Posts Tagged ‘BULL MARKET’

Monday Market Movement – Do We Ever Go Down?

breadth

We all go down for a piece of the moment
Watch another burn to the death to the core
And the roadshow thrills pack the freaks and the phonies
Sing: now is now, yeah! – Rob Zombie 

There is just no way to win betting against this market!  

Well, actually, there is one way and that's betting that each pop is nonsense and tends to have a subsequent pullback intra-day but, long-term, the cumulative effect of all that low-volume pumping has been a rousing success, to say the least.  

As you can see from Andy Thrasher's S&P chart, there has been some amazing underlying deterioration since the July 4th weekend with the Advance/Decline line falling back to trend and stocks above their 200-Day Moving Average dropping 15% in 3 weeks.  Stocks above the 200 DMA is a fantastic leading indicator for downside move – ignore it at your own risk. 

TNXPeople are panicking into bonds, dropping the 10-Year Yield 20%, from 3.1% to 2.45% this year but it doesn't matter because Central Banksters are pumping SO MUCH MONEY into the Global Markets that there's enough to buy all asset classes simultaneously – something that is unprecedented in Financial History – what could go wrong?

Well, one thing that could go wrong is you putting your money into Mutual Funds.  As it turns out, in an S&P study of actively managed Mutual Funds, only 2 (two) out of 2,862 actually beat the S&P over ANY of the fund's lifetimes (limited to 12 months or longer).  

That's even worse than the average performace of hedge funds, which only averaged a 0.59% annual loss when compared to just putting your money directly into the S&P.

 This dovetails with a conversation we were having this weekend in our Member Chat Room, where I identified 4 trade ideas for a $50,000 Portfolio that only used 1/4 of the buying power to generate $365,512 in projected profits over the next 15 years using CONSERVATIVE options strategies designed to MATCH the S&P, not beat it.…
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Too High Tuesday? 10 Bullish Trade Ideas that Made Over 1,200%

SPY 5 MINUTEThis is ridiculous.

As noted on Dave Fry's chart, the S&P made a new record high with narrow participation and essentially all of the gains were one big move in the Futures to reprice the index.  I said yesterday we have been getting 50% of the day's volumes in the close and yesterday was no different and that closing volume is all dumping into the ETF, IRA and 401K suckers that are forced to buy.  

We took a couple of big bats against the Dow's move up yesterday, adding a DIA put at $166.80 (see yesterday's Member Chat for details) as well as going long on DXD at $26.20 – both with leveraged options plays, of course.  

SPX WEEKLY

We still have plenty of bullish trades to protect but, when we bein to cash out our winners and start buying short plays on the index – you can tell the winds are changing.  Our 500% trade on DDM from Thanksgiving was scheduled to top out in April anyway – and we sold in May to go away.  

That trade was one of our "10 Trade Ideas That Can Make (and some have already made) 500% in a Rising Market" and I had just as much trouble convincing people to go long in November as I'm having convincing people it's time to cash out in May.  

Not all the trades are done, but a quick summary of those positions is:

  • ABX 2015 $13/18 bull call spread at $2.80, selling 2015 $15 puts for $2.05 for net .75, now $2.35 – up 213%
  • 8 QQQ Jan 2014 $75/80 bull call spreads for $3 ($2,400), selling 1 ISRG 2015 $300 put for $23.50 ($2,350) for net $50, now net $2,600 - up 5,100%


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The Dark Side of Deficits

The Dark Side of Deficits

Bear and bull market collage

Courtesy of John Mauldin at Thoughts from the Frontline

Secular Bull and Bear Markets 
It’s Not the (Stupid) Economy 
The Consequences of a Credit Crisis 
The Dark Side of Deficits 
LA, Europe, Kansas City, and Houston

In the pre-crisis days, I used to write about things like P/E ratios, secular bull and bear markets, valuations, and all of the things we used to think about in the Old Normal. But what about those topics as we begin our trip through the New Normal? It’s time to reconvene class and think through what might change and what will remain the same. I think this will be a fun read – and let me tip my hand. I come out on the side of a new secular bull that gets us back to trend – but not just yet. The New Normal has to have its turn first. (Note: this will print out longer than usual, as there are a lot of charts.)

