Archive for 2013

Gauging Investor Sentiment with Twitter: New Update

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


The Downside Hedge Twitter sentiment indicator for the S&P 500 Index (SPX) is painting moderately high readings on up days and fairly flat reading on down days. This is a positive sign for a market making new highs. Even though there continues to be a very large number of tweets concerned with overbought conditions there are enough tweets showing excitement about higher prices that the daily indicator doesn’t travel far below zero.


The concern about overbought conditions is showing up in smoothed sentiment as a negative divergence with price. As prices move higher more traders are showing skepticism. This indicates that the probability of a pull back in the near term is rising. Unfortunately we don’t have the conditions in place to issue a consolidation warning if price pulls back immediately.

There are two things necessary for a consolidation warning. First we need a solid uptrend line in smoothed sentiment that confirms the move in price. At this point we feel it’s too early to use the last low as a reference point. Our second condition is a divergence from price that lasts at least three weeks and preferably a month that subsequently breaks our uptrend line. The current divergence has only been in place a few weeks. The reason we prefer a longer divergence is that people change their minds slowly. It often takes several days and even weeks for the weight of evidence to build to a point where market participants move from bullish to bearish. In the current environment we see more traders get concerned about overbought conditions every day. This is showing up in moderately high daily sentiment readings on very strong price moves (and the negative divergence in smoothed sentiment mentioned earlier). At this point we have warning that traders are getting concerned, but no warning of a possible decline.

Support and resistance levels generated from the Twitter stream pointed at 1700 on SPX and almost nothing else. There were a lot of tweets mentioning the current price during each day, but not a lot of predictions. The market closed barely above previous resistance of 1665 on Friday. We like to see a market close above a resistance level for a…
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German Finance Minister Throws Cold Water on Single Bank Resolution Agency; For How Long?

Courtesy of Mish.

Germany’s Finance minister, Wolfgang Schäuble, has an uncanny ability to tread a very narrow line on formation of an EU banking union. He frequently crosses over the line in both directions but never very far, and never for long.

Every time he gives an inch to solidarity, he quickly takes it back, and vice versa. And here we go again.

Weeks before the European Commission is due to present its plan for a single bank resolution agency and rescue fund, Schäuble threw the plans in doubt with a warning EU bank rescue agency needs treaty changes.

Germany’s finance minister has warned that a single EU bailout agency and rescue fund for ailing banks is legally untenable until the bloc’s treaties have been overhauled.

In today’s Financial Times, Wolfgang Schäuble calls for a “two-step approach” that would leave bank rescues in the hands of “a network of” national authorities until treaty changes can take place.

Mr Schäuble’s declaration comes just weeks before the European Commission is due to present its plan for a single bank resolution agency and rescue fund – widely touted as the second pillar in the eurozone’s much-vaunted “banking union” – throwing the proposal into doubt even before it is unveiled.

“The EU does not have coercive means to enforce decisions. Its historical roots are young. Its democratic legitimacy could be improved upon,” Mr Schäuble writes. “What it has are responsibilities and powers defined by its treaties. To take them lightly, as is sometimes suggested, is to tamper with the rule of law.”

Lawyers for the European Commission and the European Central Bank, which has joined Brussels in pushing for quick adoption of a resolution authority after last month’s creation of a common EU bank supervisor in Frankfurt, have argued that existing treaties allow for centralising powers to shut down or restructure weak banks.

But Mr Schäuble writes that the treaties “do not suffice to anchor beyond doubt a new and strong central resolution authority”. He added that promises to create an authority quickly would cost the EU credibility, saying: “We should not make promises we cannot keep.” Even limited changes to EU treaties can take months if not years.

While he acknowledges his “two-step” plan would lead to “a timber-framed, not a steel-framed, banking union”,


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Visualizing How A Bitcoin Transaction Works

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Following our last primer on the digital currency, prices have somewhat stabilized (despite the ongoing efforts of TPTB to regulate it out of existence). The following infographic provides a step-by-step illustration of how a bitcoin transaction occurs.

