Archive for July, 2016

Gann Angles on the Russell 2000

Courtesy of Read the Ticker.

gann-angles-on-the-russell-2000It is amazing how price is bound within Gann Angles!



Gann Angles



Click for popup. Clear your browser cache if image is not showing.

RUT


Long term channels…



Click for popup. Clear your browser cache if image is not showing.

RUT Channel




NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net



Investing Quote…



…“My satisfaction always came from beating the market, solving the puzzle.  The money was the reward, but it was not the main reason I loved the market.  The stock market is the greatest, most complex puzzle ever invented – and it pays the biggest jackpot…it was never the money that drove me.  It was the game, solving the puzzle, beating the market that had confused and confounded the greatest minds in history.  For me, that passion, the juice, the exhilaration was in beating the game, a game that was a living dynamic riddle”..



Jesse Livermore





..”The stock market is filled with individuals who know the price of everything, but the value of nothing”..



Philip Fisher





..“I buy on the assumption they could close the market the next day and not reopen it for five years” and “Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.”..



Warren Buffet





In the short run, the market is a voting machine, but in the long run it is a weighing machine.



Benjamin Graham





..The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell”..



John Templeton











Regression to Trend: The Latest Look at Long-Term Market Performance

Courtesy of Doug Short’s Advisor Perspectives.

Quick take: At the end of July the inflation-adjusted S&P 500 index price was 87% above its long-term trend, up slightly from 82% the previous month.


About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let’s apply some simple regression analysis (see footnote below) to the question.

Below is a chart of the S&P Composite stretching back to 1871 based on the real (inflation-adjusted) monthly average of daily closes. We’re using a semi-log scale to equalize vertical distances for the same percentage change regardless of the index price range.

The regression trendline drawn through the data clarifies the secular pattern of variance from the trend — those multi-year periods when the market trades above and below trend. That regression slope, incidentally, represents an annualized growth rate of 1.79%.

Regression to Trend

The peak in 2000 marked an unprecedented 142% overshooting of the trend — nearly double the overshoot in 1929. The index had been above trend for two decades, with one exception: it dipped about 15% below trend briefly in March of 2009. At the beginning of August 2016, it is 87% above trend, near the top of the 69% to 91% range it has hovered in for the past 33 months. In sharp contrast, the major troughs of the past saw declines in excess of 50% below the trend. If the current S&P 500 were sitting squarely on the regression, it would be around the 1151 level.

Incidentally, the standard deviation for prices above and below trend is 40.6%. Here is a close-up of the regression values with the regression itself shown as the zero line. We’ve highlighted the standard deviations. We can see that the early 20th century real price peaks occurred at around the second deviation. Troughs prior to 2009 have been more than a standard deviation below trend. The peak in 2000 was well north of 3 deviations, and the 2007 peak was around two deviations, the same level as the latest data point.

Stanrdard Deviations


Footnote on Calculating the Regression: The regression on the Excel chart above is an exponential regression to match the logarithmic vertical axis. We used the Excel…
continue reading





China PMI Crosses Into Positive Territory, But Barely

Courtesy of Mish.

The Markit China Manufacturing PMI crossed into positive territory, but barely. This is the first positive reading in operating conditions since February 2015.

July survey data signalled a renewed upturn in operating conditions faced by Chinese manufacturers, with output, new orders and buying activity all returning to growth. However, employment continued to decline and at a solid pace, which in turn contributed to the quickest rise in outstanding business since March 2011. Meanwhile, increased prices for raw materials led to a marked rise in average input costs, which companies generally passed on to clients in the form of higher output charges.

Key Points

  • Renewed expansions in output, new orders and purchasing activity
  • Payrolls cut again and a solid rise in backlogs of work was recorded
  • Marked increases in input costs and output charges

Comment

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

“The Caixin China General Manufacturing PMI came in at 50.6 for July, up significantly by 2.0 points from the reading for June, marking the first expansion since February 2015. The sub-indexes of output, new orders and inventory all surged past the neutral 50-point level that separates growth from decline. This indicates that the Chinese economy has begun to show signs of stabilizing due to the gradual implementation of proactive fiscal policy. But the pressure on economic growth remains, and supportive fiscal and monetary policies must be continued.”

