Archive for 2012

Is the Fed in Control? If So, Control of What?

Courtesy of Mish.

Reader Richard is wondering about a statement I made in Problem is Demand: First IBM, then Intel, now Google.

Specifically Richard questions my statement “In spite of what everyone seems to think, the Fed is not really in control of much of anything”.

Richard writes …

Hi, Mish

I am a big fan of yours but I am shocked, however, by your quote in my subject line. How can you say that when the Fed totally controls everything in the financial markets not only in the U.S. but much of elsewhere in the world? It is single-highhandedly propping up the U.S. equity market, rendering bond vigilantes ineffective in the bond market, and creating an “echo real estate bubble” at will!

Hoping to hear an elaboration from you in your next blog.

Regards, Richard

No Echo Bubble in Housing

Hello Richard, for starters, there is no echo real estate bubble.

Home sales are at depressed levels, financial institutions are still overloaded with hugely underwater properties, and prices have bounced a bit in some areas, by 5-10% bounces following 50-60% declines hardly constitutes an echo bubble.

Had Richard said the Fed created an echo bubble in stock prices, I would have agreed. Let’s step back a second and look at the three primary things the Fed wants to accomplish.

Three Things Fed Desperate to Accomplish

  1. Stimulate Credit 
  2. Stimulate Jobs
  3. Stimulate Housing



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Swing trading portfolio – week of October 22nd, 2012

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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Swing trading virtual portfolio

 

One trade virtual portfolio

 





Stock Market Fragility Fast Approaching “Flash Crash” Levels

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

This past Friday, on the 25th anniversary of Black Monday, Bill Gross warned that in the current centrally-planned market "central bank puts" are the modern day equivalent of "portfolio insurance", and he is right. By sending complacency to record levels, and essentially forcing investors to no longer worry, hedge and generally ignore tail risk, the central planners, in their futile attempts to reflate stocks at all costs, are guaranteeing that the market will experience just the type of fat tail event they promise will never occur. As for the catalyst that will make sure of it is none other than our old friend: high frequency trading. Because while central planning is the mechanism by which investing is dragged away from mean reversion, price clearing and fair value discovery, it is HFT that is Bernanke's analogue in the millisecond trading world (as all those who had stop limit orders (that did not get DKed) on May 6, 2010 very well remember). Because when the next Black ___day does happen, it will be due to central planning, but it will be enacted courtesy of HFT (which will never go away until the next and probably final market crash: too much exchange revenue depends on the perpetuation of this parasitic liquidity drain).

Which is why it is only appropriate to warn readers that when it comes to system market fragility, at least according to Nanex, whose work ZH first presented nearly two years ago and has since gone mainstream now that HFT is the universal scapegoat of even such legacy media venues as CNBC (it is always better to bash the vacuum tubes than the people who profit, or those who have made a mockery of the stock market – it is not like anything will change anyway), the frequency and magnitude of "wild price spike" events (to put it simply) are now both rising at an exponential rate, and fast approaching Flash Crash levels.

From Nanex:

Below is a chart showing the daily counts for all NMS stocks of prices that exceeding NxCore filter level 6. Filter levels range from 2 (lowest) to 7 (highest). Stock prices flagged at these levels are almost always canceled or corrected by the exchange later in the trading session.  The chart below indicates that wild


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[Video] 60 Minutes Interviews the Man who Famously Resigned from Goldman Sachs – Greg Smith

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

An interesting – but unsurprising – interview with former VP (which is a “middle management” title on Wall Street) Greg Smith, formerly of Goldman Sachs.  If you don’t remember the story of Mr. Smith – he left his half a million a year job in a very public manner – offering his reasons in an op-ed in the New York Times early this year. Anyone who has been following the goings on, in the world of Wall Street the past half decade+ won’t be surprised by his ‘revelations’ but certainly it is still an interesting view.  It does appear that the world of investment banking took a tremendous – and many would argue bad – change once these stopped becoming private partnerships and instead became public companies.

