Archive for the ‘Appears on main page’ Category

Signs of a Bottom

 

Signs of a Bottom

Courtesy of 

The S&P 500 gained 6.4% last week, the second-best post-pandemic performance for the large-cap index.  For a moment there, we were out of bear-market territory, bouncing to an 18.5% decline from all-time highs. Now, it’s a bear market again ¯\_(?)_/¯

All silliness aside, calls for a bottom appear premature.

Michael Cembalest and his team did some work on what you want to be on the lookout for, and we’re not there quite yet. They said that PMI surveys have historically been the best leading indicators, and so you’re going to want to see that bottom. It hasn’t. He also pointed out in the chart below, that over the last few decades, we’ve seen interest rates top prior to equity markets bottoming (gray line). So we’re 0 for 2.

Economic data is backward-looking, which is why it tends to bottom after the stock market. Cembalest shows that on average, stocks bottom 116 days before the economy does. That’s a long time. The news will get worse, but the market will stop reacting to it. We’re not there yet.

While it’s too early to call a bottom, there are some signs of capitulation (ARKK flows aside). The companies trading below their cash levels are at the highest levels in the last few decades.

And investors, at least the ones polled by AAII are as bearish as they’ve been since the GFC.

Every bear market is unique, but they all share one thing in common; they end. Sam Ro has a similar takeaway, saying, “the most important pattern in history’s bear markets is that the market has always come out on top — and then some.”

Josh and I are going to cover this and much more on tonight’s What Are Your Thoughts?

 





What Now Wednesday – Markets Struggle to Stay Above Last Week’s Lows

Well yesterday was ugly.  

A lot of it was caused by an almost 1% gain in the Dollar but that was caused by AWFUL Consumer Confidence numbers (98.7) while, at the same time, Fed Pres Williams said he expects rates to be 3.5-4% next year and thinks 0.75% would be appropriate at the next meeting.  So stagnant Economy + Inflation = Stagflation – and that's not a good thing.

Goldman Sachs FINALLY realized earnings expectations for 2023 were likely overdone – especially in light of higher interest rates.   Fortunately, at PSW, we've been taking higher rates into account all year in determining which companies to invest in so our selections should do very well as GS sends their High Net-Worth Clients running for the safety of low-debt stocks.  

When the market is reacting to news that isn't news to us – we see it as a buying opportunity but FIRST we increased our hedges (SQQQ in particular) – as we did not like the display of overall weakness we saw in the indexes yesterday.  We're going to give them a hall pass due to the pop in the Dollar but not a lot of slack.  We had planned to hedge more into the holidays anyway, this just hastened our plan. 

One saving grace to the sell-off is it came against low volumes – so what is done can easily be undone but we're going to need some good news and all we have this morning is some depressing Q1 GDP data (-1.5%) and BBBY just announced they are getting rid of their CEO (as if that will help) as sales were down 27% – because who would have thought that cutting back on coupons while the customers were suffering from inlfaion would not work out well???    Mark Triton has been with BBBY since 2019 and, before that, he was the CEO of TGT – so you'd think he'd have a clue but inflation makes fools of us all, apparently.  

You can now buy BBBY, which also includes BuyBuyBaby (but who's having those these days?) for Just $500M at $6.50 per share and they do have $7Bn in sales but that's dfown from $12Bn in 2019, when Triton took…
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Animal Spirits: Are We Sure a Recession is Coming?

 

Animal Spirits: Are We Sure a Recession is Coming?

Courtesy of The Irrelevant Investor, Michael Batnick 

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Tempting Tuesday

We're not there yet. 

As long as we are over 12,000 on the Nasdaq 100, we're not bearish BUT as long as we're under 4,000 on the S&P 500, we are not bullish either.  The indexes are in a tricky spot and we need to be patient and see which way they resolve themselves.  

Our expectations, as we decided yesterday in our Live Member Chat Room are for a move back to 13,000 on the Nasdaq, where we're likely to flip bearish again and we expect 12,000 to settle down to become the middle of the NDX range – likely for the rest of the year.  

