some more points on the board.  ’Bull Traps’ are the real challenge, but it will take a few more days of buying before indices get there.

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Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





The Big Four Economic Indicators: Real Personal Income Less Transfer Payments

Courtesy of Doug Short.

Note from dshort: This commentary has been updated to include Real Personal Income Less Transfer Payments for August.


Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:

  • Industrial Production
  • Real Personal Income (excluding Transfer Payments)
  • Nonfarm Employment
  • Real Retail Sales
  • The Latest Indicator Data

    According to the Bureau of Economic Analysis, Personal Income (PI) in August rose 0.3%. Transfer Payments (TP), which includes Social Security, Medicare, Medicaid, government & private pensions and miscellaneous welfare programs) rose 0.7%. If we subtract the latter from the former (PI less TP) the monthly increase drops to 0.2%. If we adjust for inflation using the PCE Price Index, the increase rises to 0.3%, thanks mostly to lower gasoline prices, which contributed to a disinflationary month-over-month decline in the BEA’s PCE Price Index.

    The chart and table below illustrate the performance of the Big Four with an overlay of a simple average of the four since the end of the Great Recession. The data points show the cumulative percent change from a zero starting point for June 2009. We now have the three indicator updates for the 61th month following the recession. The Big Four Average is (gray line below).

    Current Assessment and Outlook

    The overall picture of the US economy had been one of slow recovery from the Great Recession with a clearly documented contraction during the winter, as reflected in Q1 GDP. Data for Q2 supported the consensus view that severe winter weather was responsible for the Q1 contraction — that it was not the beginnings of a business cycle decline. However, the average of these indicators in recent months suggests that, despite the Q2 rebound in GDP, the economy remains near stall speed.

    The next update of the Big Four be the month-end Real Personal Income less Transfer Payments.

    Background Analysis:
    continue reading





    Don’t Miss Jeffrey Gundlach & Richard Bernstein Live: Two APViewpoint Exclusives

    Courtesy of Doug Short.

    Members of APViewpoint can attend our two upcoming live webinar/Q&A sessions with Jeffrey Gundlach and Richard Bernstein. Not a member of this free, secure, online advisor-only community from Advisor Perspectives? Sign up today!


    Beyond Smart Beta: Global Opportunities in Equities and Bonds

    Tuesday, September 30, 2014
    4:15pm EST

    Smart beta is a hot topic among advisors these days, but smarter beta management is far more important, according to Richard Bernstein Advisors CEO and former Merrill Lynch Chief Investment Strategist Rich Bernstein. In this webinar, he’ll present his views of the global equity and fixed income markets, and offer insights into the importance of beta management when constructing portfolios that seek to help investors meet longer term goals with a focus on risk management.


    The Bond Market: How to Play it in 2014 and Beyond

    Tuesday, October 14, 2014
    4:15pm EST

    In 2014, 10-year Treasury bonds have combined strong returns with low volatility. In this webinar, DoubleLine CEO Jeffrey Gundlach will examine how inflationary pressures, ECB actions and potential changes in Fed policies will affect the bond market, and where opportunities may be found in undervalued sectors.


    Both of these events will offer plenty of time for Q&A. If you’re an APViewpoint member, sign up for these events by logging in to APViewpoint and clicking on “APVIEWPOINT EVENTS” on the home page.

    If you’re not an APViewpoint member, you can attend these events by joining APViewpoint today.

    Note from dshort: Highly recommended!





    A Bearish Message from Small- and Mid-Caps?

    Courtesy of Doug Short.

    Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


    The Russell 2000 & Mid-Cap 400 indexes happened to bottom together in the fall of 2008, ahead of the S&P 500, sending a bullish signal to the broad markets.

    Turning the page forward, they both started started reflecting weakness earlier this year after they both hit respective Fibonacci 161% extension levels. Both have been diverging against the S&P 500 for the past few months.

    Currently both are making an attempt to break support drawn off the lowest of lows, starting at the 2009 lows.

    Both look to have created rather large bearish rising wedges. The positive divergence was a bullish sign in late 2002. Watch to see if the bearish divergence over the past 6 months is a bearish signal for the broad markets.

    Click to View
    Click for a larger image

    Kimble Charting Solutions
    For information, send an email to services@kimblechartingsolutions.com.





    PCE Price Index: Headline and Core Little Changed, Remain Below Target

    Courtesy of Doug Short.

    The Personal Income and Outlays report for August was published this morning by the Bureau of Economic Analysis.

    The latest Headline PCE price index year-over-year (YoY) rate of 1.46%, down from the previous month’s 1.58%. The Core PCE index of 1.47% is fractionally lower the previous month’s 1.49% YoY.

    As I’ve routinely observed, the general disinflationary trend in core PCE (the blue line in the charts below) must be perplexing to the Fed. After years of ZIRP and waves of QE, this closely watched indicator consistently moved in the wrong direction. Since April of last year Core PCE had hovered in a narrow YoY range of 1.23% to 1.35%. The five most recent months have lifted the range slightly to 1.44% to 1.65%, but at this point we don’t yet see evidence of an upward trend.

    The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. I’ve highlighted the narrow 12-month range that hovered around its interim low.

