Posts Tagged ‘risk appetite’

Squeezing the lemon – risk appetite being sucked higher

Squeezing the lemon – risk appetite being sucked higher

Courtesy of Rohan at Data Diary

Risk appetite has been ticking higher this past week. The price action in isolation looks pretty positive. The question that is troubling the synapses is whether equity markets are poised to thrust higher once more – egged on by the monetary cattleprod of the US and a seeming stabilisation in China’s growth dynamics.

Risk appetite index 500x291 RISK APPETITE BEING SUCKED HIGHER

Certainly the penultimate rejection of the S&P500 off 1040 set the scene for a short squeeze of material proportions. Given the ramp up in volumes that accompanied the selloff from the April highs, it’d be reasonable to expect that there’d be a block of nervous ‘shorts’ at levels not too far from here. It’ll be interesting to see what the tea-leaves say about who sold/bought in the Flow of Funds data next week, but the 1130 level is looking like a pretty tasty target.

US equities price and volume 500x303 RISK APPETITE BEING SUCKED HIGHER

For the moment, it’s probably wise to respect the price action. It’s a reasonable probability that we run through 1130 while under the influence of that big can of nitrous oxide. With declining participation, any buyers ‘on the break’ will be that much easier to suck in. Witness the ever vanishing activity in CBOE equity options.

Equity option volumes 500x293 RISK APPETITE BEING SUCKED HIGHER

Still my read of the bigger picture has this run-up as a position driven head fake.  Momentum has turned lower since the April high that marked the exhaustion point for global stimulus mark I. It’s looking increasingly unlikely that successive rounds of government intervention will be as wildly successful as the first. While the leading indicators are tracking lower, so will the market.

The other factor tugging at the market’s tail is that the logic for risk spreads to widen remains compelling. The Fed may be the fat kid sitting on the longer end of the Treasuries market, but ultimately the other end of the risk plank can’t join in as the economic malaise works its way through earnings forecasts and default probabilities. This rally should meet its maker over the next couple of weeks – just a matter of whether it can convince him that all those calories can’t be good for you.


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IMF: RECOVERY IS SURPRISING TO THE UPSIDE

IMF: RECOVERY IS SURPRISING TO THE UPSIDE

Courtesy of The Pragmatic Capitalist

European stocks rallied on the day after bullish comments by IMF chief Strauss-Kahn.  At a speech in Japan, Dominque Strauss-Kahn noted that the global economy is recovering faster than expected, but remains largely dependent on government stimulus.  In his speech the IMF leader noted 4 key risks to the recovery:

  • Unemployment is still growing, posing the threat of social unrest and even conflict if not tackled.
  • The risk appetite of investors is on the rise. While investors are still not putting capital into advanced economies, large sums are flowing into emerging economies, including Russia, Brazil, and emerging Asia, creating the risk both of asset bubbles or of a damaging abrupt halt in inflows.
  • The financial system remains damaged. Japan’s experience with its own financial crisis since the late 1990s shows that recovery begins only when companies and banks have cleaned up their balance sheets.
  • The timing of unwinding of government stimulus measures is crucial. Although governments are now saddled with high debts from the anti-crisis measures, trying to remove the stimulus measures too quickly could result in a “double dip” recession, with advanced economies in particular falling back into negative growth.
Although he notes that the IMF does not expect a double dip recession, he says the potential is substantially higher if governments do not maintain their stimulus:
“Our forecast at the IMF is not a forecast of a double dip. But you never know. It may happen and especially if countries exit too early. If they exit too early and we have a new downturn in growth, then really I don’t know what we can do. A lot of our toolkit in terms of fiscal and monetary policy has been used. If we fall back into negative territory for growth it will be very, very difficult to solve the problem, So, our advice is to be very careful.”

The implications here are clear.  Expect governments to maintain their accommodative stances for some time to come.

You can see more from Strauss-Kahn here:

 


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Seeing Your Blind Spots

 

Seeing Your Blind Spots

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“The first principle is that you must not fool yourself — and you are the easiest person to fool.”

-Richard Feynman

Anybody who has ever tried to beat the market knows that understanding psychology is just as important as understanding a business. You can know a company’s return on equity to the third decimal and what management likes to do with excess capital, but if you don’t understand prospect theory or confirmation bias, you’re missing the most important elements of what it takes to be a successful investor...



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Zero Hedge

OPEC Pops The Question - Will Russia Say "I Do"?

Courtesy of ZeroHedge. View original post here.

Authored by Herman Wang via Platt's "The Barrel" blog,

OPEC is drafting an agreement to tie Russia into a so-called “super group” of oil producers.

Details on the proposal are vague and the Kremlin’s willingness to consider such a betrothal is uncertain, despite some positive vibes between Russia and OPEC kingpin Saudi Arabia at the moment.

In tryi...



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ValueWalk

Warren Buffett's Advice for Small Business 2018

By joniferdingcong. Originally published at ValueWalk.

The Master Investor gives top tips for budding entrepreneurs, startups, and small businesses.

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Chart School

Weekly Market Recap Feb 18, 2017

Courtesy of Blain.

BOO YAH! Now that’s more like it!  Your regularly scheduled non stop up market returned this past week with a “5 for 5” week (all 5 days up).  Three of those days were >1% so it was a return of the bulls.  That said to return to the “Trump market” we need to get back to almost no volatility and incremental up days of 0.3% or so 80% of the time.   We noted in last week’s recap the NYSE McClellan Oscillator was still VERY oversold so a “snapback rally” was still on the docket.  That was quite a snapback rally!  So the “easy part” of the bounce just happened – now we will see if we are going to return to a more volatile future or go right back to the sleepy market that tacks on a little 4 out of 5 ...



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Digital Currencies

As Bitcoin Nears $11,000, Here's A History Of Its Biggest Ups And Downs

Courtesy of ZeroHedge. View original post here.

The cryptocurrency rebound off Feb 5th's bloodbath lows (below $6,000 for Bitcoin) has been impressive, as a 'mysterious' massive buyer 'bought the dip' and momentum took care of the rest.

With Bitcoin now nearing $11,000 (almost a double off the lows), ...



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Insider Scoop

Walmart, Target Are Susquehanna's Top Picks Ahead Of Retail Earnings Season

Courtesy of Benzinga.

Related WMT Upcoming Earnings: Hurricane Effects Still Trickling Through For Home Depot? Did Walmart Meet It...

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Biotech

What is 'right to try,' and could it help?

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

 

What is 'right to try,' and could it help?

In this March 18, 2011 photo, Cassidy Hempel waved at hospital staff as she was being treated for a rare disorder. Her mother Chris, left, fought to gain permission for an experimental drug. AP Photo/Marcio Jose Sanchez

Morten Wendelbo, Texas A&M University and Timothy Callaghan, ...



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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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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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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!

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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

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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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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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