And speaking of first, I once again need some help from readers. I will be in "jail" next week for the Muscular Dystrophy Society. I need you to help bail me out. You can go to https://www.joinmda.org/downtowndallas2010/johnm and make a donation to help kids and families who really need help in these difficult times, and also help sponsor research that will eventually cure this disease. If you follow the link, you can see a cute video – and then make your donation!

I thank you and I am sure Jerry’s kids thank you too!

Secular Bull and Bear Markets

Market analysts (of which I am a minor variety) talk all the time about secular bull and bear cycles. I argued in this column in 2002 (and later in Bull’s Eye Investing) that most market analysts use the wrong metric for analyzing bull and bear cycles.

(For the record, even though I am talking about the US stock market, the principles apply to most markets everywhere. We are all human.)

CANYONLANDS, UT - OCTOBER 25:  The full moon rises over the White Rim Trail with the La Salle Mountains as a backdrop on October 25, 2007 in Canyonlands National Park, Utah.  (Photo by Doug Pensinger/Getty Images)

"Cycles" are defined as events that repeat in a sequence. For there to be a cycle, some condition or situation must recur over a period of time. We are able to observe a wide variety of cycles in our lives: patterns in the weather, the moon, radio waves, etc.…
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Things We Lost In The Fire

Things We Lost In The Fire

Courtesy of Joshua M. Brown, The Reformed Broker 

MOSCOW, RUSSIA. JUNE 7, 2010. Salesmen await fire fighters as Kuntsevo-2 construction marketplace in Moscow is ablaze. (Photo ITAR-TASS / Dmitry Machin) Photo via Newscom

Over the last month, US markets have been burned to a crisp.  Blame it on Europe, blame it on a softening of our own recovery data, blame it on the end of earnings season, blame it on the end of quantitative easing, blame it on the Gulf spill, blame it on the engineered cool-off in China.

Is it too soon to eulogize the March 2009 – April 2010 bull market, a 78% performer that even the most bullish never really believed in the entire way up?  Depends on which support lines and moving averages you happen to be fixated on at the moment.

But it is certainly not too early to lament the Things We Lost In The Fire - the idiosyncrasies of the Impossible Rally that we may have lost for good.  These include:

Apple as the Michael Jordan of the NASDSAQ- Steve Jobs had us from hello, we clamored around the television for each product release and conference, and Mr. Jobs did not disappoint.  Nor did Apple stock, which seemed to go up 3 to 5 points a day for what seemed like an endless stretch of time.  It was a reminder to stockpickers everywhere that ETFs didn’t control everything- that you could get one right on research.  The release of the iPad and the move toward shattering the $300 per share mark epitomized the release of our pent-up optimism and will always be remembered as a special time in market history.

Cree Research, Green Mountain Coffee and Baidu- The hottest of hot…
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A BEAR MARKET OR JUST A CORRECTION?

A BEAR MARKET OR JUST A CORRECTION?

Courtesy of The Pragmatic Capitalist 

Bull in bear costume

Readers have likely noted my decidedly more bearish tone of late.  Coming into 2010 I was fairly optimistic about the equity markets and the economy in the first half of the year with expectations of a second half slow-down.   The market appeared likely to unfold in exactly that manner, but the developments in China and Greece looked like game changers to me as the global turmoil unfolded a bit faster than I expected.  So much so that I initiated my first net short position in over two years as the S&P surged to 1200.  Just a few short weeks later the market was literally crashing.