China PMI

China PMI 2016-07-31

Comment on the Comment

There were signs of stabilization in 2015, 2014, 2013, and 2012. So let’s not get excited over a one month expansion that is barely positive.

Where this all heads is more likely to depend on the global economy than internal demand in China. Export demand is as likely to weaken as anything else.

A global trade war may be on the horizon regardless of who wins the US election in November.

Mike “Mish” Shedlock

[Original article published here.]





Is War Inevitable In The South China Sea?

Courtesy of ZeroHedge. View original post here.

Authored by Pepe Escobar, originally posted Op-Ed via RT.com,

Since the recent ruling by The Hague in favor of the Philippines and against China over the South China Sea, Southeast Asia has been engulfed on how to respond. They dithered. They haggled. They were plunged into despair.

It was a graphic demonstration of how “win-win” business is done in Asia. At least in theory.

In the end, at a summit in Vientiane, Laos, the 10-nation Association of Southeast Asian Nations (ASEAN) and China finally settled for that household mantra – “defusing tensions”.

They agreed to stop sending people to currently uninhabited “islands, reefs, shoals, cays, and other features” after ASEAN declared itself worried about land reclamation and “escalations of activities in the area”.

And all this without even naming China – or referring to the ruling in The Hague.

China and ASEAN also pledged to respect freedom of navigation in the South China Sea (which Washington insists is in danger); solve territorial disputes peacefully, through negotiations (that happens to be the official Chinese position), also taking into consideration the UN Convention on the Law of the Sea (UNCLOS); and work hard to come up with a Code of Conduct in the South China Sea (that’s been going on for years; optimistically, a binding text will be ready by the first half of 2017).

So, problem solved? Not really. At first, it was Deadlock City. Things only started moving when the Philippines desisted to mention The Hague in the final statement; Cambodia – allied with China – had prevented it from the start.

And that’s the heart of the matter when it comes to ASEAN negotiating with China. It’s a Sisyphean task to reach consensus among the 10 members – even as ASEAN spins its role as the perfect negotiation conduit. China for its part prefers bilaterals – and has applied Divide and Rule to get what it wants, seducing mostly Laos and Cambodia as allies.

That threat by a peer competitor

The strategic geopolitical centrality of the South China Sea is well known: A naval crossroads of roughly $5 trillion in annual trade; transit sea lanes to roughly half of global daily merchant shipping, a third of global oil trade and two-thirds of all liquid natural gas (LNG) trade.

It’s also the key hub of


continue reading





Breaking News And Best Of The Web

Courtesy of John Rubino.

Doug Noland and Jim Grant on the global credit bubble. The Telegraph on negative interest rates. US and Chinese numbers disappoint. Most financial markets directionless on first day of August. Oil, however, still falling, now back in technical bear market. Polls give Clinton slight edge but very close in battleground states.

Best Of The Web

Weekly commentary: Bubble battles – Credit Bubble Bulletin

Jim Grant is bullish on gold, bearish on Craft – Barron’s

Negative interest rates: necessary evil or symbol of greed? – Telegraph

IMF admits disastrous love affair with the euro – Telegraph

Biggest companies in the S&P 500 use made-up earnings numbers – MarketWatch

This is how independent central banks are – Gold Republic

Why real reform is impossible – OfTwoMinds.com

Plutocracy, then and now – the lesser of two evils – Jesse’s Cafe Americain

How to profit form these massive, Brexit-induced trends – Casey Research

5 reasons why Trump will win – Michael Moore

An upside down world – Financial Sense

IceCap asks what happens when the bond bubble finally pops – Zero Hedge

It’s all connected – Globe And Mail

—————————————————————–

Breaking News

The Economy

8/01    US factory activity dips, construction spending weak – Yahoo!