Nike (NKE) was no help last night with weak guidance but earnings were actually a beat from low expectations.  China lifted some of their lockdown restrictions again and that's boosting everyone pre-market and remember – a 1% move on the Dow these days is over 300 points – so there's nothing at all impressive about 100-point moves.  Oveall, this is more of a "watch and wait" kind of week – we made our bullish bets last week and, for the moment, we're taking a breath to see how they pan out before jumping into more stocks.  

Hamburgers are going to be 36% more expensive this Holiday Weekend and that's the data we're going to have to contend with when we get back as inflation continues to creep into every corner of Consumers' lives.  Going shopping for a BBQ party and getting a $300 bill at the grocery store vs $200 last year is the kind of thing that sticks in people's minds the next time they are surveyed about their sentiment regarding the economy and their own finances.  

And it goes round and round as, for example, UAL just agreed to give pilots a 14.5% wage increase, which means the price of your plane tickets will go up to pay for it.  This is why it takes so long for inflation to settle down – there are layers upon layers of increases which feed on each other.

Oil is blasting back to $112 after President Macron was overheard telling President Biden at…
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Momentum Monday – How Long Will Relief Rally Last?

 

Momentum Monday – How Long Will Relief Rally Last?

Courtesy of Howard Lindzon

Good morning.

As always, Ivanhoff and I tour the market looking at momentum. You can watch/listen to this weeks show right here. I have embedded it below…

Ivanhoff shares this thoughts below:

The market is better at predicting the news than the news is at predicting the market. Financial markets typically look 6-9 months ahead and try to anticipate what could happen. They are currently betting that the Fed’s aggressive tightening policy is going to send the economy into recession and the Fed will have to stop hiking sooner than previously expected. As result inflation expectations are tapering and we saw a major mean reversion last week. The worst-hit groups year-to-date outperformed significantly last week – ARKK went up 18%, the cloud ETF – WCLD, went up 15%, biotech XBI went up 14%. In the meantime, the best performing sector year-to-date – oil & gas (XOP), lost 6%, tested its 200-day moving average and it is now down almost 30% from its annual highs.

The odds are that this is just another bear market bounce that will eventually be faded again. It is really hard to know how long it can last. The conventional wisdom says that the declining 50 and 200-day moving averages are likely to be major areas of resistance for SPY and QQQ but markets often overshoot. In the meantime, there’s nothing wrong with being nimble and playing the relief rally. If the bounce has legs, we should see more stocks setting up and offering decent risk/reward entry points. As of right now, the number of good long setups is still relatively small.

Last week just 2 percent of stocks in the S&P were above 50 day moving average and that generally leads to great forward returns.

But, the longer term picture continues to be a mess now that…
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Monday Market Momentum – S&P 4,000 or Bust this Week!

ImageThere's no reason not to hit 4,000 this week – yet.  

Pre-holiday weeks are usually low-volume affairs and the market tends to drift higher.  There's not much in the way of earnings that are likely to derail us at the moment though Nike (NKE) this evening is a big one that could be problematic if it doesn't go well.  NKE was an upside surprise last quarter so it would be a huge disappointment if they miss now.  The stock has dropped 20% with the market since then – so it won't take much to get them to pop.

Of course, China went back on lockdown so they could have had additional supply-chain issues and lower sales in China and Consumer Spending in the US also pulled back recently – so it depends how things were going through the end of May, which is what this report will capture.  

NKE is the kind of stock we like to buy at PSW when they are cheap but $113 is not cheap as it's $178Bn in market cap and, even if all goes great, NKE is only going to make $6Bn this year – about 5% more than they made last year.  That means they are trading at close to 30x current earnings and it means only that $180 was RIDICULOUS and $113 is simply getting better – but still not a price we'd pay for a retail manufacturer.  

