PSW Wrap-Up Show for the Week
by phil - February 12th, 2011 12:57 pm
We have a new episode of The Wrap-Up Show.
This time, it’s a quick review of the week’s activity:
Also, as we have a ton of Government Data that will be driving the markets next week, let’s review "How the US Government Manipulates Inflation Data" – just so we remember not to take it all too seriously.
 Email This Post
|
 Twitter
|
LinkedIn
|
 del.icio.us
|
Google+ |
A Turning Point in Early September? (DIA, SPY, ETFs)
by ilene - September 7th, 2010 2:56 pm
A Turning Point in Early September? (DIA, SPY, ETFs)
Courtesy of John Nyaradi, of Wall Street Sector Selector
[Take a free trial to Wall St. Sector Selector here.]
All summer long we’ve been locked in a wide trading range that extends roughly from a low of 1020 on the S&P 500 to a high of 1120. Now with the calendar turning to autumn, mid-term elections close at hand and having arrived at a significant technical juncture, it seems likely that new forces will serve to push the markets in a decisive manner in one direction or other.
Looking at My Screens
On a technical basis, the sharp three day rally last week pushed the S&P 500 back up to strong resistance levels around the 1100 mark with the widely watched 200 Day Moving Average just ahead at 1116.
Less widely watched is the Point and Figure Chart of the S&P 500 that is displayed below.
Chart courtesy of stockcharts.com
Starting at the top, the black arrow highlights the pattern is in a bearish configuration, expecting lower prices ahead with a price objective of 942.85 and so the point and figure chart is on a “sell” signal.
More significantly, it has also broken below the upward trending blue bullish support line and this indicates a very significant trend change from bullish to bearish.
These changes in trend are very rare and very significant as the red and blue lines tend to act like walls in the path of the columns of Os and Xs.
You can see the last such change highlighted by the arrow at the lower left of the chart which occurred shortly after the beginning of the huge rally last March, and this uptrend has been in place until just this month when the uptrend was broken by the column of Os descending to 1040.
Now we’ve seen a retracement rally that has brought the last column of Xs back up to 1104 and the base of the new red bearish resistance line. This line also corresponds almost exactly to the 200 day moving average.
So now the situation is quite clear. A break above the red bullish resistance line would represent a significant trend change back to the positive while failure…
| Email This Post
|
Twitter
|
LinkedIn
|
del.icio.us
|
Google+ |
26 of Last 88 Trading Days have been 90% Days (Either Up or Down); 7 More Lean Years in Stock Market?
by ilene - August 31st, 2010 3:46 pm
26 of Last 88 Trading Days have been 90% Days (Either Up or Down); 7 More Lean Years in Stock Market?
Courtesy of Mish
.jpg)
Here is an interesting snip from August 31 Market Commentary by Art Cashin for UBS. Sorry, no link.
Monday’s market evaporated nearly all the gains from Friday’s rally. Despite lighter volume, it was a 90% down day. That means the bears got a lopsided advantage in negative breadth and negative volume. In Friday’s rally, the bulls had had a similar 90% advantage. Robert McHugh of Main Line Investors says 26 of the last 88 trading days have been 90% days – one way or another. Any wonder the public is wary.
Are these 90% Days a Good Thing?
While the big boys push the market around, small investors have thrown in the towel and are not coming back.
Market volume now consists of black boxes pushing all stocks one way or the other on 30% of the days. Is this a good thing? For who? Investors or Goldman Sachs?
Holding the Line
Today, the 1040 level on the S&P held for about the 8th time on "fabulous" news consumer confidence rose to 53. Bear in mind number in the 70′s are typical of recession lows.
How long the 1040 level can hold is a mystery, but each bounce seems to be weaker and weaker.
Last Friday, I noted Market Cheers 1.6% Growth; Treasuries Hammered; while asking "what’s next?"
We have a partial answer already. Treasuries have regained the entire selloff that started (and ended) on the "great news" that 2nd quarter GDP was +1.6% instead of the expected +1.4%. Never mind that growth was revised down twice from above +2.5% to +1.6%.
Looking ahead, I expect GDP to be negative in the 3rd quarter.
Art Cashin’s 17.6 Year Cycles
A little over a year ago Art Cashin commented Dow Trapped in 17-Year Cycle
Art Cashin, director of floor operations at UBS Financial Services, offered CNBC his stock-market insights. Cashin decried the idea of a second stimulus, in light of the "infamous" first attempt.