 

(via bitcoincharts.com)

(click image for legible large version)

 

(h/t Dr. Constantin Gurdgiev via True Economics blog)





The Annotated Hilsenrath

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In a weekend dominated by discussion of the "Taper Tantrum", i.e., interpretations of what Hilsenrath "said" after the close on Friday, what the Fed wanted him to say, what the market's response to what he said or did not say would be, and what the next steps may be, we present this convenient annotation of Hilsenrath's complete recital courtesy of Mike O'Rourke from Jones Trading.

Hilsenrath Highlights

The WSJ’s Jon Hilsenrath published a story Friday evening titled “Fed Maps Exit From Stimulus – Timing of Wind-Down Is Uncertain, but Focus Is on Managing Unpredictable Market Expectations.”  We suspect the twitter taper caper on Thursday opened the window for the FOMC to provide some clarity as to where policy stands.  Here are some key questions.  Is this story important?  Can it be taken at face value and should markets move?  The answer is yes, yes and yes.  The WSJ placed the article prominently on the cover of the Saturday edition, so they believe they have an important story.  It is a Hilsenrath story, and in the post-recession QE era the Fed has used him to foreshadow almost every major monetary policy move.  Finally, in a tape where QE is the dominant theme, any indication of policy slowing or reversing course is meaningful.

We think the headline in and of itself is interesting “… Focus Is on Managing Unpredictable Market Expectations.” Are market expectations really highly unpredictable?  Has this Fed done anything done but promise excessive monetary support for the US economy?  The market only expects what the Federal Reserve has conditioned it to expect.  Nearly every time the stock market dipped over the past 3 years, a new asset purchase program was launched.  We view “unpredictable market expectations” as a sign that the FOMC has been trying to foreshadow policy in one direction and the market is interpreting it in another direction.

Since this story is important, we decided to share our thoughts that came to mind as we read through it and have quoted the text of the original article below.  You can skip to our key takeaways in parentheses and blue text at the end of the paragraphs. 

* * *

 “Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy—an…
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World’s Largest Steelmaker Urges Europe To Declare Trade War On China

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Currency wars are so pre-”QE eternity.” At least that is the opinion of Indian multi-billionaire Lakshmi Mittal, and owner of the world’s biggest steelmaker, who urged Europe to embrace protectionism and erect trade barriers to “protect” its manufacturers (benefiting one ArcelorMittal among others), while at the same time bashing austerity, saying “the futures of EU manufacturing depended on politicians in Brussels helping industry face what he said was unfair competition from China.” In other words, it’s time for Europe to escalate into full blown trade warfare with China. It is unclear if Mr. Mittal had any thoughts on how China would, in turn, escalate to this progression in trade warfare: whether with tariffs, subsidies, or outright dumping. What does appear quite clear is that the owner of ArcelorMittal, who on Friday posted a net loss of $345 million (down from a $92 million profit a year earlier) on Q1 sales plunging by 13%, whose stock is just off its 52 week lows, and who said he may close plants in Eastern Europe if the “economy continues to slump”, may have some ulterior motives in asking that Europe fight his war for him.

From the FT:

Mr Mittal suggested that Europe should embrace protectionist measures to stop Chinese products flooding the market with cheap goods.

 

The London-based entrepreneur said Brussels should consider applying higher tariffs on imports of Chinese-produced steel, similar to the ones to be imposed on solar panels made in China. He argued that Chinese producers of steel were over producing, lowering the price of the metal globally.

 

“There should be increased tariffs for imports, or there should be a surcharge on the steel coming to Europe from countries where environmental standards are very low,” he said.

 

His call came as EU policy makers adopt an increasingly muscular approach to what they see as unfair competition from Chinese producers across a range of sectors.