That's the dark side of upcoming earnings – there's still a lot of companies out there trading at unrealistic prices.  I can get the same return on a 10-year note (3.4%) as I can on NKE stock.  Speaking of notes, Russia is finally about to default on theirs – although they don't see it that way.  They were expected to pay $100M by last night and they did not – which is the usual definition of default – 30 days after their May 27th deadline.  Russia claims to have made payments in Rubles but Rubles are not acceptable under the contracts but it's up to the investors (private) to declare Russia in default (and hire food testers from now on) – so we'll see what happens.

On the Economic Calendar, Powell is scheduled to speak after Wednesday's GDP Report
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All Ears

 

All Ears

Courtesy of Scott Galloway, No Mercy/No Malice, @profgalloway

I’ve made my living communicating. The first 20 years of my career, I rented my brain to Fortune 500 CEOs looking for guidance on branding or strategy. Just as a hit television show is a cocktail of production values and storytelling, a good consultant brings the peanut butter and chocolate of data-driven insight and storytelling together. The ideas and data are nothing unless you can articulate them in a compelling manner.

I didn’t hate consulting, but I didn’t love it. That’s fine — “do what you love” is bullshit. I did it because I was good at it. I spent most of my time on the road, unable to form or maintain enduring relationships, and it was fucking exhausting. Yes, it provided economic security for me and my family, which was (and should have been) my goal … full stop. But I spent the better part of two decades helping companies sell people stuff they didn’t need, and it felt increasingly meaningless. Actually, it felt like nothing … like it didn’t happen.

The Relentless Pursuit of Greatness

Within five or six years all I could think about was selling the firms I’d founded that helped other businesses sell stuff. The sales of Prophet and L2 provided economic security and blessed me with a new task — to be great, really great … at something. So I turned to teaching, and in 2002 I joined the faculty of NYU. Since then, more than 6,000 students have taken my courses. It’s been hugely rewarding, and, at the core, I consider myself a teacher. A very good teacher … but not a great one.

Despite clocking Cs in my high school and college English courses, sheer practice has improved my writing. First as a consultant, ghostwriting letters and press releases worth (optimistically) $1,200/hour. Since 2017, I’ve published a book about every 18 months (coming this fall). Good books, but still … real greatness eludes me. TV? Hands down my worst medium. I’m the Covid-19 of the idiot box, infecting and sometimes killing weak networks — Vice, Bloomberg Quicktake and CNN+. What network goes down next? Just look for my face.

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Fabulous Friday Finish – S&P Back to 3,840 – As Planned

Told you so!

Last Friday we told you there would be a 2% bounce – back to 3,780 on the S&P 500 and we closed yesterday at 3,790 so mission accomplished and now we're testing our also-foretold 3,840 Line and, as I noted yesterday, that's going to be our stop on the way to 4,000 next week.   

Once again, this is not a recovery though, 4,000 is the middle of our expected range on the S&P 500 and we HOPE (not a valid investing strategy) that we stay in the top of that range, up towards the Strong Bounce line at 4,320 – because only that is going to prevent the 50-day moving average (now 4,087) from falling below 4,000 about a month from now.  Once that happens, you will WISH (also not a valid strategy) that we can get back to 4,000.

We have a nice tailwind next week from that rising MACD line so let's not waste it.  It's going to be a low-volume, pre-holiday week and, if all goes as expected, we'll probably be adding more hedges next Friday but I think our portfolio balance is good going into the weekend with both the Long-Term and Short-Term Portfolio already ahead of our June 15th review

Knowing what the market is going to do next let us buy with confidence in the past two weeks and it's been very, very busy for our Members as we added GOOGL, LOVE, IBM, CIM, LEVI, F, TROX and BBY to our Top Trade Alerts this month alone.  In our Live Member Chat Room, we added many more longs to our portfolios – taking advantage of the opportunities that presented themselves – and that's why we're going to want more hedges next week – we have a lot more to protect!  