"There was no ‘stimulus’ in the stimulus package. It was mostly social engineering," Cashin said. Thus, talk of a new plan is shaking markets with fears of even more debt — with "nothing to show for it."
Cashin revisited his theory of "the 17.6-year cycle."
"It’s like the Biblical story of the fat
…
| Email This Post
|
Twitter
|
LinkedIn
|
del.icio.us
|
Google+ |
Goldilocks and the 300,000,000 Bears
by phil - August 14th, 2010 3:43 am
Talk about feeling outnumbered!
As the guy in Airplane kind of said – "Looks like I pricked the wrong week to get bullish!" Of course, as I often tell people I am neither bullish nor bearish – I’m rangeish – and our range is the 5% band between around Dow 10,200 and S&P 1,070, which takes us as low as Dow 9,690 and S&P 1,016 and as high as Dow 10,710 and S&P 1,123 before I really "flip flop" my positions. Despite the fact that this is the range we predicted last October and is the range we’ve been in (other than a brief trip to 11,200, which we shorted the hell out of) all year – people still seem to find it necessary to call me either bullish or bearish as we navigate the channel.
I suppose I have been HOPEFUL for the month (now heading into day 14) that we will finally make a little progress and establish a higher floor at our usual mid-points while, at the same time, the MSM have decided that we are all going to die. That does make me kind of bullish by comparison doesn’t it? We are mainly in cash and we are well hedged to the downside so, unless we are REALLY heading much, much lower, there is little profit in speculating to the downside, other than our quick trades. As PT Barnum once said:
"A man who is all caution, will never dare to take hold and be successful; and a man who is all boldness, is merely reckless, and must eventually fail. A man may go on "’change" and make fifty, or one hundred thousand dollars in speculating in stocks, at a single operation. But if he has simple boldness without caution, it is mere chance, and what he gains to-day he will lose to-morrow. You must have both the caution and the boldness, to insure success."
Balance is the key to long-term success and we’ve had many conversations about that in Member Chat. Our goal is to be neither bullish or bearish but rather to sell premium to both the bulls and the bears when conditions permit us. As Ravalos said Friday in Member Chat:
"Ever since I became member (actually before I became member I was already following your newsletter for quite some time) I find it hard for me to BUY PREMIUM. Over time, I’ve realized that buying the
…
| Email This Post
|
Twitter
|
LinkedIn
|
del.icio.us
|
Google+ |
Wanted: One Cool Customer
by ilene - July 30th, 2010 5:50 pm
Wanted: One Cool Customer
Courtesy of Joshua M Brown, The Reformed Broker
Different market environments call for different temperaments, and this tape calls for One Cool Customer. The cross-currents lately are absolutely cartoonish – back-to-back-to-back triple digit rallies while each morning we are treated to fresh evidence of Slouching Housing, Hidden Consumer.
A lot of pros were washed out at the bottom this month when the 8 or 10 month moving averages that they use as stops were violated. Right on cue, the S&P rallied 6% off those lows during July, almost out of spite. The frustration is palpable and people are getting heated.
What to make of it all? I don’t know about you, but I’m looking for cool heads and calm direction – so I’m reading a lot of Leigh Drogen lately on his Surfview Capital blog.
You may know Leigh from the StockTwits stream. He is in this market, not just discussing it. And Leigh Drogen is cooler than Lenny Kravitz in February.
Based on his writing, it appears that he’s back to playing his momentum faves and making mental room for the possibility that the tape is, in fact, getting "healthier"…
It’s hard to sit through pullbacks, but as Jesse Livermore said, the real money is made by sitting, not by coming and going. The last two days have been a tough chop fest where you really don’t want to be trading. I took off a decent amount of long exposure yesterday morning at the top, but not enough to keep me from looking at my book today and cringing, just a little. Even when you know what’s about to take place, and that your plan is to let it happen and buy into it, watching your P&L move against you is never fun. Today my second largest position, and what is a normal position size in $WPRT is down 10%, not fun. Other than that, everything is acting predictably soft, consolidating nice gains from the past week or so. We’re not playing for peanuts this time as has been the case the past three months. It’s time to make some real money as the market has become a bit healthier. Raise your stops along the way and buy the pullbacks.
