Posts Tagged ‘indicators’

On Reflexivity & Animal Spirits: What Moves the Market from Here?

Kent Thune’s wonderful blog The Financial Philosopher is not just a financial site, it’s a "learning experience."  I highly recommend that you visit him and read some of his latest inspirational articles, such as Get Busy Livin’ or Get Busy Dyin’To Embrace Death is to Embrace Life, and Entrepreneurs: Use Your Delusion, Sell the Illusion. – Ilene

On Reflexivity & Animal Spirits: What Moves the Market from Here?

ITAR-TASS 02: IRKUTSK REGION, RUSSIA. NOVEMBER 30, 2008. Early twentieth century German pendulum clock with a statuette of Mnemosyne, Greek goddess of memory, on display at the Clock Museum, Angarsk, Irkutsk Region, Russia. (Photo ITAR-TASS / Nikolai Ryutin) Photo via Newscom

Courtesy of Kent Thune, at The Financial Philosopher

Are capital markets leading economic indicators or do they provide fuel for a growing economy? Or is it both? Isn’t the function of capital markets to raise capital for the financing of corporate and government operations through the sale of securities (stocks and bonds)?

If the stock market is rising, would this not then create the economic condition it is "predicting" as an economic indicator? In the absence of government stimulus, might financial markets save themselves? If so, how? Can financial markets rise spontaneously or do they require a fundamental boost or outside stimulation?

Capital markets have many functions and their participants have numerous objectives; however, we may simplify them all into two basic categorical functions: 1) Passive and 2) Active. Depending upon economic conditions and variables, capital markets can play one or both rolls. Consider recent comments by George Soros (Hat tip to Captain Jack):

…financial markets do not play a purely passive role; they can also affect the so-called fundamentals they are supposed to reflect. These two functions that financial markets perform work in opposite directions. In the passive or cognitive function, the fundamentals are supposed to determine market prices. In the active or manipulative function market, prices find ways of influencing the fundamentals. When both functions operate at the same time, they interfere with each other. The supposedly independent variable of one function is the dependent variable of the other, so that neither function has a truly independent variable. As a result, neither market prices nor the underlying reality is fully determined. Both suffer from an element of uncertainty that cannot be quantified. I call the interaction between the two functions reflexivity…

Mr. Soros’ idea of reflexivity asserts, as he says, "that financial markets do not necessarily tend toward equilibrium; they can…
continue reading


Tags: , , , , , , ,




S&P 500: On a knife’s edge

S&P 500: On a knife’s edge

Courtesy of Prieur du Plessis, Investment Postcards from Cape Town

Last Thursday was a so-called 90% down-day for American stock markets (and many other bourses also recorded downward dynamics). A 90% down-day is defined as a day when downside volume equals 90% or more of the total upside plus downside volume and points lost equal 90% or more of the total points gained plus points lost. The historical record show that 90% down-days do not usually occur as a single incident on the bottom day of an important decline, but typically on a number of occasions throughout a major decline. As far as the very short term is concerned, 90% down-days are often followed by two- to seven-day bounces.

The stock market is on a knife’s edge at the moment as seen in the chart below, showing the long-term trend of the S&P 500 Index (green line) together with a simple 12-month rate of change (ROC) indicator (red line). Although monthly indicators are of little help when it comes to market timing, they do come in handy for defining the primary trend. An ROC line below zero depicts bear trends as experienced in 1990, 1994, 2000 to 2003, and in 2007. And 2010? With the ROC delicately perched just above the zero line, the primary trend is still bullish, but barely so.

Source: StockChart.com.

Regarding seasonality, I have done a short analysis of the historical pattern of monthly returns for the S&P 500 Index from 1950 to August 2010. The results are summarized in the graph below.

Source: Plexus Asset Management (based on data from I-Net Bridge).

As shown, the six-month period from May to October has historically been weaker than the period from November to April as seen in the average monthly return of 1.05% for the “good six months” compared with 0.25%% for the “bad six months”. Importantly, when considering individual months, September (-0.18%) and October (-0.19%) have historically been the only two negative months of the year. (A word of warning, though: one should take cognizance of seasonality but understand that it is not a stand-alone indicator and it is anybody’s guess whether a specific year will conform to the historical pattern.)

Where does this leave us at this juncture? Considering an array of indicators, we are somewhat in no-man’s land regarding whether the bull or bear will…
continue reading


Tags: , , , , ,




Fibozachi Forecast: Week of April 26th

Trading ideas for early next week. Courtesy of Fibozachi.

