Archive for the ‘Chart School’ Category

Animal Spirits: Record Outflows

 

Animal Spirits: Record Outflows

Courtesy of 

Today’s Animal Spirits is presented by YCharts.

On today’s Animal Spirits we discuss:

The gap is closing between active and index

Can unemployment signal a recession

Some more unemployment numbers

J.P. Morgan’s Guide to the Markets

Stocks look attractive

Alphabeticity Bias

Credit Card Perks

Do women hedge fund managers outperform?

Tough year for Einhorn

Good year for Bridgewater

High earners living paycheck to paycheck

Millennials are delusional 

Listen here:

Recommendations

  • The Wealthy Barber
  • The Coddling of the American Mind
  • Impossible to Ignore

Charts mentioned

 

 

 

 

Tweets mentioned

 

Mention Animal Spirits to receive 20% off (*New YCharts users only).





A ten percent bounce in the S&P 500, now what?

 

A ten percent bounce in the S&P 500, now what?

Courtesy of 

What does it mean when the stock market makes a low and then stages a large bounce in a short period of time? Is that sort of price action meaningful? How should traders think about? How should long-term investors think about it? What are the signs that a big bounce will lead to a new high instead of a new low later on?

Michael Batnick and Downtown Josh Brown attempt to answer these questions the best way they know how – with context, data, historical information and common sense.

Leave us a comment below, and make sure to subscribe to The Compound if you haven’t already! We love your feedback and we love our subscribers.

Here are the charts we posted in today’s video:

 

 

The Compound (YouTube)





Are the Home Builders Signaling Another Financial Crisis?

Courtesy of Chris Kimble.

Is 2018-2019 going to be a repeat of the 2007-2008 crisis for the home builders? One indicator/index to watch is the Dow Jones Home Construction Index.

This index experienced a bearish divergence just before the 2007 stock market highs. Once it kissed the underside of dual resistance and turned lower, the financial crisis was underway.

The Home Construction Index is experiencing another bearish divergence that’s developed over the past year. And it is now kissing the underside of dual resistance, similar to the pattern in 2007.

Should this key homebuilding index turn lower here and the S&P 500 break support at (1) it would mean bad news for market bulls.

Pay attention in the weeks ahead!

What price action do bulls want to see that would break the 2007 pattern? Home construction breaks above dual resistance it is currently testing!

What price action would suggest concern for the bulls? Dual resistance for home construction holds and selling pressure starts pushing them much lower.

In my humble opinion, how the Home Construction index handles the dual resistance test will be very important for the broad market for weeks to come!

This article was first written for See It Markets.com. To see the original post CLICK HERE

To become a member of Kimble Charting Solutions, click here.





Time for Mid-Cap Stocks to Outperform Broader Market!

Courtesy of Chris Kimble.

Mid-cap stocks have been underperforming large-cap stocks for quite some time. Perhaps, this is a reason for the malaise in the broader market over the past year.

Let’s take a closer look at what’s happening. In the chart below, we look at the performance ratio of mid-cap stocks to large-cap stocks, using the S&P Mid Cap ETF (MDY) and the S&P 500 (SPY).

As you can see, it’s been trading in a longer-term channel and hit upside resistance in late 2016 / early 2017 at (1). And it has been heading lower ever since.

The decline is currently testing 8-year support (2) with momentum levels oversold and potentially creating a higher low. Mid-caps have rallied from these momentum levels in the past (see green markers).

A setup is in play for Mid-cap stocks to outperform Large-cap stocks. Stay tuned!

Mid-Cap Stocks (MDY) / Large-Cap Stocks (SPY) Ratio Chart

This article was first written for See It Markets.com. To see original article CLICK HERE

To become a member of Kimble Charting Solutions, click here.





S&P 500 Testing Historical Kiss Of Resistance

Courtesy of Chris Kimble.

In February of 2018, the S&P created a low, which was tested again as support a couple of months later. These two lows became the lows of a new trading range that was forming, with support at (1).

Weakness in December saw support line (1) break, which was a negative for the broad market.

The rally of the past couple of weeks has the S&P kiss on support as new resistance at (2), as momentum is nearing oversold levels.

For the first time ever, the S&P is now kissing old support as new resistance at (2). What the S&P does at this important kiss of resistance, a send an a very important message to start our the new year!