Whenever sentiment and the direction of the market diverge so drastically as is the case now, the key is to stay cool. For smart, emotionless…
| Email This Post
|
Twitter
|
LinkedIn
|
del.icio.us
|
Google+ |
Chinese Banks Face Default Risk on 23% of $1.1 Trillion Loans; Chinese Rating Agency Criticizes Moody’s, Fitch, S&P
by ilene - July 24th, 2010 6:05 pm
Chinese Banks Face Default Risk on 23% of $1.1 Trillion Loans; Chinese Rating Agency Criticizes Moody’s, Fitch, S&P
Courtesy of Mish
Here is an interesting pair of stories at odds with each other, the first article is about problem loans at Chinese banks, the second is about a rating agency mud fight.
Bloomberg reports Chinese Banks See Risks in 23% of $1.1 Trillion Loans
Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they’ve lent to finance local government infrastructure projects, according to a person with knowledge of data collected by the nation’s regulator.
About half of all loans need to be serviced by secondary sources including guarantors because the ventures can’t generate sufficient revenue, the person said, declining to be identified because the information is confidential. The China Banking Regulatory Commission has told banks to write off non-performing project loans by the end of this year, the person said.
The nation’s five-largest banks, including Agricultural Bank of China Ltd., plan to raise as much as $53.5 billion to replenish capital after the sector extended a record $1.4 trillion in credit last year.
“In China now, it is the same as the people getting loans in Phoenix here in the U.S. three years ago,” said Vikas Pershad, chief executive officer of Chicago-based Veda Investments LLC. “People who want money get money, and then they all lose track of it.”
Local governments set up the financing vehicles to fund projects such as highways and airports due to limits on their ability to directly borrow money. The central government this year restricted borrowing on concern money isn’t being used for viable projects.
“The issue is symptomatic of the way the stimulus package was rolled out in 2008,” said Nicholas Consonery, Asia specialist at the Eurasia Group. “It is difficult for local governments to finance these projects. It is written under the Chinese constitution that local governments cannot offer their own debt.”
Chinese Rating Agency Criticizes Moody’s, Fitch, S&P
The Financial Times reports China rating agency condemns rivals
The head of China’s largest credit rating agency has slammed his western counterparts for causing the global financial crisis and said that as the world’s largest creditor nation China should have a bigger say in how governments and their debt are rated.
“The western rating agencies are politicised and highly ideological and they
…
| Email This Post
|
Twitter
|
LinkedIn
|
del.icio.us
|
Google+ |
What the Market Wants
by ilene - June 14th, 2010 10:01 pm
Here’s the latest "What the Market Wants" from Sabrient’s David Brown. Check out more of Sabrient’s investment resources here. - Ilene
|
Sabrient Systems
June 14, 2010 Support Holds . . . But So Does Resistance Since August 2009, with the exception of roughly nine weeks, the S&P 500 has stayed between strong support at 1040 and strong resistance at 1114, and it has been trapped in that range once again for the past month. Earlier today it was close again to testing resistance at 1114, but alas, it failed to break through and dropped back to 1089. This is likely due partially to the mixed nature of last week’s economic reports. We had generally weaker-than-expected numbers for pure consumer credit and retail sales, but those were partially offset by a second consecutive week of improvement in initial jobless claims. The uncertain global picture has stabilized somewhat with some improvement in BP’s handling of the oil spill and considerable stabilization of the euro from its position a few weeks ago.Also, China’s growth seems more certain than a few weeks ago. But mid-session today, there was news that Moody’s had downgraded Greece’s debt rating, and the S&P 500 seemed to lose its resolve to penetrate its 200-day moving average and slipped all the way back to 1089, ending the day with a -0.18% loss. On the corporate front, reports are now few and far between but those we’ve seen have still been generally equal |
…
| Email This Post
|
Twitter
|
LinkedIn
|
del.icio.us
|
Google+ |
Silver Charts and a Look at the SP 500 Long Term Cash Chart
by Chart School - June 7th, 2010 12:10 am
Silver Charts and a Look at the SP 500 Long Term Cash Chart
Courtesy of JESSE’S CAFÉ AMÉRICAIN
Several readers have asked for thoughts on the silver charts.
Silver normally functions as both a monetary and an industrial metal. This provides it with a higher beta (risk variation both on the upside and downside) than gold, and a stronger correlation to the SP 500.
So if one is looking at silver, one first has to ask, what do we think the SP 500 will do next, and then, what will gold do next?
SP 500 Long Term Cash Chart
The SP 500 is at a point where it will either find a footing and break back high according to its longer term bull trend, undoubtedly with serious assistance from the monetary authorities and their banking cohorts, or it will break down further and activate a more serious decline and a H&S topping pattern.
My bias now is for further weakness to the downside, possibly even a false breakdown, and then we will look for the turnaround to gain traction IF volumes remain light and there is no panic selling.
