Posts Tagged ‘equities market’

IS THE “DEATH CROSS” A USEFUL INDICATOR?

IS THE “DEATH CROSS” A USEFUL INDICATOR?

Skull

Courtesy of The Pragmatic Capitalist 

At the March highs we were talking about death crosses.  No, not death crosses in the S&P, but the death cross in the one equity index that has proven to be even remotely leading over the course of the last 5 years – China. Today, everyone and their mother is chattering about the death cross in the S&P 500.  Is it of any use?  Jeff Kleintop at LPL says it’s nonsense:

“While much is made of the “death cross” of the S&P 500 50-day moving average falling below the 200-day, it has actually been a buying signal during these periods in the past. A good example of this took place in 2004 when during the soft spot in the recovery the 50-day crossed below the 200-day on August 17, 2004, just as the S&P 500 had completed the low point of its soft spot pullback and embarked upon a double-digit percent gain over the next three months.”

Pierre Lapointe, a macro strategist at Brockhouse Cooper agrees:

“The death cross IS nonsense. They’re no better than a flip of a coin to predict future returns. Check out these odds: Since 1970, only 10 of the 21 occurrences actually resulted in a market pullback a month after the death cross. Three months later, the market was down only 43% of the time. With odds like this, don’t short the market. Go to a casino — you’ll have more fun.”

The S&P 500 and the U.S. equity market has not proven to be a leading indicator of much in recent years.  Many even question its discounting capabilities at all.  The moral of this story?  Don’t wait until after a 15% decline in equities to jump on some technical analysis bandwagon.  Especially one from an index that has proven to be a leading indicator of just about nothing. 


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WHY THE GOOD JOBS REPORT COULD BE BAD NEWS FOR 2010

WHY THE GOOD JOBS REPORT COULD BE BAD NEWS FOR 2010

Courtesy of The Pragmatic Capitalist

Investors are likely to be increasingly concerned about rate increases over the coming months due to the much better than expected non-farm payrolls report.  Using the last few recessions as a reference point it is likely that equity gains could become increasingly difficult to come by as the Fed is pressured to remove their accommodative stance and other programs are wound down.

Teun Draaisma at Morgan Stanley recently noted this in his “tightening checklist”.   I would expect an upgrade across the checklist.  As we expected job creation is certain to begin by Q1 and Fed language should begin to change dramatically.

 WHY THE GOOD JOBS REPORT COULD BE BAD NEWS FOR 2010

Despite higher rates coming shortly, MS expects the rally to continue in the near-term.  I can’t disagree with this outlook.  Stocks are very buoyant heading into Christmas and it’s unlikely that this report will force the Fed’s hand immediately.  Like Draaisma, I believe the rally could move higher into year-end based on this optimism, but could then begin to sputter out as 2010 becomes a year of higher rates and transition into an economy without a government crutch.  MS analysts report:

We expect the sweet spot to last a bit longer. The cyclical bull market has some further to run, in our view.  We expect 20%+ earnings growth in 2010, equity valuations are still attractive versus rates, and sentiment is not ultra-bullish yet. We prefer equities to fixed income, and we expect a further 9% upside to reach our 1200 bull case target for MSCI Europe based on the mid-cycle multiple on mid-cycle earnings of 15x 12% ROE.

Lessons from past tightening cycles. The start of tightening phases tends to lead to some indigestion and a defensive rotation in equity markets, for two quarters or more. The 1994 and 2004 episodes led to a 16% and 8% fall in MSCI Europe over eight and five months. Sector performance was defensive, but Oil and Materials outperformed, too. In the aftermath of secular bear markets tightening phases have been more severe, with equities falling on average 25% over 13 months.

Draaisma notes that it’s silly trying to jump on the back end of a 70% rally in an attempt to time the final leg up.  As we wrote earlier this week:

But Draaisma


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Phil's Favorites

3 myths about the poor that Republicans are using to support slashing US safety net

 

3 myths about the poor that Republicans are using to support slashing US safety net

Courtesy of Michele GilmanUniversity of Baltimore

Sen. Chuck Grassley recently seemed to suggest some poor people spend all their money on “booze or women or movies.” AP Photo/Charlie Neibergall

Republicans continue to use long-debunked myths about the poor as they defend lower taxes for the rich and deep cuts to the social safety net to p...



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Zero Hedge

The Best Tax Incentive In The World

Courtesy of ZeroHedge. View original post here.

Authored by Simon Black via SovereignMan.com,

In a move almost destined to prove that laws and policies have absolutely zero meaning, the European Union released a list of “tax havens” last week… with a massive, giant, highly conspicuous omission.

The blacklist contains the names of the usual suspects– Panama, United Arab Em...



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Chart School

Rallies Slow As Semiconductor Selling Eases

Courtesy of Declan.

Markets experienced early gains but gave them back by the close of business. Given the mini-rally of the past five days, some of the indices are looking vulnerable to a new round of selling.

The S&P finished with a narrow inverted hammer on low volume but at new highs. A move back to the newly accelerated channel is looking favored.


The Nasdaq also finished with a narrow doji but wasn't able to make new highs.  It's already close to one channel but looks more likely to reach down to the slower channel.

...

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Insider Scoop

Earnings Scheduled For December 13, 2017

Courtesy of Benzinga.

Companies Reporting Before The Bell
  • Lightinthebox Holding Co Ltd-ADR (NYSE: LITB) is estimated to report quarterly earnings at $0.01 per share on revenue of $78.49 million.
Companies Reporting After The Bell
  • ABM Industries, Inc. (NYSE: ABM) is expected to post quarterly earnings at $0.49 per share on revenue of $1.49 billion.
  • ...


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Digital Currencies

Not A Bubble?

Courtesy of ZeroHedge. View original post here.

Meet The Crypto Company - up almost 20,000% since inception in September...

To a market cap of over $12.6 billion...

Grant's Interest Rate Observer drew the world's attention to this 'company' yesterday.....



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Biotech

DNA has gone digital - what could possibly go wrong?

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

 

DNA has gone digital – what could possibly go wrong?

Courtesy of Jenna E. GallegosColorado State University and Jean PeccoudColorado State University

Modern advances come with new liabilities. Sergey ...



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ValueWalk

Tax Bill May Spark Exodus From High-Tax States

Courtesy of FinancialSense.com via ValueWalk.com

The following is a summary of our recent podcast, “Exodus – The Major Wealth Migration,” which can be listened to on our site here on on iTunes here.

It’s looking increasingl...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!

...

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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan 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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