Also not surprising was his lashing out at the latest bogeyman for Europe’s economic doldrums: austerity, which has become the old world’s equivalent of Bush, whereby everything that is wrong, is blamed on Germany’s unwillingness to pursue “debt-reduction” policies through the layering of more debt, or in other words, to give the ECB carte blanche to…
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David Stockman On The New Deal Myths Of Recovery

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In chapter 8 of David Stockman’s new book The Great Deformation, the power-that-be-turned-anti-establishment-reality-seeker explains his perspective on the myths of the New Deal Recovery: “The new deal was a political gong show, not a golden era of enlightened economic policy. It shattered the foundation of sound money and inaugurated a régime of capricious fiscal and regulatory activism that inexorably fueled the growth of state power and the crony capitalism which thrives on it. But it did not end the Great Depression or save capitalism from the alleged shortcomings which led to the crash. In fact, the New Deal introduced a severe dose of economic nationalism and autarky at a time when the only hope for speedy recovery was a reopening of world trade and reestablishment of a stable international monetary régime…. in reality, the notion that the New Deal had pioneered a road map to recovery by means of countercyclical fiscal policy is mostly a postwar academic legend.

 

 

 

David Stockman Book – Chapter 8

 

(h/t The Circle Bastiat blog)





Bond And Stock Futures Open Red – Buying Opportunity?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Erasing Friday’s gains (and the well-documented VIX-driven melt-up into the close), S&P 500 futures have opened down 4.5 points (against JPY-carry for now), Treasuries are indicated 4-5bps higher in yield, and Gold is opening down 0.4%. Not in itself a large move but perhaps indicative of some concerns that Hilsenrath is on to something and the punchbowl is being ever so gradually pulled away (though, we suspect it is only a matter of time before this article is spun in a bullish light, suggesting that the Fed still does not have a firm timeline in mind, which by implication is bullish – no news is good news – and much more jawboning has to come before the real tapering talk begins). In the meantime, we are sure the clarion call to Buy-The-Feding-Dip will be heard and in the interest of balance, we offer some insight into ‘valuations’.

 

S&P 500 futures open -4.5pts… erasing the closing ramp and Friday gains…

 

and Bonds are being sold too…

 

long way to go for both from when the disconnect began…

 

Which one are you going to believe? US Macro vs SPX and 10Y from the ‘disconnect’ above

 

But stocks are cheap I tell you…

 

(h/t @Not_Jim_Cramer)





Weekly Market Commentary: Double Top in New Highs? Probably Not

Courtesy of Declan Fallon

Unusual behavior in New Highs / New Lows.  After what looked to have been a fairly reliable peak in the number of (smoothed) NYSE components at new 52-week highs, now looks set to make an even higher high. Given the last peak was a 10-year high, it’s odd to see this challenged so soon. However, it does point to the overall strength of the rally to have so many components making new high – a total contrast to the action in the 2007 top.  The current situation has far more in common with peaks in 2004 and 2010, which marked consolidation points of larger rallies


Market Breadth hasn’t reached overbought conditions, supporting the idea for further gains.  The Percentage of Nasdaq Stocks above 50-day MA hasn’t broken the 70% barrier.  And technicals are not overbought.

The Nasdaq Bullish Percents successfully back tested support, with plenty of room for upside.

All indices are rallying within themselves, so there is no obvious signs for a top.

Another week – another opportunity to build on past strength?

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Meet Dylan The Day-Trader, Or When Fundamentals No Longer Matter

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Only 25, self-described ‘risk-taker’ Dylan Collins plays the markets with a pot of more than $1 million – $100,000 of his own money earned from trading over the past two years, the rest provided by his bosses and partners at AMR Capital Trading. As The Washington Post reports, Dylan exclaims, “trading is fun; for me this is the dream job;” but as they note, for most of us, day trading conjures up the image from the dot-com era of some dude in his pajamas with a two-day growth of beard logged on to a Charles Schwab account buying Nortel Networks and Pets.com on margin. But have no fear for – New York-based AMR, a division of G-2 Trading, is a lot more disciplined and sophisticated than that – specializing in “momentum trading,” riding hot stocks up and cold stocks down, taking advantage of the irrational herd behavior that characterizes financial markets. “I understand the idea that maybe you’d want to do something more meaningful, but I don’t think I need to worry about that at my age,” Dylan explains as he exploits momentary mispricings and sudden spikes in volume.