But as the market continues to decline we have to ask ourselves if fear isn’t getting a bit ahead of fundamentals?  Are investors too bearish and pricing in too much negativity or are they not bearish enough?  In other words, is this a new bear market or this just a correction? This was the question David Rosenberg asked himself in last Thursday’s missive:

“Well, so far the S&P 500 is down nearly 10% from the highs, so this is indeed a correction thus far but more often than not, declines like these morph into something more severe — even when we are in durable economic expansion phases like 1987 and 1998. This recovery is tentative, at best. But the numbers we are looking at is a 50% retracement of the March 2009-April 2010 runup, which means 943 on the S&P 500 and the reality that lows in the market, whether they be interim or more fundamental, tend to occur with the index 20% below the 200-day moving average, which at this stage would be 879. So at least we have a defined range of when to begin to put money to work. A break below that range would indicate that Mr. Market is sniffing out a double-dip recession, not just a visible slowing.

The ECRI leading index is down to a 47-week low, which is pointing towards much softer growth ahead and the Shanghai equity index is off nearly 30% and perhaps giving us a reading on global growth prospects. The one thing we do know is that the last time China was down 30%, this was a train hardly worth boarding in terms of how to be positioned


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Dow Jones Masochism

Dow Jones Masochism

Courtesy of Joshua M. Brown, The Reformed Broker 

Female devil holding whip, flames in background

Brett Arends has a story up over at WSJ that makes the case for more pain – that the March ’09 bottom wasn’t quite painful enough to have been THE bottom for this cycle.  The article’s an amusement park for shorts, but does a nice job categorizing the items that could lead to another brutal beating for stocks.

The slide that began in 1969 didn’t end until 1982. The slump after 1929 didn’t give way until the late 1940s. Japan’s gloom is still with us.

In general, the bigger the bull-market boom, the bigger and nastier the bear market that follows. The bull market of the ’80s and ’90s was the biggest on record. So expect the bear that follows to be ugly and tenacious.

And for some perspective, Lisa Haney throws in this Dow Jones Industrial Average bear market guide…

The 2007-2009 plunge is the worst on record, but according to some, not nearly damaging enough considering the run-up in asset prices that preceeded it.

Source:

May’s Big Selloff Could Be Just The Beginning (WSJ) 


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TECHNICAL PERSPECTIVE: WHERE’S THE VOLUME?

TECHNICAL PERSPECTIVE: WHERE’S THE VOLUME?

Courtesy of The Pragmatic Capitalist 

By Decision Point:

FROM A SUBSCRIBER: Hi Carl. I’ve never written but have followed you for many years (since AOL) and have learned more about reading the market from you than any other source. You have such a clear and common sense view that it is really refreshing. I love the new daily blogs and am so glad Erin is learning the ropes. I would write her directly, but don’t see her email address anywhere. I rarely disagree with what is said, but in this case I am very suspicious of a bullish interpretation of today’s (May 27) rally, mostly due to the low volume. It seems more like a bear market, short covering rally to me. Was wondering what you think of the volume issue. Thanks for any comments. 

Thanks for the compliment!

I try not to engage in discussions in order to reconcile differences of opinion about the market, because, even if I manage to convince my “opponent”, it doesn’t mean I’ll be right about the outcome. We try to be methodical in our analysis and clear in presenting our conclusions.

After several days of sloppy, downward-sliding price action, on Thursday the market finally had the first day of what could be a full rebound from very oversold conditions. Sloppy action in oversold conditions signals a very dangerous situation, one from which a crash can result, and on Thursday we breathed our first conditional sigh of relief.

While we have emphasized the danger involved “buying into weakness” with oversold markets, we have believed that the odds favor an end to the correction because we are technically in a long-term bull market, and corrections rarely morph into bear markets in those conditions.

It is true that volume was pathetic, but volume has been unimpressive throughout this bull market, and for Thursday there is also the issue of the upcoming Memorial Day weekend. People are leaving town early.

We can also see a clear descending wedge pattern, a bullish pattern which has a high reliability for resolving to the upside.

Chart

Most important is our philosophy that price is primary, breadth and volume are secondary. Not that we don’t look at breadth and volume, but they need to be subjectively interpreted based upon the bull or bear bias of the market. As a result, none of our mechanical timing…
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SP Futures Daily Chart and a Brief Note Ahead of the Comex Option Expiry.

SP Futures Daily Chart and a Brief Note Ahead of the Comex Option Expiry.