Also, just like we expected the 3,680 line to hold on the S&P, we expect the 4,000 line to be rejected – at least on the first attempt and that's why we keep our hedges in the Short-Term Portfolio – where we can take advantage of these short-term moves.  It's also nice that our 5% Rule™ lets us see what's coming so far in…
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Phil’s Stock World’s Live Weekly Webinar

Phil's Stock World's LIVE Weekly Webinar 6-22-2022

Major Topics:

00:04:56 Checking on the Markets
00:06:20 Petroleum Status Report
00:22:57 XOM
00:25:14 VLO
00:28:58 DJI
00:30:51 Dow Historical Chart
00:40:48 Moore's Law
00:46:10 Back to Dow Historical Chart
00:48:48 CROX
00:51:52 HBI
00:56:20 Compund Interest Calculator
01:11:42 Indices Charts
01:18:18 GDP
01:43:17 TSLA
01:46:11 TGT
02:09:03 Thailand per capita GDP

 

Phil's Weekly Trading Webinars provide a great opportunity to see what we do at PSW. For LIVE access to all our webinars, join us at PSW!

Subscribe to our YouTube channel and view all our past weekly webinars here.





Follow-Through Thursday – S&P 3,840 is our Next Stop on the Way Back to 4,000

"Well, we know where we're goin'

But we don't know where we've been

And we know what we're knowin'

But we can't say what we've seen" – Talking Heads 

We had a very nice Macro Discussion on our Live Trading Webinar Yesterday.

The bottom line is the "Recession" is a lagging measurement of the damage that's already been done by War, Supply Chain Disruption, Covid, Inflation, Global Warming and the Labor Shortage – it's like getting the bill after you've eaten the food – the bill doesn't make things worse – it just sums up the damages.

That's the problem with Stimulus Spending – the Government spent $11Tn in the past two years and we have/had a $22Tn economy so 25% of it has been stimulus and now there is no more stimulus (after Biden's last $2Tn) so we have to stand on our own and, if you think a $17Tn economy (without stimulus) bounces back to a $22Tn economy in one year – you just don't understand how economies work.  So, that means we'll be at LESS than $22Tn without stimulus and that means, on paper, the economy will contract.  

The thing is, it already contracted 25% during Covid but we pretended it didn't and we papered over the gaping economic hole with Trillions of Dollars and now we are finally paying the proverbial piper but there's no sense in whining about it or panicking over it – this is simply an honest measturement of our economy for a change and labeling it a "Recession" doesn't make it worse.  That's like saying you can say the temperature is 32 degrees but don't say "freezing" – because that would make it cold…

30 Inspirational Warren Buffett Quotes on Investing and LifeSo stop whining and find things to buy but buy with caution and scale into the positions (see our Strategy Section) because, as we learned in 2008/9 –…
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Phil's Favorites

Signs of a Bottom

 

Signs of a Bottom

Courtesy of 

The S&P 500 gained 6.4% last week, the second-best post-pandemic performance for the large-cap index.  For a moment there, we were out of bear-market territory, bouncing to an 18.5% decline from all-time highs. Now, it’s a bear market again ¯\_(?)_/¯

All silliness aside, calls for a bottom appear premature.

Michael Cembalest and his team did some work on what you want to be on the lookout for, and we’re not there qui...



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ValueWalk

Let General Mills Command A Position In Your Defensive Portfolio

By MarketBeat. Originally published at ValueWalk.

Recession Resistant General Mills Rockets Higher Outlook

We’ve been interested in General Mills (NYSE:GIS) for some time now and we couldn’t be happier with the FQ4 2022 results. The company not only beat on the top and bottom line but issued favorable guidance in the face of mounting economic headwinds. The takeaway here is that defensive consumer staple stocks like General Mills are among the best positioned for today’s times and General Mills is among the best picks. Trading at only 18.5X it’s earnings outlook the stock is undervalued relative to its peers while paying an ...



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Zero Hedge

Why Is The VIX So Low? A Surprising Answer Emerges In The Market's Microstructure

Courtesy of ZeroHedge View original post here.

One of the most frequent questions tossed around Wall Street trading desks (and strip clubs), and which was duly covered by Bloomberg recently in "Fear Has Gone Missing in Wall Street’s Slow-Motion Bear Market", is why despite the crushing bear market and the coming recession, does the VIX refuse to rise sustainably above 30, or in other words, why is the VIX so low?