To become a member of Kimble Charting Solutions, click here.





Return Of The Bull Or Dead Cat Bounce?

Courtesy of Lance Roberts, RealInvestmentAdvice.com

“No animals were harmed during the writing of this article.” 

If you listen to the media, the shocking and totally unexpected downturn last [year] was unable to be foreseen by anyone. Thankfully, it’s now over and we can get back to the roaring bull market. 

Or can we?

Mark Hulbert wrote an interesting piece recently stating:

“The stock market’s recent correction has been more abrupt than you’d expect if the market were in the early stages of a major decline.

I say that because one of the hallmarks of a major market top is that the bear market that ensues is relatively mild at the beginning, only building up a head of steam over several months. Corrections, in contrast, tend to be far sharper and more precipitous.”

His view is a common pushed out in the mainstream narrative as of late, but is based on a potentially flawed assumption the bear market began in October of this past year as shown below.

The decline from “all-time” highs took many of the persistently bullish commentators by surprise.

However, the topping process began long before October and, as shown in the chart below, the market was sending a clear warning that something was amiss.

As shown, the “blow-off rally” in January formed the left-shoulder of what would eventually become a “head and shoulder” topping process. For those not into the technical “mumbo jumbo,” this pattern of prices is similar to throwing a ball up in the air. Initially, the ball has a lot of momentum as it begins it rise. However, at a point, the force of gravity slows the momentum of the rise until, for a brief moment, the ball is motionless before falling back to earth.

Markets work much the same. Eventually, the momentum of the rise in prices becomes too far extended above long-term price trends, which act like gravity, and prices “fall back to earth.” The chart below shows the previous momentum driven rise and fall of the markets.

The yellow-shaded boxes denote the points where price momentum began to struggle to move higher. The lines in the bottom pane…
continue reading





The Next 20 Years

 

The Next 20 Years

Courtesy of 

There was an article in Barron’s over the weekend, It’s Been a Rough 20 Years for Stocks. The Next 20 Should Be a Lot Better. The first part of that headline is factually correct. From 1999-2018, the stock market experienced two crashes, and investors received just 5.6% annually for their troubles. Over the same time, the Barclays aggregate bond index gained 4.6% and experienced a max drawdown of less than 5%.

Looking at the chart below, sure stocks came out ahead, but did they adequately compensate investors for all of the sleepless nights? In my opinion, they did not.

Which brings us to the second part of the headline, “The next 20 years should be a lot better.” Historically, this is true. As you can see in the chart below, if U.S. stocks experienced a lousy twenty years, the next 20 generally did quite well.

In the 20 years following the peak in 1929, stocks returned a paltry 1.9%. And in the twenty years following that, they returned 14.3%.

Here’s the problem with data points like this, I don’t think they’re particularly meaningful. Does having this information make you feel any differently about your investments? Will it help you stay the course during the next this bear market?

20 years is a long time.

The fact that a 5.6% annualized return is the worst twenty year period for stocks tells you a lot about how strong the U.S. stock market has been over the last century. Unfortunately it doesn’t provide any clarity into the future.





Kendall and Hochberg: Interest Rates Win Again as Fed Follows Market

 

Kendall and Hochberg: Interest Rates Win Again as Fed Follows Market

By Elliott Wave International

Most economists and financial analysts believe that central banks set interest rates.

For more than two decades, Elliott Wave International has tracked the relationship between interest rates set by the marketplace and interest rates set by the U.S. Federal Reserve and found that it's actually the other way around--the market leads, and the Fed follows.

The latest Federal Reserve rate decision on December 19 brought the usual breathless anticipation. Confusion reigned as the U.S. president as well as a former Fed board member publicly urged the U.S. central bank not to raise rates and many wondered if the Fed would "rescue" investors with a surprise decision to leave them unchanged. The Fed, however, did what it almost always does: it brought its rate in line with market rates.

The Fed increased its federal funds rate a quarter-point from 2.25% to 2.50%. As shown by the dashed line in Figure 1, the Fed's move followed a rise in the six-month U.S. Treasury bill yield from 2.36% to 2.56% and an increase in the three-month U.S. Treasury bill yield from 2.18% to 2.42% since the prior Fed rate hike on September 26. So, market rates remain nearly undefeated when it comes to predicting what the Fed's actions will be.

