Posts Tagged ‘slow economic recovery’

Same Old Same Old

Same Old Same Old

stocks and bondsCourtesy of Michael Panzner at Financial Armageddon

Markets often send out false signals, though some seem to do it more than others. Indeed, one lesson we’ve learned during the past few years is how wrong equity markets can be in comparison to their fixed-income brethren. The best example, of course, was when stocks surged to new highs in the fall of 2007 while almost every part of the credit universe was convulsing or collapsing. Given what Reuters has to say in the following report, "Junk Bond Spreads Signal Slow Economic Recovery," and the euporia percolating through share prices lately, it seems to me that we are seeing the same old same old.

The sanguine view of stock investors about the U.S. economy is not borne out by the credit market, which is signaling that a recovery from the longest downturn in decades may be painfully slow.

Risks of continued high defaults and massive refinancing needs of the most precarious corporate borrowers are keeping credit spreads high, especially on high-yield bonds, signaling the economy is not out of the woods.

"We are still priced for near recession at the moment and certainly notably below average growth," said Christopher Garman, founder of Garman Research in Orinda, California. High-yield bond spreads are reflecting about a 9 percent default rate, "which would put economic growth around zero to 1 percent," he said.

Spreads would typically have to reflect a default rate more within the normal range of about 5 percent to signal an economy growing more than about 1.5 percent, Garman said.

Economists polled by Reuters last week said the economy is recovering more strongly than previously expected but next year will be lackluster and risks of a double-dip downturn remain. After shrinking by 1 percent in the second quarter on an annualized basis, U.S. gross domestic product will grow 2.4 percent in the current quarter, according to a poll of about 70 economists.

High unemployment and consumer debt will hamstring the economy after an initial rebound, however, respondents said, and they still see a 25 percent chance of a double-dip recession.


Though not considered a traditional economic indicator, corporate bond spreads typically widen ahead of recessions and rising defaults as investors demand more yield for increased risk. Widening spreads also brake the economy as they

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

S&P 500 Futures Little Changed; Alcoa Drops After Earnings Miss (Bloomberg)

U.S. stock-index futures were little changed, after disappointing results from Alcoa Inc. offset optimism from a winning streak that’s put the Standard & Poor’s 500 Index on track for its best week of the year.

France's economy is finally showing some signs of life after years of stagnation (Business Insider)

It's a rare week when there are two positive economic data points coming out of France.


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Zero Hedge

Europe Reveals How Accounts Will Be Frozen During the Next Crisis

Courtesy of ZeroHedge. View original post here.

Submitted by Phoenix Capital Research.

In the last 24 months, Canada, Cyprus, New Zealand, the US, the UK, and now Germany have all implemented legislation that would allow them to first FREEZE and then SEIZE bank assets during the next crisis.

These moves will be sold as “for the public’s good,” when they happen. But the reality is that it’s all about stopping people from moving their capital into actual physical cash.

The whole template for this was set out in Cyprus in 2013. The quick timeline for what happened in Cyprus is as follows:

·      June 25, 2012: Cyprus formally requests a bailout from the EU.


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Kimble Charting Solutions

Free Premium Trail Offer & Free Webinar Viewing Available Now!

Courtesy of Chris Kimble.


Ryan Detrick and I produced a webinar this week, covering some new indicators we created, which we shared publicly for the first time.

We also shared two new Buy & Hold indicators we created, as well as two short-term trades, that look goo...

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Phil's Favorites

VIX Trips From 37 To 20 Have Been All-Or-Nothing For Stocks

Courtesy of Dana Lyons

Everyone knows that spikes in the S&P 500 Volatility Index, a.k.a. “VIX”, are associated with distress in the equity markets. The recent August decline in stocks was a perfect example of this as the VIX jumped from near 11 to over 50 in just a few weeks with the S&P 500 dropping by more than 10%. As stocks have recovered, the VIX has calmed down. As of Monday, the VIX closed below 20 for the first time since the middle of August. Such returns to “normalcy” in the VIX have typically been associated with a return to calmer times in the equity market. This recent round trip in the VIX got us wondering how reliable of an all-clear signal that has been for stocks historically. So…surprise, we checked it out.

We originally searched for all occasions in which the VIX first returned t...

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All About Trends

Mid-Day Update

Reminder: David 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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Whitney Tilson On LL, EXACT, And Martin Shkreli


Whitney Tilson On LL, EXACT, And Martin Shkreli

Courtesy of Value Walk

1) The shares of one of my largest short positions (~3%), Exact Sciences, crashed by more than 46% yesterday. Below is the article I published this morning on SeekingAlpha, explaining why I think it’s still a great short and thus shorted more yesterday. Here’s a summary:

  • The U.S. Preventative Services Task Force’s Colorectal Cancer Screening Draft Recommendation issued yesterday is devastating for Exact Sciences’ only product, Cologuard.
  • I think this is the beginning of the end for the company.
  • My price target for the stock a year from now is $3, so I shorted more yes...

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Chart School

Yesterday's Losses Reversed

Courtesy of Declan.

Bulls can be happy with today's progress. What weakness emerged today was reversed by the close, a change on yesterday's action where sellers dumped in the last few minutes of trading. Volume climbed to register an accumulation day.

The S&P finished at the 50-day MA, but beyond that there is plenty of room beyond that to run to the next level of resistance at 2,045. Technicals are net bullish.

The Nasdaq pushed off its 20-day MA and has another 50 points of maneuver before it gets to its 50-day MA.  Technicals are not yet net bullish, but they are close.


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Sector Detector: Searching for solid support in the face of global headwinds

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

Courtesy of Sabrient Systems and Gradient Analytics

Uncertainty about the health of the global economy led investors to flee U.S. equities during Q3, primarily driven by worries about China's growth prospects and the Federal Reserve’s decision to not raise rates. Sure, there are plenty of real and perceived headwinds, but on balance it seems that a recession here at home is not in the cards. And when you consider sentiment and the technical picture, it appears that a continuation of Friday’s bounce is in store. The question remains as to whether the seasonally strong Q4 will be able to propel the bulls through levels of resistance that have built up.

In this weekly update, I give my view o...

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Swing trading portfolio - week of October 5th, 2015

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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Baxter's Spinoff

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

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).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...

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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

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. 


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Watch the Phil Davis Special on Money Talk on BNN TV!

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...

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Help One Of Our Own PSW Members

"Hello PSW Members –

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 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.

Thank you for you time!

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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...

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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.

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