As Goldman's Rocky Fishman wrote in a recent note "Option Markets Ta...



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Politics

Putin's propaganda is rooted in Russian history - and that's why it works

 

Putin’s propaganda is rooted in Russian history – and that’s why it works

Courtesy of Julia Khrebtan-Hörhager, Colorado State University and Evgeniya Pyatovskaya, University of South Florida

Russia’s war against Ukraine is pressing into its fifth month – despite several rounds of failed peace talks, and Western countries’ issuing severe economic sanctions against Russia.

The war isn’t happening just on Ukrainian soil. President Vladimir Putin’s propaganda is propelling...



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Kimble Charting Solutions

Doc Copper Pattern Suggesting Another Huge Decline Is To Be Expected?

Courtesy of Chris Kimble

Looks like the historic run higher in copper prices may be taking a breather.

While we cannot say that the LONG-term rally is over. It definitely has put in an intermediate top.

Back in March, we wrote about this possibility in our article, “Is Copper Repeating Historic Double Top Price Pattern?” There have been two other historic double tops that have taken place in the past 20 years.

Well, here we are today and the double top pattern is breaking down and Doc Copper is on the ropes. Below is an updated ...



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Chart School

Gold Stocks Review

Courtesy of Read the Ticker

Gold miners do well when gold is higher, and borrowing and gasoline costs are lower.

Lets start with a question: Why do governments own gold?

1) The need it to support their economy during an energy crisis. If their currency is collapsing oil producers will not take fiat for settlement, but they will accept gold.
2) While the US prints money the purchasing power of the US dollar is declining, hence gold is a hedge.

A particular market action which forces traders to move gold higher is when oil moves higher while the US dollar falls. This means the US dollar is losing purchasing power against oil, therefore gold will go higher as the demand for (1) above explodes. Some history, gold moved higher sharply in these years 2007, 2011, 2016, 2020. All ...

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Digital Currencies

Scams and cryptocurrency can go hand in hand - here's how they work and what to watch out for

 

Scams and cryptocurrency can go hand in hand – here’s how they work and what to watch out for

The anonymous nature of cryptocurrency transactions is ideal for con artists. seksan Mongkhonkhamsao/Moment via Getty Images

Courtesy of Yaniv Hanoch, University of Southampton and Stacey Wood, Scripps College

When one of our students told us they were going to drop out of college ...



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Biotech/COVID-19

At last, COVID-19 shots for little kids - 5 essential reads

 

At last, COVID-19 shots for little kids – 5 essential reads

Millions of U.S. children between the ages of 6 months and 4 years will soon be eligible for COVID-19 shots. FatCamera/E+ via Getty Images

Courtesy of Amanda Mascarelli, The Conversation

For many parents of kids under age 5, a safe and effective COVID-19 vaccine could not come soon enough. A full year and a half after shots first became available for adults, their wait is nearly over.

On June 17, 2022, the Food and Drug Administration ...



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Promotions

Phil: Be the House Not the Gambler at the Fintech Conference in Vegas

 

Phil gave an excellent, educational presentation called "Be the House Not the Gambler: Using Stock Options to Significantly Boost Your Portfolio Performance" at the FinTwit Conference hosted by Lupton Capital and Benzinga on May 14 in Las Vegas. The video is set to start playing at 5:30:45, when Phil takes the stage (but you can see previous presentations by backtracking).

AGENDA 
9:00 AM Opening Remarks with Jonah Lupton, Entrepreneur & Investor
9:05 AM Wagging the Dog: How to Profit From Derivative Driven Moves in the Market with Steven Place, Founder, Investingwithoptions.com
10:00 AM The MarketWebs & The Path of Least Resistance, Christian Fromhertz, CEO, The Tribeca Trade Group
10:55 AM Fireside Chat with Gareth Mann, Founder & CEO, AlphaStream & Spencer Israel, Executive Producer, Benzinga
11:25 AM Sponsor Pitch: Carolyn Bao, VP of Marke...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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





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. Contact Ilene to learn about our affiliate and content sharing programs.