FF

  

Short Trade Candidates

GME: Gamestop (Short-Term to Intermediate-Term) 

Current Price25.22

Candlestick PatternsNone

 

After rallying for eight consecutive weeks, Gamestop appears due for a pullback that allows price to digest gains and consolidate before re-testing a wide band of horizontal resistance that spans 26 – 28.  With price quickly approaching resistance at 26.05, the chances of registering a multi-week swing high appear well above-average.  Last week’s narrow range (near doji) plotted alongside the highest weekly volume tally since the first week of January.  This type of high-volume ‘churn’ is a flashing yellow light, warning of possible inflection ahead.

 

EntryImmediate (with daily confirmation) or with a move below 24.77

Target (Short-Term)22.75

Target (Long-Term)21.11

Stop-Loss26.06 or higher

Potential Risk:  $1.29

Potential Reward (Short-Term)$2.02

Potential Reward (Long-Term)$3.66

Reward: Risk Ratio1.6  &  2.8

 

GME

 


WAT: Waters Corporation (Short-Term to Long-Term)

Current Price70.03

Candlestick PatternsDoji

 

Last week’s high-volume doji marked an end to WAT’s eleven week non-stop rally from 56 – 72 and now is an ideal time to begin looking the other way.  WAT appears primed to pullback towards 63 over the next few weeks, where even a bull flag would target 64 – 65 before inflecting.  An extended move would carry price down towards the previous swing low area of 56 – 57 from the first week of February.

 

EntryImmediate (with daily confirmation) or with a move below 68.36

Target (Short-Term)63.00

Target (Long-Term)57.00

Stop-Loss71.62 or higher

Potential Risk$3.26

Potential Reward (Short-Term)$5.36

Potential Reward (Long-Term)$11.36

Reward: Risk Ratio1.6  &  3.5

 

WAT

 


 

LINTA: Liberty Media Holdings (Intermediate-Term to Long-Term)

Current Price16.38

Candlestick PatternsDoji (Perfect)

 

LINTA has now registered back-to-back dojis up at a previous swing high, which is a specific trading setup that we scan across markets for each and every day.  While last week finally provided a bit of venting for Liberty’s eleven week monster rally, price popped back up at week’s end to close just a single penny lower for the week; some weekly…
continue reading


Tags: , , , , ,




THE BIG MONEY IS BULLISH WHILE SMALL MONEY IS BEARISH

THE BIG MONEY IS BULLISH WHILE SMALL MONEY IS BEARISH

Courtesy of The Pragmatic Capitalist  

Bear and bull sculptures outside the Frankfurt stock exchange

As a futures trader I routinely check the commitment of traders report released by the CFTC.  For those who aren’t familiar with the report it is a breakdown provided by the CTFC of each Tuesday’s open interest for market positions in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.  It’s widely followed in trading circles and gives a glimpse into what the big money, commercial money and even the small money is doing with their positions.

What piqued my interest in this data were comments in Tuesday’s “Breakfast with Dave” by Gluskin Sheff’s David Rosenberg implying that the equity markets were overly bullish because the commitment of traders showed a net bullish position of 151,000 contracts.  Let’s put this in context, however.  (See here for the current allocation of large institutions – a much more useful indicator).

I have found over the years that the commitment of traders report tends to be a fairly weak short-term indicator.  In fact, the COT tends to be more useful in following the long-term trends of large institutions and where they are currently investing money.  Mr. Rosenberg’s implication that the current net bullish position should be seen as a contrarian sign is not necessarily true.  After all, big money moves prices and knowing where the big money is going is more often than not a good indicator of where to put your money as opposed to what to avoid.  But let’s go even further.

One of my favorite indicators is actually the reporting of small speculators in the CFTC’s report.  This shows us what the amateur and small-time futures traders are doing with their money.  I have found over the years that this is a fairly reliable contrarian indicator.  As you can see in the chart below these traders were net bullish in just 4 weeks over the last year.  The last time small traders were substantially net bullish was just before the market crumbled at the beginning of 2009.  But what is it telling us now? As of last week’s report it is showing the largest net short position since the week following the March 8th bottom.  In other words, small speculators were this…
continue reading


Tags: , , , , ,




 
 
 

ValueWalk

Georgia: Pope Visits Tbilisi

By EurasiaNet. Originally published at ValueWalk.

Georgia: Pope Visits Tbilisi by Monica Ellena, EurasiaNet

Pope Francis arrived in Georgia on September 30, aiming to extend his outreach campaign to the Christian Orthodox world. The pontiff’s ecumenical message, however, is not an easy sell in Tbilisi.