8/01    Growing oil glut shows investors theres’ nowhere to go but down – Bloomberg

8/01    Did Germany just blink? – Wolf Street

8/01    The Fed that cried wolf – Seeking Alpha

8/01    Abe’s fiscal plan follows a long road of packages that failed – Bloomberg

8/01    Skewed interest rates – Talk Markets

8/01    CSLA, like Gundlach, warns of “nasty surprise” amid negative rates – ValueWalk

8/01    “Time’s up – the pain must begin now” – Zero Hedge

8/01    italian banks crash despite ‘all clear’ from EU stress tests – Zero Hedge

8/01    Satyajit Das slams policymaker ignorance – Zero Hedge

8/01    


continue reading





Yuan Strengthens Most Since 2010 As China Manufacturing Spikes To 17-Month Highs AND Tumbles To 7-Month Lows

Courtesy of ZeroHedge. View original post here.

In a miracle of modern goal-seeking, China’s Manufacturing PMI clung to within an inch of ‘stable’ 50 level for the 20th month (actually missing expectations of 50.0, printing 49.9) But while manufacturing is its lowest since Feb, the non-manufacturing PMI jumped to 53.9 – its highest since Dec 15. Even better, just 45 monutes after this data, Caixin released their manufacturing PMI data which smahed expectations, surging to 50.6 – its highest since Feb 2015. Following the notable USD weakness on Friday (thanks to BoJ disappointment), and the apparent recovery of the Chinese economy (just need another trillion or two of credit to keep the dream alive), PBOC strengthened the Yuan fix by 0.35% – the most since mid-June… extending the 9-day gain to the most since Sept 2010.

Manufacturing slipped to a 5-month low…

Services hits 7-month (2016) highs…

But Caixin Manufacturing (weighted more towards smaller-caps rather than official PMI’s weighting towards SOEs) surged to 19 month highs… thanks to the quickest rise in outstanding business since March 2011.

Commenting on the China General Manufacturing PMI data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

“The Caixin China General Manufacturing PMI came in at 50.6 for July, up significantly by 2.0 points from the reading for June, marking the first expansion since February 2015. The sub-indexes of output, new orders and inventory all surged past the neutral 50-point level that separates growth from decline. This indicates that the Chinese economy has begun to show signs of stabilizing due to the gradual implementation of proactive fiscal policy. But the pressure on economic growth remains, and supportive fiscal and monetary policies must be continued.”

Evercore ISI notes the following a China’s most crucial recent developments… 

  • “Severe challenges” in the China economy says Beijing, worse than “persistent downward pressure” – their characterization of the last several months. 
  • Two components to this change.  One, managing expectations down. Two, showing the upcoming G20 (Sep 4-5) attendees that the officials are on the case. 
  • Conflicting Beijing comments.  Saying ‘foundation of stable economic development not solid’ – bad.   Then saying the ‘long-term positive trend in fundamentals has not changed’ – good.   
  • China budget deficit now 4.2% of GDP, vs. 2.2% in worst of 2008-09 global crisis amid a big


continue reading





What If?

Courtesy of ZeroHedge. View original post here.

Presented with no comment…

Source: Townhall.com





America’s Recent Achievements In The Middle East

Courtesy of ZeroHedge. View original post here.

Authored by Eric Zuesse,

Here are before-and-after pictures of what the U.S. government has achieved, in the Middle East:

What’s especially interesting there, is that in all of these missions, except for Iraq, the U.S. was doing it with the key participation of the Saud family, the royals who own Saudi Arabia, and who are the world’s largest buyers of American weaponry. Since Barack Obama came into the White House, the operations — Libya, Yemen, and Syria — have been, to a large extent, joint operations with the Sauds. ‘We’ are now working more closely with ‘our’ ‘friends’, even than ‘we’ were under George W. Bush.

As President Obama instructed his military, on 28 May 2014:

When issues of global concern do not pose a direct threat to the United States, when such issues are at stake — when crises arise that stir our conscience or push the world in a more dangerous direction but do not directly threaten us — then the threshold for military action must be higher. In such circumstances, we should not go it alone. Instead, we must mobilize allies and partners to take collective action. We have to broaden our tools to include diplomacy and development; sanctions and isolation; appeals to international law; and, if just, necessary and effective, multilateral military action. In such circumstances, we have to work with others because collective action in these circumstances is more likely to succeed.