If there is a further decline, let’s see if it can hold the 1000 area where there is a long term bottom of the bull trend channel.
Silver Daily Chart
In the short term silver appears to have further downside. How much is a very open question.
If and only if the SP 500 falls out of bed and there is a general liquidation of assets, silver may trigger a short term H&S top and fall down to the target area in green. There it is likely to be a singularly attractive trading buy, but we would have to look at the overall market landscape and the Fed’s monetary actions.
Silver Weekly Chart
The weekly chart appears much stronger than the daily chart, suggesting that if there is a breakdown it might be short term, and look much worse on the daily chart, an intra-week spike down on the longer term chart. Again it is hard to say because the SP 500 is such an important variable in this.
I doubt very much that silver and the SP 500 will diverge. Gold however is more likely to diverge from stocks if it comes to that.
I have some confidence in Ben’s and Timmy’s willingness to sacrifice…
| Email This Post
|
Twitter
|
LinkedIn
|
del.icio.us
|
Google+ |
Market Club Videos
by Chart School - May 26th, 2010 11:28 am
Market Club Videos: S&P, Gold, Euro
By Adam Hewison at Market Club
S&P Sell Signal
It’s been a little over a year since we had our first major buy signal for the S&P 500 at 888.70 on 5/4/09. Since that time, the S&P 500 has climbed approximately 61.8% from the lows in early March of ’09.
Our "Trade Triangle" technology gave a sell (5/25) at 1044.50, our first major sell signal since 7/1/08 at 1,272.00.
Watch our S&P VIDEO update here>>
There are a whole host of problems around the world that will have negative consequences for the equity markets. The problems in Greece and Europe are well known and are likely to continue for the balance of the year. This is going to have a negative impact on markets in general.
In my new short S&P 500 video, I share what I think is going to happen to the S&P 500 market and just how you can protect yourself if we are correct. As always our "Trade Triangles" will dictate all market action. At the present time all of our "Trade Triangles" are negative and pointing to the downside. This indicates that a very strong trend is in place and it likely to continue.
Many traders, especially younger traders, are unaware of how bear markets work. Bear markets tend to be demoralizing as they do not have any strong and sustained rallies. They tend to erode as more and more traders become unnerved and throw in the towel.
We are back in the gold market.
After exiting all long positions at 1217.72 on 5/18, we reinstated long positions seven days later on 5/25 at 1196.57.
As many of you know who watch my videos, we use our weekly "Trade Triangles" for trend…
| Email This Post
|
Twitter
|
LinkedIn
|
del.icio.us
|
Google+ |
S&P VOLUME IS RISING – WHAT IS THIS TELLING US?
by Chart School - April 30th, 2010 3:29 pm
S&P VOLUME IS RISING – WHAT IS THIS TELLING US?
Courtesy of The Pragmatic Capitalist
By Data Diary:
It’s been notable that volume has been stepping higher on the S&P500:
Volume peaks tend to be associated with short to medium bottoms in the index. Similarly, troughs in volume often signal some kind of top. Or course this relationship doesn’t always hold – a wicked example being that 2008 price avalanche where volume peaked around 8bn shares per day and then thrashed around below that level until the March 2009 floor was eventually reached.
Still is there some significance to the recent rise in activity? Some thoughts for your consideration…
1) It’s a ‘reversion to mean’ volume – While it’s incredible (and clearly unsustainable) that volume increased over 20% per annum since the beginning of 2004, the question remains what is the underlying trend in daily volume. On a trend basis we may still be south of that level.
2) Buy the dip – the risk compression trade is alive and well and about to enter it’s next phase. This would have more credibility in my book if risk appetite had also blown out already. It hasn’t.
Credit spreads in Europe may have dissolved in a gelatinous mess, but the US credit markets remain blase about this state of affairs. Similarly, the VIX has sprung to life but not nearly enough to signal that we are in a renewed bout of risk aversion. The relative calm can be seen a little more clearly via our risk appetite index:
As an indicator, we would normally expect the index to have dipped towards -2% before the ‘panic’ volume spike was upon us.
3) Risk aversion is on the rise - My best guess is that the rising volume is part of a change in trend – that’s it’s more likely to represent distribution than accumulation. Witness the Merrill Lynch hedge fund position report (via Market Folly) suggesting that funds have been reducing their equity exposure. If this is the case, then it’s likely that there are a few even higher volume days in the wings.
| Email This Post
|
Twitter
|
LinkedIn
|
del.icio.us
|
Google+ |
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(
