Okay, we’re never moving anywhere again? Well, never say never must be operative I suppose. So the movers are gone and the world’s most traveled and theoretically expensive household goods are here. So, sitting amid a sea of boxes I’ll be cutting this commentary short today. I mean, there’s some work to do. Let’s just look at the highlights from a few selective markets.
Last week we were honored with wonderful emails telling us how bright we were in getting out of many positions. This week, not a peep! That goes to ETF Digest Sacred Cow VIII (again): “At any given time, the market can make anyone look like an idiot—always.” And that’s the way of it this week.
Bulls would have nothing to do with selling and volume was extraordinarily light. Perhaps this was due to Monday’s non-holiday holiday. (Are there more bureaucrats and bankers trading nowadays? There seems to be more of the former in numbers anyway.) Breadth was positive.
We’ve been due for this type of action for some time as conditions had gotten much overbought. Suddenly, “worse than expected” news is really just bad news not spun in another manner. We lose one of the Four Horsemen (RIMM) due to poorly received earnings; and Durable Goods and New Home Sales were in the bad news camp so the selling continued.
Volume remains at a higher level with selling than previously with buying which isn’t good. Breadth today continues negative and that should embolden dip buyers and tape painters with the quarter and month end just a few trading days away.
Mirrors on the ceiling, pink champagne on ice And she said, ‘We are all just prisoners here of our own device’ And in the master’s chambers they gathered for the feast They stab it with their steely knives but they just can’t kill the beast.
Hotel California Part 2 The Eagles
The targeted beast is the bull obviously but today he got a little nick for show. I wondered yesterday after Oracle reported negative results how that might impact performance today given other economic data being released. You can only conclude that “better than expected” Jobless Claims, Housing Starts and the Philly Fed Survey allowed investors to brush aside negative news from not only ORCL, but FDX and EK to name a few.
We’re starting the quad-witching this afternoon and this finishes up tomorrow. It should boost volume and it has in the past few days anyway. Tomorrow volume should get an even bigger jolt higher.
Today’s volume was greater than yesterday’s but not by much and breadth was negative but not overwhelmingly so.
What did I miss from yesterday? Down a hundred, up a hundred—that’s about it.
Were there really any surprises from the Fed today? Okay, they’re going to stop buying bonds and I could say “me too!” But, that said, this was an inevitable event. So, bears would argue we’re just trolling along the bottom economically and while earnings and economic data have been uniformly “better than expected” much lowered estimates. Looking ahead things aren’t great since there really aren’t any new jobs, aside from government, being created.
Bulls need some new stimulus themselves to take the rally to another level. I don’t see this yet.
Volume was good today but as you can see by the 5 minute chart in SPY routinely posted below most of it came a little before and then after the Fed announcement. The action was two-way in nature although breadth was positive but not a 90/10 day by any means.
Today’s disappointing employment report from ADP was the dose of cold water an overbought market needed to sell-off. But then the cavalry came to the rescue at just the right moment with GS’s call upgrading economic growth estimates. The effect was a ragged rally reducing more selling. There’s a concerted effort in officialdom and with their Wall Street brethren to lift markets and they’ll use whatever new rules and tools are needed to get things going. Making you feel good makes them money and reelects incumbents. With regard to the former is the eyebrow raising Bloomberg story how GS is making $100M per day trading. Yep, they’re trading free money from you and me with their High Frequency Trading systems (HAL 9000s).
If you don’t think companies aren’t front-running their recommendations you’re living in dreamland. But we’re just pawns in the game. You either play with them or leave the casino.
Let’s see, should you subvert your emotions and logic by staying systematic and disciplined? Well, that’s not me standing on the tracks. I’m just sayin’
So, the "green shoots" and "better than expected" theme is winning out. That’s it, so stay off the tracks.
Now volume remains light and others, including this write-up from TheStreet.com has a different take on volume advising not to worry about it. I remain open to other views but for now this light volume is downright scary. No question about it today breadth was positive.
“Better than expected” once again. Like I said yesterday with bears apparently washed-out, volume light, HAL 9000s dominant and short-term debt instruments producing negative real yields, it doesn’t take much (even fantasy numbers will do) in the way of economic data or earnings reports to put bulls in stampede mode. This is just the way of it. Today it was housing data that was only marginally better than expected. But, hey, anything like this is the shot to put the herd on the run.