The central element of the 79-year-old pontiff’s visit was a meeting with the Georgian Orthodox Church’s leader, Patriarch Ilia II. The September 30 encounter with the 83-year-old Georgian patriarch was the latest in a recent string of meetings the pope has had with Orthodox leaders, starting with a first-ever sit-down with Russian Orthodox Church’s patriarch last February, followed by a get-together with the Eastern Orthodox Church’s ecume...



more from ValueWalk

Zero Hedge

Secret Swiss Military Bunkers Being Filled With Gold By Billionaires Seeking "Alternatives To Bank Deposits"

Courtesy of ZeroHedge. View original post here.

For decades, Switzerland had a reputation for bank secrecy that made it the most sought after tax haven for billionaires from around the globe.  But, after more than 80 years of secrecy, a series of bilateral agreements with countries around the world, including America’s Foreign Account Tax Compliance Act (FATCA), have forced the private-banking industry in Switzerland to embrace an entirely new era of transparency that requires a full exchange of tax-relevant information with more than a hundred countries.

Which, as ...



more from Tyler

Phil's Favorites

The Fed's Monetary Politburo Is Finally Catching Some Flack

Courtesy of David Stockman of Contra Corner

Now that’s more like it. Echoing Donald Trump’s Monday night bull’s-eye regarding the Fed’s thoroughly political essence, Rep. Scott Garrett put more wood to Janet Yellen during Wednesday’s hearing:

Rep. Scott Garrett, R-N.J., seized Trump’s mantle during Wednesday’s hearing, saying “the Fed has an unacceptable cozy relationship” with the Obama administration and Democrats.

“As the saying goes, perception is reality,” Garrett told Yellen. “Whether you like it or not, the public increasingly believes that the Fed’s independence is nothing more than a myth.”

Of course it’s a myth, and a dangerous one at tha...



more from Ilene

Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Major Dollar Shortage Exposed In Europe As Deutsche Bank Contagion Spreads (Zero Hedge)

While global markets remain calm(ish), distracted by OPEC headlines, US election 'entertainment', and Middle East proxy wars, the reality is, something very ugly is accelerating in Europe.

U.S. Index Futures Little Changed as Investors Assess Bank Woes (Bloomberg)

U.S. index futures were little changed as investors assessed the implications of deepening woes in the European banking industry.

...



more from Paul

Kimble Charting Solutions

Commodities attempting triple breakout, says Joe Friday

Courtesy of Chris Kimble.

Below looks at Commodities ETF DBC over the past decade. Since the highs in 2008, DBC has been a great asset to avoid. Is it time to start paying attention and potentially own this hard hit ETF? Check out the rare price situation below in DBC.

CLICK ON CHART TO ENLARGE

The CRB (Commodities Index) has been down 5-years in a row, this has never happened in the history of commoditi...



more from Kimble C.S.

Mapping The Market

The Industry That Was Crushed By The Obama Administration

By Jean-Luc

Good riddance – cleaned up a lot of frauds there:

The Industry That Was Crushed By The Obama Administration

In early 2009, the seven largest publicly traded college operators were worth a combined $51 billion. Today, they’ve been all but wiped out.

When Barack Obama took office, America’s seven largest publicly traded college operators were worth a combined $51 billion, with more than 815,000 students enrolled at campuses spread across the country. The schools were flooded with with people seeking shelter from the recession, returning to school to pick up new skills.

Almost eight years later, the industry has been decimated. The seven largest listed operators are worth just over $6 billion, and the most valuable co...



more from M.T.M.

Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results.



Date Found: Saturday, 26 March 2016, 02:36:15 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: ZH: Its a BULLARD market, the FED jaw boning is keeping the market up!



Date Found: Sunday, 27 March 2016, 02:31:30 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: RTT: World trade near 2008/09 lows. SP500 near all time highs. PLACE YOUR BETS! Roll up! Roll up!



Date Found: Tuesday, 29 March 2016, 02:42:11 PM

Click for popup. Clear your browser cach...



more from Chart School

OpTrader

Swing trading portfolio - week of September 26th, 2016

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

Members' Corner

Market Liquidity and Macroeconomic Bullshit

 

Market Liquidity and Macroeconomic Bullshit

Courtesy of The Nattering Naybob

STJL - "Apparently macroeconomics is all bullshit – ROFL! Paging Naybob now… Famous Economist Paul Romer Says Macroeconomics Is All Bullshit."

The Nattering One muses... Macroeconomics as practiced by academics and those in charge is pure voodoo. Better to chant over goat blood, bird feathers and scattered entrails...

As for reality, overnight CNH HIBOR (...



more from Our Members

Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.

...



more from Bitcoin

Biotech

Epizyme - A Waiting Game

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

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



more from Biotech

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...

more from David

Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



more from Promotions



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 >>