13 minute video – email readers will need to come to site to view

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog





China, China, Everywhere; But Not A Drop Of QE To Drink

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With this evening's news that Japan and the USA are 'backing down' from a planned 'joint security drill' to recapture a remote 'uninhabited' island in Okinawa province (apparently amid concerns of backlash from Beijing); and chatter of the PBoC gauging demand for reverse repos (instead of flooding us with newly minted Yuan which everyone believes is just the remedy), it seems very clear who the world's super-power is (militarily and economically). Furthermore, as The Diplomat explains, multi-faceted challenges to the new leadership — possible economic stagnation, social unrest, elite disunity, and a revival of pro-democracy forces — will make it more distracted and less politically capable to maintain discipline on numerous actors now involved in China's foreign policy.  The effects of such accumulated internal woes, while not necessarily aggressive, are certain to be an erratic pattern of behavior that both worries and puzzles China's neighbors and the rest of the international community.

"Be careful what you wish for.  A weaker China could nevertheless
inflict serious damage to the world order."

On China's Political Transition (via Damien Ma's interview with Foreign Affairs Magazine):

Via Minxin Pei of The Diplomat: Sorry World, What Happens In Beijing, WON'T Stay In Beijing

One of the questions on the minds of most China watchers these days is how Beijing will behave externally when it faces a far more difficult internal environmentOf the well-recognized challenges China will encounter in the coming years are its deteriorating economic dynamism, a structure of decision-making with diffused power and uncertain authority, rising nationalism, growing demand for political reform, and widespread popular disenchantment with the status quo.

In totality, these internal difficulties will reduce the resources available to maintain and expand China's influence around the world, constrain the Chinese military's ability to accelerate its modernization, and make Chinese leaders more reluctant to assume greater international or regional responsibilities.  Most worryingly, erratic behavior driven by a mixture of lack of leadership experience and political security will most likely mark Beijing's foreign policy conduct in the coming years.

Given the high profile China has assumed in projecting its economic influence around the world, particularly in resource-rich developing countries, one might dismiss as fanciful the suggestion that looming economic hardships at home may severely limit


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Weekly Market Commentary: Breadth Weakness Continues

Courtesy of Declan Fallon

Another week, another set of breadth losses for the indices.

The Nasdaq was the worst hit of the indices.  The Percentage of Nasdaq Stocks above 50-day MA finished  at lows of 37%, but stochastics are only half-way towards oversold territory.

The Summation Index only saw marginal more losses than last week. It closed the week below 0, but the index doesn’t typically reach oversold levels until below -600. This could take another few weeks before a swing low is reached.

The Bullish Percents similarly experienced a small loss.  Technicals are in neutral territory, but still net bearish.  Still looks to offer plenty of downside before a swing low is reached.

Despite the brief respite on the daily timeframe, the weekly chart for the Nasdaq favours a move to 2,863 support.  Higher volume selling marked confirmed distribution.

While tech struggles, Large Caps held their ground.  The Dow and S&P held support for another week.

And the Russell 2000 finished just above declining resistance – turned support.  The inverse doji offers a workable support zone, although technicals are neutral (and a long way from oversold territory).

Bullls will look to focus on Large Caps, and its continued advance.  More speculative players may want to take a look at the Russell 2000.  Shorts may find more on offer from the Nasdaq (or Nasdaq 100), as these are caught in a support no-mans land.

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NASDAQ Tech Wreck 2.0?

Courtesy of John Nyaradi.

With last week’s dismal action in the Nasdaq index and tech sector, October could be another bad month for the Nasdaq.

tech wreck, nasdaq, qqq, nysearca:qqqMuch of the headline news last week was focused on the 25th anniversary of “Black Monday,” October 19, 1987, when world markets crashed and the Dow Jones Industrial Average (NYSEARCA:DIA)) plunged 508 points or approximately 24% in one day.

Much has been written about whether or not Black Monday can happen again, and, of course it can, but on its anniversary this year, it’s more important to pay attention to what’s happening today, particularly what’s happening in the tech sector since tech tends to be a leader both up and down in today’s modern markets.