The thing about this kind of trading is that you don’t have to know very much about the companies whose shares you are buying or selling.  “So much of trading is just about intuition,” he adds brushing off how quickly knife-catching turns to blood (as the BTFD strategy backfired on Sino-Forest and Digital Domain).

“This isn’t just an 8 to 4 job. There are a lot of tiny intricacies,” he says, “and there are so many others out there doing the easy, obvious trades that they don’t really work any more. You have to stay a step ahead of them.” On a typical day, Dylan may put in a thousand orders to buy or sell dozens of stocks at prices higher or lower than where the shares are trading at that moment, anticipating movement up or down. Most are never filled – or will be canceled – as prices move in the other direction. By day’s end, only a dozen or two trades may be executed.

“Barring some disaster, I can’t imagine leaving this firm,” Dylan declares with the confidence of a twenty-something. “I’m sure this is the perfect career for me.” Party likes…
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Eric Sprott: The Golden Answer To Chinese Import Data

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Eric Sprott, Etienne Bordeleau, and David Franklin of Sprott Group,

Manufacturing data in the last several months has suggested that economic growth around the world is slowing. However, China’s export growth surprised the market this week and unexpectedly accelerated in April, even as shipments to the U.S. and Europe fell. This has created a conundrum for analysts and market watchers. How can China be growing while the countries that purchase its exports are slowing? The numbers don’t add up.

Digging deeper into these figures, several analysts have come to the conclusion that the numbers are faulty. Bank of America Corp. and Mizuho Securities Co. analysts have gone so far to say the figures have been inflated by fake reports. An “astounding” 92.9 percent jump in exports to Hong Kong, the most in 18 years, raises questions on data quality, researcher IHS Inc. said. They even call some of the data ‘absurd’, suggesting that exporters are ‘faking orders’ to obtain export-tax rebates. These observations challenge the credibility of Chinese economic data once again.

It is has been suggested that China’s robust appetite for commodities from iron ore to crude oil show that Chinese domestic demand is healthy, alleviating concerns about a renewed slowdown. China’s recent surge in gold imports puts this ‘increase in domestic demand’ observation into question. Our analysis shows that trade statistics are biased by the large gold inflows the country has experienced over the past few years. Because gold imports are accounted for in the “import” numbers of the current account (instead of the capital account like other investments), they artificially inflate the total import numbers published in the Financial Press. We say “inflate” because gold, unlike other materials, is mostly used for investment purposes and as such should not qualify as an import of “goods and services”, which is used to measure real economic activity. Now that China is importing significant quantities of gold, trade flow numbers are becoming more distorted.

When we strip out the ‘gold effect’, we find that 37% of the increase in imports over the last 12 months into China is due to the massive amount of gold that’s being imported. In Table A, gross imports increased by $82 billion, but $30 billion of this increase was from gold alone.  Put another way, more than…
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ValueWalk

#1 Performing Global Macro Hedge Fund Sees More Shorts Opportunities Ahead As China Bursts

By Jacob Wolinsky. Originally published at ValueWalk.

Crescat Global Macro Fund update to investors on 1/19/2019

Crescat Global Macro Fund and Crescat Long/Short fund delivered strong returns for both December and full year 2018 in a difficult market. Based on ...



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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

Divisive economics

 

Guest author David Brin — scientist, technology consultant, best-selling author and futurist — explores the records of Democrats and Republicans on the US economy in the following post. For David's latest posts, visit the CONTRARY BRIN blog. For his books and short stories, visit his web...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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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.

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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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