    The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. I’ve also included an overlay of the Core PCE (less Food and Energy) price index, which is Fed’s preferred indicator for gauging inflation. I’ve highlighted 2 to 2.5 percent range. Two percent had generally been understood to be the Fed’s target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place.

    Click to View
    Click for a larger image

    I’ve calculated the index data to two decimal points to highlight the change more accurately. It may seem trivial to focus such detail on numbers that will be revised again next month (the three previous months are subject to revision and the annual revision reaches back three years). But core PCE is such a key measure of inflation for the Federal Reserve that precision seems warranted.

    For a long-term perspective, here are the same two metrics spanning five decades.

    Click to View
    Click for a larger image


    Note: I use the data from Table 9 in the full release and tables available here.





     

    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!

     
     

    Phil's Favorites

    Europe: The ONE Economic Comparison That Must Not Be Named... Was Just Named

    Europe: The ONE Economic Comparison That Must Not Be Named... Was Just Named

    The Continent is now teetering on the edge of a "Japan-style" deflation. Here's our take on it.

    By Elliott Wave International

    It's happened. The one economic comparison Europe has dreaded more than any other; the name that's akin to Lord Voldemort for investors has been uttered: "deflation."

    And it's not just "deflation." You can still spin that term in a positive light if you get creative enough. Say, for example,

    "Fa...



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    Zero Hedge

    CDC Confirms First Ebola Case Diagnosed In The US

    Courtesy of ZeroHedge. View original post here.

    Submitted by Tyler Durden.

    As experts (as opposed to President Obama) had warned, the probability of Ebola coming to the US is around 20% by year-end. So it shoould not be a total surprise that:

    • *CDC CONFIRMS FIRST EBOLA CASE DIAGNOSED IN THE UNITED STATES
    • *EBOLA PATIENT IS IN DALLAS HOSPITAL, NEWS 8 REPORTS

    CDC will hold a press conference at 530ET. This perhaps explains why CDC was "taking pre...



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    Chart School

    "Deflationary" Ball Game?

    Courtesy of Doug Short.

    Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

    Well October is almost here and it's time for the baseball post season to start today. Speaking of baseball, is a "New Deflationary Ball Game" starting in a variety of assets?

    This 5-pack reflects that a variety of long-term support and resistance line breaks are taking place.


    Click for a larger image

    The U.S. Dollar (upper left) is pushing above a 9-year resistance line recently. At the same time the TR commodity index, Gold,...



    more from Chart School

    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...

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    Option Review

    VIX Call Spreads Trade

    The CBOE Vix Index topped 17.0 and the highest level since early-August on Monday morning amid declines in U.S. equities to start the trading week. The volatility index is off its earlier highs to trade 5.0% higher on the session at 15.65 as of 11:30 am ET. Options volume on the VIX is hovering near 360,000 contracts, or just more than 50% of the average daily reading of around 660,000 contracts. Calls are far more active than put options, as evidenced by the call/put ratio up above 4.2 in morning trading, perhaps as some traders position for volatility to stick around.

    Large call spreads traded on the VIX today caught our attention as one big optio...



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    Sabrient

    Sector Detector: Stocks fight off predictable weakness, but expect more downside

    Courtesy of Sabrient Systems and Gradient Analytics

    Yes, the market showed significant weakness last week for the first time in quite a while. In fact, the Dow Jones Industrial Average moved triple digits each day. But it was all quite predictable, as I suggested in last week's article, and certainly nothing to worry about. Now the market appears to be poised for a modest technical rebound, and longer term, U.S. equities should be in good shape for a year-end rally. However, I still believe more downside is in order before any new highs are challenged. Moreover, market breadth is important for a sustained bull run, so the challenge for investors will be to put together broader bullish conviction, including the small caps.

    In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, re...



    more from Sabrient

    OpTrader

    Swing trading portfolio - week of September 29th, 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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    Market Shadows

    Ebola vs. Us

    Ebola vs. Us

    By Ilene 

    Ebola is spreading too quickly for Ebola-vaccine makers to conduct typical studies of safety and efficacy on experimental vaccines. Instead, vaccines will be tested for basic safety, but then deployed with protocols devised now in order to test for efficacy essentially on the field. Testing has to be expedited because the situation in West Africa gets worse every day while there are no approved vaccines or other treatments.

    The chart below is from a paper in the New England Journal of Medicine showing estimates of the virus's trajectory projecting out to November 1, 2014. If current trends continue...



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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.

    The latest issue of Stock World Weekly is now available. Please sign in with your PSW user name and password. Or simply take a free trial to try out our weekly newsletter. 

    ...

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    Promotions

    Last Chance! See The 'Google-Like' Trading Algorithm 'Live' TODAY

    Traders and Investors,

    RSVP NOW to attend a special presentation TODAY at Noon or 9:00 pm ET, where you’ll see a powerful trading algorithm that’s been tested and proven to return phenomenal results on a consistent basis. 

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    Digital Currencies

    Making Sense of Bitcoin

    Making Sense of Bitcoin

    By James Black at International Man

    Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.

    Opinions differ as to what constitutes "money."

    The English word "money" derives from the Latin word "moneta," which means to "mint." Historically, "money" was minted in the form of precious metals, most notably gold and silver. Minted metal was considered "money" because it possessed luster, was scarce, and had perceive...



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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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    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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