 On My ETF Radar

nasdaq, QQQ, nysearca:qqq

chart courtesy of StockCharts.com

In the chart of the Nasdaq Composite (NYSEARCA:QQQ) above, we can see how the index is in a significant downtrend, with declining momentum and has decisively broken its 50 day moving average. Next significant support lies in the 2900 level, approximately 3% from current levels.

S&P 500 , spy, nysearca:spy

chart courtesy of StockCharts.com

In this chart of the S&P 500 (NYSEARCA:SPY) we can see how the index has formed a triple top, which is generally seen as an ominous development in technical analysis, momentum is declining and Friday’s sell off ended right at the 50 day moving average.

s&p 500, spy, nysearca:spy

chart courtesy of StockCharts.com

In the point and figure chart of the S&P 500 (NYSEARCA:SPY) we can see that the chart is on a “sell” signal with a downside price objective of  1380, some 3.7% from today’s levels.  A close below the blue, bullish support line at approximately 1390 would indicate the onset of a new bear  market according to point and figure methodology.

Add it all up, and the technical indicators are looking more and more bearish.

On a fundamental level, one must pay attention to the Nasdaq as it’s loaded with big names like Google (GOOG) Apple (AAPL) Microsoft (MSFT) Intel (INTC) and others.  Therefore, the index represents some of the strongest, leading edge companies operating in the technology sector which has become indispensable to the functioning of modern, developed economies.  Furthermore, Nasdaq and glamor names like Apple (AAPL) tend to attract the interest of big players in the hedge fund and institutional space, and if the…
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Is a Debt Jubilee the Next Big Meme?

Courtesy of John Rubino.

The idea of a “debt jubilee” — that is, a wide-spread forgiveness of debt as a way to reset the US financial system — has been bouncing around for a while. But it hasn’t gained mainstream traction because it seems, at first glance, to be too simplistic to be worth serious thought. It must have a fatal flaw that would jump out as soon as one looks at it, which makes looking a waste of time.

But the idea keeps bubbling up, so the other day I finally decided to try to understand it. And the story, as with most apparently simple things, is more complicated and harder to dismiss than it seems at first.

According to Wikipedia, “The concept of the Jubilee is a special year of remission of sins and universal pardon. In the Biblical Book of Leviticus, a Jubilee year is mentioned to occur every fiftieth year, in which slaves and prisoners would be freed, debts would be forgiven and the mercies of God would be particularly manifest.”

Note the fifty-year cycle, which is not that far from the 60-year Kondratieff Wave, at the end of which debt is forcibly erased through mass default.

The problem with the classical jubilee concept is spelled out by Martin Hutchinson and Robert Cyran in a 2011 New York Times article:

The Downside to a Debt Jubilee
Good ends do not justify bad means. That philosophical observation applies to proposals for a big American debt jubilee that are now doing the rounds. The basic idea is to slash consumer debt, which is an admirable aim for an overleveraged nation. Household debt is still 90 percent of gross domestic product, down only modestly from the 2008 peak of 100 percent. But even bank-haters should recognize that this cure might be worse than the disease.

To start, writing off debts would not necessarily increase economic growth. Every liability is also an asset, so while a dollar that is no longer required for debt repayment might add some cents to consumer spending, it is also a dollar cut out of a bank’s capital or of an investor’s net worth — subtracting from resources and confidence.

And write-offs big enough to change consumer behavior would probably be big enough to destabilize banks. The Federal Reserve or the government would need to help, presumably by injecting newly printed


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Stock Review: Time Warner ($TWC)

Courtesy of Declan Fallon

My latest stock review covers Time Warner.  Other stock reviews can be found here.

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Chinese Gold Imports Through August Surpass Total ECB Holdings, Imports From Australia Surge 900%

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

First it was more than the UK. Then more than Portugal. Then a month ago we said that as of September, “it is now safe to say that in 2012 alone China has imported more gold than the ECB’s entire official 502.1 tons of holdings.” Sure enough, according to the latest release from the Hong Kong Census and Statistics Department, through the end of August, China had imported a whopping gross 512 tons of gold, 10 tons more than the latest official ECB gold holdings. We can now safely say that as of today, China will have imported more gold than the 11th largest official holder of gold, India, with 558 tons.