We’re all seeing the ongoing “better than expected” earnings news. One headline screamed, “Stocks rise on solid earnings reports.” Solid? CAT’s earnings were 66% lower than previously which qualified as a “beat”, but solid? That’s pretty generous don’t you think? It really doesn’t matter since bulls have seized the tape and bears appear washed-out…
There are many smart people who naysay this rally. They may be proven correct at some point but for now the action belongs to the bulls…
You can’t argue with new highs. The only thing missing in this rally is you since volume is incredibly light. Therefore, the only conclusion is computers are trading against one another. Friday’s volume was as low as a typical half day of trading during the Christmas holiday break. But this is the way things are now and we must accept it and deal with it. Stocks rose today on continued momentum from the usual “better than expected” theme and CIT being taken care of by its own creditors supposedly. It does make one wonder at the arbitrary and random nature of bailouts giving rise to conflict of interest accusations….
The volume is light but those still involved have things nicely under control. The HAL 9000s aren’t as idle as individual investors in my opinion. For an inside look at how these machines run markets please review these links that support Da Boyz in their enterprise here, here and perhaps here as well. These are eye-openers for sure…
Mega Bear Noriel Roubini tosses in the towel saying the recession will end this year according to the Perma Bulls at CNBC. Not so fast says Roubini:
“It has been widely reported today that I have stated that the recession will be over “this year” and that I have “improved” my economic outlook. Despite those reports – however – my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.”
…If you’ve read this blog and others (particularly Tyler Durden’s, Zero Hedge Blog) you’re aware of the embarrassing news that a Goldman Sachs employee stole their HAL 9000 high frequency trading program. Why should we care? Because the combination of these trading programs and government liquidity injections are how these companies report huge trading profits.
But what’s important is the effect of these trading systems on market behavior and action. This well-written in post by Joe Saluzzi also in Zero Hedge explains the situation. The most important aspect of it to me is the negative effect these programs have on basic trend-following systems no matter their individuality. Technically based systems need to be modified to deal with these new phenomena. One way is to join them day-trading and the other is to lengthen your views to allow for greater volatility period.
“We aren’t addicted to oil, but our cars are.”
– James Woolsey
“The greatest asset, even in this country, is not oil and gas. It’s integrity.”
– George Foreman
If energy powers the world, then whoever owns that energy must have power over the world. That’s certainly been the case for the last century or two. Ownership of our primary energy source, crude oil, is what made billionaires of John D. Rockefeller, H.L. Hunt, and assorted Middle Eastern kings, emirs, and sheikhs.
Oil in the ground is wealth only on paper – you may own that oil, but it earns you nothing unti...
Federal Reserve Chair Janet Yellen gave her bi-annual Humphrey-Hawkins testimony before congress this past week. Although the prepared remarks were much the same as expected with any monetary policy review. What really made “news” to anyone paying attention was the Q&A. Yes, may times Ms. Yellen seemed to give the usual rebuttals of “We would consider this if that …” and so forth.
Yet, in response to questions that took issue with the Fed. paying banks on excess reserves The Chair seemed not only defensive, but rather perplexed, as to why they were even questioni...
"It is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn't look like going up soon. Freight rates are lower. The external conditions are much worse."
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
.."There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks h...
In May of last year, the S&P hit a key level and stopped on a dime. We applied Fibonacci tools to the highs in 2007 and the lows in 2009, to the chart above. The 161% Fibonacci extension level came into play in the 2,150 zone last year and when hit at (1), the markets stopped on a dime.
If your tools or adviser has suggested to be long and strong since May of 2015, that advice has been costly.
Our take, “Free advice that is wrong, is expensive!!!”
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Throughout the past 30 days of wild volatility, here’s what I didn’t do.
Panic. Worry. Sell.
In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our mind and ignored it.
A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.
We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.
The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies--money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.
Last year, the S&P 500 large caps closed 2015 essentially flat on a total return basis, while the NASDAQ 100 showed a little better performance at +8.3% and the Russell 2000 small caps fell -5.9%. Overall, stocks disappointed even in the face of modest expectations, especially the small caps as market leadership was mostly limited to a handful of large and mega-cap darlings.
Notably, the full year chart for the S&P 500 looks very much like 2011. It got off to a good start, drifted sideways for...
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
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 firstname.lastname@example.org 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.
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