181228 - Chart 1

Figure 1

Figure 2, a longer term version of the same relationship, is from The Socionomic Theory of Finance by Robert Prechter. It shows the federal funds rate as set by the Fed and the market-set three-month U.S. Treasury bill yield back to early 2000. This history shows that the T-bill market moves first and the Fed's interest-rate changes follow. As a result, no one monitoring the Fed's decisions can predict when T-bill rates will change, but anyone monitoring the T-bill rate can predict when the Fed's rates will change. We demonstrated this ability in August 2007 by predicting that the Fed was on the cusp of lowering its federal funds rate dramatically. Figure 2 shows the timing and its aftermath.

 

181228 Chart 2

Figure 2
continue reading





King Dollar Attempting To Break Support, Bullish for metals!

Courtesy of Chris Kimble.

This chart looks at the US Dollar, reflecting that it has spent the majority of the past 14-years inside of rising channel (1).

Over the past 3-years, King Dollar could be creating a series of lower highs and lower lows inside of falling channel (2). It hit the top of the channel a few weeks back, near the top of the new falling channel and some selling pressure has taken place.

The weakness in King$ has it attempting to break support of a bearish rising wedge at (3).

King$ continued weakness would send a positive message to Commodities, especially Gold, Silver and the miners! What it does at (3), will send an important message to the hard-hit commodities space. Full disclosure-Metals members have been long Gold for a couple of months.

To become a member of Kimble Charting Solutions, click here.





Weekly Market Recap Jan 6, 2019

Courtesy of Blain.

It was another volatile week with big swings especially Thursday and Friday but the new Federal Reserve Chairman finally bowed to pressure from the investor class and went very DOVISH in comments Friday, stoking the type of rallies we’ve seen for decades now on the back of words by Greenspan, Bernanke, Yellen, et al.   Ironically the guy was sitting next to Yellen and Bernanke while making these comments…

“We don’t believe that our issuance is an important part of the story of the market turbulence that began in the fourth quarter of last year. But, I’ll say again, if we reached a different conclusion, we wouldn’t hesitate to make a change,” Powell said. “If we came to the view that the balance sheet normalization plan — or any other aspect of normalization — was part of the problem, we wouldn’t hesitate to make a change.”

Thursday’s swoon was due to guidance by Apple (AAPL) as the company’s words signaled the fear of many market watchers about a global slowdown, especially in China.  This led to the worst day for Apple since 2013.

Before we move on to the week, taking a moment to assess 2018 the returns were -6.2% for the S&P 500 and -3.9% for the NASDAQ.

A very interesting statistic:  2018 was the first year since 1948 (!!) that the S&P 500 finished negative after finishing up in each of the first 3 quarters.  For the NASDAQ it was the first time since 1987 (which was a bloody October).

In economic news ISM manufacturing tumbled dramatically from a reading of 59.3 in November to 54.1 in December.  Wow.  Any reading over 50 still signals expansion but that’s quite a haircut in 30 days.  Expectations were for a reading of 57.0.

On a brighter front, although it’s usually a lagging indicator when the economy turns – the government reported job gains of 312,000 well in advance of expectations of 182,000.  The unemployment rate did rise 0.2% but that was mostly…
continue reading





 
 
 

Zero Hedge

NYC's Housing-Market Weakness Spreads From Manhattan To The Outer Boroughs

Courtesy of ZeroHedge. View original post here.

Throughout vast swaths of New York City, members of the city's vast middle class work force can barely afford even a modest apartment. Yet for years after the post-crisis housing market recovery began, that reality did little to slow down the rise in home valuations as foreign capital and rock bottom interest rates fueled a buying frenzy, pushing rents ever-higher. But after citywide rents peaked in 2014, the NYC housing market, particularly the most expensive areas o...



more from Tyler

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 ...



more from ValueWalk

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...



more from Ilene

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...



more from Kimble C.S.

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...



more from Bitcoin

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 ...

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

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...



more from Chart School

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 (...



more from Our Members

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.

...

more from Biotech

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...



more from M.T.M.

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 ...



more from OpTrader

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 >>