Yet despite importing more gold than the sovereign holdings of virtually all official entities, save for ten, importing more gold in July than in any month in 2012 except for April, importing more gold in 8 months in 2012 than all of 2011, and importing four times as much between January and July than as much as in the same period last year, here is MarketWatch with its brilliant conclusion that the ‘plunge’ in gold imports in August can only be indicative of the end of the Chinese gold market, and the second coming of infinitely dilutable fiat.

“China’s near-term appetite for gold appears to be waning as bullion imports from Hong Kong slow,” HSBC analysts said in a note following the data release last week.

 

Anecdotal evidence also pointed to the cooling trend, with one Hong Kong bullion dealer saying the word from mainland clients was that gold inventories are saturated.

 

“What we are hearing from our customers is that they were buying gold rapidly over the last couple of years, but they would now see some of their stocks sold off before they rebuild some of their inventories,” Scotia Mocatta managing director Sunil Kashyap said in Hong Kong.

There is spin, and there is of course, reality. We urge readers to identify where on the chart below is the evidence of Chinese disillusionment with gold:

Furthermore, with the status quo cartel in desperate need of China stepping up its monetary easing, and jumping right into the race to debase, which is absolutely critical to…
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Phil's Favorites

Congress is considering privacy legislation - be afraid

 

Congress is considering privacy legislation – be afraid

Courtesy of Jeff Sovern, St. John's University

Supreme Court Justice Louis Brandeis called privacy the “right to be let alone.” Perhaps Congress should give states trying to protect consumer data the same right.

For years, a gridlocked Congress ignored privacy, apart from occasionally scolding companies such as Equifax and Marriott after their major data breaches. In its absence, ...



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Zero Hedge

Key Events This Week: Trade War, EU Elections, Durables, PMIs And Fed Minutes

Courtesy of ZeroHedge

Looking at this week's key events, Deutsche Bank's Craig Nicol writes that while the unpredictable nature of US-China trade developments will likely continue to be the main focus for markets again next week, we also have the European Parliament elections circus to look forward to as well as various survey reports including the flash May PMIs which may offer some insight into the impact of trade escalation on economic data. The FOMC and ECB meeting minutes are also due, along with a heavy calendar of Fed officials speaking.

The European Parliament elections will kick off next Thursday with voting continuing into the weekend across the continent, with results expected on Sunday. With the elections surrounded by internal and external challenges for the EU, members di...



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Kimble Charting Solutions

Will S&P 500 Double Top Derail The Rally?

Courtesy of Chris Kimble.

The rally off the December stock market lows has been strong, to say the least. The S&P 500 rallied 25 percent before hitting and testing the 2018 high.

The old highs proved to be formidable resistance and ushered in some volatility in May… and a 5 percent pullback.

In today’s 2-pack, we look at that resistance level – could that be a double top? We can see similar patterns develop on the S&P 500 Index and its Equal Weight counterpart.

Both indexes are testing short-term Fibonacci retracement levels of the recent decline at point (2).

What takes place here after potential double top highs will be important. Stay tuned...



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Insider Scoop

60 Biggest Movers From Friday

Courtesy of Benzinga.

Gainers
  • Fastly, Inc. (NYSE: FSLY) shares jumped 50 percent to close at $23.99 on Friday. Fastly priced its 11.25 million share IPO at $16 per share.
  • Outlook Therapeutics, Inc. (NASDAQ: OTLK) shares climbed 37.3 percent to close at $2.10 on Friday after the stock rose over 68 percent Thursday following an Oppenheimer initiation at Outperform with a price target of $12.
  • Cray Inc. (NASDAQ: CRAY) shares rose 22.5 percent to close at $36.52 after Hewlett Packard Enterpri...


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Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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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

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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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