So: ’we’ didn’t achieve these things only on our own, but instead in alliance with the royals of Saudi Arabia, Qatar, UAE, Kuwait, and other friendly countries, which finance jihadists everywhere but in their own country. And, of course, all of ‘us’ are allied against Russia, so we’re now surrounding that country with ‘our’ NATO partners before we do to it what we’ve previously done to Iraq, Libya, Yemen, and Syria. America is becoming even more ambitious, because of ‘successes’ like these in Iraq, Libya, Syria, Yemen, and Ukraine.

The United States has been the great champion of ‘democracy’ throughout the world. And these are are some of the results of that ‘democracy’. ‘We’ are spreading it abroad.

‘Our’ latest victory has been ‘our’ spreading it to Ukraine. No country is closer to Russia than that.

Inside America, the term that’s used for referring to anyone who opposes this spreading of


continue reading





If You Disagree With This Harvard Economist You May Be Stupid And A Racist

Courtesy of ZeroHedge. View original post here.

Shocked by the inexplicable realization that Americans are stubbornly unwilling to bow down and blindly accept the political and economic views of the educated elites in this country, Harvard Professor Gregory Mankiw recently took to the New York Times to pen an oped where he concluded that the only possible reason for the lack of conformity to his point of view is the stupidity and racism of the electorate.  An article by Adam Button at forexlive, called our attention to the recent oped which he described as a “dazzling display of contempt for the public from a Harvard professor who can’t believe that voters aren’t listening to the gospel of the economic elites.

Questioning why American’s object to increasing globalization, Professor Mankiw pointed to three main conclusions:

“The first is isolationism more broadly. Trade skeptics tend to think, for example, that the United States should stay out of world affairs and avoid getting involved in foreign conflicts.  They are not eager for the United States to work with other nations to solve global problems like hunger and pollution.”

“The second is nationalism. Trade skeptics tend to think that the United States is culturally superior to other nations. They say the world would be better if people elsewhere were more like Americans.”

“The third is ethnocentrism. Trade skeptics tend to divide the world into racial and ethnic groups and think that the one they belong to is better than the others. They say their own group is harder working, less wasteful and more trustworthy.”

In summary, Professor Mankiw concludes that “…isolationist, nationalist, ethnocentric worldview is related to one’s level of education…the more years of schooling people have, the more likely they are to reject anti-globalization attitudes.”  So if we understand Professor Mankiw correctly, we disagree with him because we’re stupid, and because we’re stupid we’re also necessarily racist.  Got it.  

Lest you think that Mr. Mankiw only holds contempt for American dissenters, he points out that the British people are stupid and racist as well:

“…the recent Brexit vote was strongly correlated with education.  Districts with a high percentage of college graduates tended to vote to remain in the European Union, while those with a small percentage tended to vote


continue reading





The Trouble with Trade

 

The Trouble with Trade

By John Mauldin, Thoughts from the Frontline 

“When goods don’t cross borders, armies will.”
– Frequently attributed to Frédéric Bastiat

“Free trade agreements are trade agreements that don’t stick to trade.”
– Ralph Nader

“The future has arrived. It’s just not evenly distributed yet.”
– William Gibson, circa 1993 in an interview (original version of the quote)

The political speech-fests are finally over. Republicans and Democrats conducted largely violence-free quadrennial conventions – but not because everyone loves each other. The disdain was palpable, both within and between the two parties.

On one topic, however, both campaigns agree: global free trade has jumped the shark. We haven’t seen this kind of protectionist rhetoric in a long time, at least from major party candidates. Globalization is taking the blame for a wide variety of ills. The trouble with all this dissing of globalization and free trade is that, like some generals, both major political parties are fighting the last war, not the ones we face today and tomorrow. And the Libertarian Party seems to think that the correct philosophy by itself will cure the problems, which it may do in the long run; but philosophy doesn’t pay the bills or create jobs in the short run.

However, we should recognize that aimless, disorganized criticism isn’t necessarily wrong. Real economic problems led to Donald’s Trump’s GOP nomination. Ditto for the strong Bernie Sanders run against Hillary Clinton. People aren’t just imagining their pain.

