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.
Japan’s foreign investments and assets climbed to a record in 2014, keeping it in front of China and Germany as the world’s top creditor nation.
The reading stretches Japan’s lead as No.1 creditor country to 24 years, with 71 percent more in net assets than China, even after its Asian neighbor surpassed it to become the world’s second-largest economy in 2010.
“We’re not gonna make it, are we ? People, I mean.”
“It is in your nature to destroy yourselves.”
“Yeah. Major drag, huh ?”
From James Cameron’s ‘Terminator 2: Judgment Day’.
Here is a thought experiment. It is January 2000. The last wild Pyrenean ibex has been found dead, squashed by a tree. America Online has just announced an agreement to buy Time Warner for $162 billion – the largest corporate merger in history. It is all very exciting. Suddenly, a sourceless wind rises; papers blow across t...
With the three-day Memorial Day weekend in the immediate offing, the S&P 500 spent the day in semi-vacation mode. The intraday high-low trading range of 0.29% was the smallest of the year. The peak coincided, not surprisingly, with Janet Yellen's "Outlook for the Economy" speech at 1 PM. In her speech, Ms. Yellen discounted economic projections with a rather stunning self-abnegation, especially so in coming from a Fed Chair.
"Of course, the outlook for the economy, as always, is highly uncertain. I am describing the outlook that I see as most likely, but based on many years of making economic projections, I can assure you that any specific projection I write down will turn out to be wrong, perhaps markedly so." [bolding added b...
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Understanding the new normal of a business model is key to the success of any company. The managment of companies need to adapt to the changing demand, but first they must recognize what changes are taking place. Big Pharma's business model is changing rapidly, and much like the airline industry, there will be but a handful of pharma companies left at the end of this path.
Most Big Pharma companies have traditionally done everything from research and development (R&D) through to commercialisation themselves. Research was proprietary, and diseases were cherry picked on the back of academic research that was done using NIH grants. This was in the heyday of research, where multiple companies had drugs for the same target (Mevocor, Zocor, Crestor, Lipitor), and could reap the rewards on multiple scales. However, in the c...
Stocks closed last week on a strong note, with the S&P 500 notching a new high, despite lackluster economic data and growth. I have been suggesting in previous articles that stocks appeared to be coiling for a significant move but that the ingredients were not yet in place for either a major breakout or a corrective selloff. However, bulls appear to be losing patience awaiting their next definitive catalyst, and the higher-likelihood upside move may now be underway. Yet despite the bullish technical picture, this week’s fundamentals-based Outlook rankings look even more defensive.
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Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad, and almost everything in between, but we're finally about to get some solid data to help settle the debate.
On Monday, the Nasdaq (NDAQ) stock exchange said it would ...
Chris Kimble likes the idea of shorting the US dollar if it bounces higher. Phil's likes the dollar better long here. These views are not inconsistent, actually, the dollar could bounce and drop again. We'll be watching.
Phil writes: If the Fed begins to tighten OR if Greece defaults OR if China begins to fall apart OR if Japan begins to unwind, then the Dollar could move 10% higher. Without any of those things happening – you still have the Fed pursuing a relatively stronger currency policy than the rest of the G8. So, if anything, I think the pressure should be up, not down.
UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I'd prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 call...
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.
Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene
The replay is now available on BNN's website. For the three part series, click on the links below.
Part 1 is here (discussing the macro outlook for the markets)
Part 2 is here. (discussing our main trading strategies)
Part 3 is here. (reviewing our pick of th...
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 email@example.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.
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