I have used the quote from William Gibson several times this year at the opening of the letter: “The future is already here. It’s just not evenly distributed yet.” I decided to do a little research on the quote and found that the popular version actually comes from an interview in the documentary Cyberpunk. The quote evolved over the next few years to today’s form. Most versions that you read, including the one I’d been using, did not have the final word yet at the end of the sentence. And yet (he wrote with a smile), for the purposes of today’s letter, that is the key word. We are going to talk about the negative public sentiment that…
continue reading





 
 
 

Zero Hedge

Explosion Hits Russia's Largest Virus Lab Which Houses Plague, Smallpox, Ebola And Other Deadly Viruses

Courtesy of ZeroHedge View original post here.

A sudden explosion at a Siberian virus research center on Monday reportedly left the facility engulfed in flames, according to several Russian news outlets. 

Firefighters and other emergency personnel were dispatched to the "Vector Institute" located several miles from Novosibirsk - an emergency which was upgraded "from an ordinary emergency to a major incident," a...



more from Tyler

Phil's Favorites

The future of work will still include plenty of jobs

 

The future of work will still include plenty of jobs

Even though the future is unknown, Canada’s employment rate has risen steadily from 53 per cent in 1946 to more than 61 per cent today. (Shutterstock)

Courtesy of Wayne Simpson, University of Manitoba

There is now widespread anxiety over the future of work, often accompanied by calls for a basic income to protect those displaced by automation and other technological changes.

As a labour economis...



more from Ilene

Lee's Free Thinking

Is The Drone Strike a Black Swan?

Courtesy of Lee Adler

Pundits are calling yesterday’s drone strke a “black swan.” Can a drone strike on a Saudi oil facility, be a “black swan.”

According to Investopedia:

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

I seriously doubt that no one expected or could have predicted a drone strike on a Saudi oil facility.

Call Me A B...

more from Lee

Insider Scoop

New Relic Cuts 2020 Sales Guidance, Announces Changes In Management

Courtesy of Benzinga

New Relic (NYSE: NEWR) has reaffirmed its second-quarter guidance and cut its sales guidance for fiscal year 2020 from $600 million-$607 million to $586 million-$593 million.

The company’s chief technology officer, Jim Gochee, and chief revenue officer, Erica Schultz, have resigned. New Relic also named board member Michael Christenson as its chief operating officer. Christenson joins from his ...



http://www.insidercow.com/ more from Insider

The Technical Traders

Metals are following downside sell off prediction before the next rally

Courtesy of Technical Traders

It is absolutely amazing how the precious metals markets have followed our October 2018 predictions almost like clockwork.  Our call for an April 21~24 momentum base below $1300 followed by an extensive rally to levels above $1550 has been playing out almost like we scripted these future price moves.

Now that the $1550 level has been reached, we are expecting a rotation to levels that may reach just below the $1490~1500 level before attempting to set up another momentum base/bottom formation.  And just like clockwork, Gold has followed our predictions and price is falling as we expected. Just look at our October 2018 chart where we forecasted the price of gold...



more from Tech. Traders

Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

more from Chart School

Kimble Charting Solutions

Bond Yields Due For Rally After Declining More Than 1987 Stock Crash

Courtesy of Chris Kimble

U.S. Treasury Bond Yields – 2, 5, 10, 30 Year Durations

The past year has seen treasury bond yields decline sharply, yet in an orderly fashion.

This has spurred recession concerns for much of 2019. Needless to say, it’s a confusing time for investors.

In today’s chart of the day, we look at a longer-term view of the 2, 5, 10, and 30-year treasury bond yields.

Short to long term bond yields are all testing 7 to 10-year support levels as momentum is at the lowest levels in a decade.

A yield rally is likely due across the board after a recent decline that was bigger than the stock crash in 1987!

If yields fail to ral...



more from Kimble C.S.

Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...



more from Bitcoin

Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



more from Biotech

Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

more from M.T.M.

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...



more from Our Members

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

...

more from Promotions





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...

Learn more About Phil >>


As Seen On:




About Ilene:

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.

Market Shadows >>