Courtesy of JESSE’S CAFÉ AMÉRICAIN

The SP is continuing its bounce off the long term trendline for this leg of the bull market in stocks, the result of the reflation effort by the Fed.

Stocks showed some remarkably artificial action last week that was a bit hard to miss.

Similarly, gold and silver continue to rebound from the blatant hammering they took last week as we approach the option expiration at the COMEX. A fellow that trades there said last week that the price would be back over 1200 by Wednesday, and that the option buyers ‘were just asking for it.’

Perhaps they were, but it is the job of the CFTC and the US government to make sure that they don’t "get it," that is, get cheated, at least not that easily, through the obvious manipulation of price which we have seen in the last week. It would be as if the Nevada Gaming Commission allowed false dealing and marked decks to facilitate the casinos cheating their customers, who were dismissed as greedy gamblers anyway. Why this argument is allowed in the financial markets is beyond me.

The sellers are easily identified, as are the sellers of the calls, and the large short interests. This is not rocket science. It is a failure to do one’s job, and uphold their sworn oaths to protect the public. You can judge their motives.

"The government is the potent omnipresent teacher. For good or ill it teaches the whole people by its example. Crime is contagious. If the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy. To declare that the end justifies the means — to declare that the government may commit crimes — would bring terrible retribution."

Supreme Court Justice Louis Brandeis


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ROSENBERG: 400 POINT RALLIES ARE A REASON TO BE BEARISH

ROSENBERG: 400 POINT RALLIES ARE A REASON TO BE BEARISH

Two four-month-old polar bear cubs walk in an open-air cage on their first day at the Royev Ruchey Zoo in the Siberian city of Krasnoyarsk

Courtesy of The Pragmatic Capitalist 

Excellent note this afternoon from the always cheerful David Rosenberg.  Mr. Rosenberg notes that 400 point rallies and increased volatility are not the signs of a bull market, but rather a bear market!   Rosenberg writes:

“The obvious question is: how can the bull market possibly be over considering that we enjoyed that amazing 405-point rally on the Dow just three days ago (Monday, May 10)?  Wasn’t that an exclamation mark that the bull is alive and well?

Far from it.  There have been no fewer than 16 such rallies of 400 points or more in the past, and 12 of them occurred during the brutal burst of the credit bubble and the other four took place around the tech wreck a decade ago.  See Chart 2 below.

In other words, the most valuable information contained in last week’s intense volatility, underscored by the 400-plus point bounce in the Dow, is that it’s time to take chips off the table and brace for the breakdown. “

GS1 ROSENBERG: 400 POINT RALLIES ARE A REASON TO BE BEARISH

While traders have become very euphoric about the prospects of the recovery and the continuation of the bull market now that government’s around the world have saved the day (once again!) Rosenberg notes that huge spikes like the recent move in the VIX are not bullish signs at all, but rather preceded major market downturns:

gs2 ROSENBERG: 400 POINT RALLIES ARE A REASON TO BE BEARISH

Buckle up boys and girls.  Last Thursday might have only been an appetizer.

Source: Gluskin Sheff 

 


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More On Yesterday’s Plunge

More On Yesterday’s Plunge

Courtesy of Karl Denninger, The Market Ticker 

If you had any doubt about what I have been talking about during this entire ramp job off 666 – that the so-called "bull market" was in fact not much more than a handful of institutions buying shares with free Fed money and passing them between one another hoping to distribute them to you - you should be thoroughly disabused of your skepticism after yesterday.

"Revenge of the algorithms" writ large, basically.

We keep talking about how financial innovation has "helped consumers", "helped businesses" and "made markets more efficient."

Let me put this in nice, large letters for you:

That claim is one big fat LIE.

If you need anything more after yesterday to understand that all these "algos" have done is create systemic risk and permit a handful of very large institutions to siphon off more and more of your money into their pockets like an insane hoover vacuum cleaner on steroids, you need a lobotomy.

The crooners are of course out in force this morning, among them Jeff Immelt:

“This is a point in time when the world needs the U.S. to be a beacon of stability, a beacon of reliability,” Immelt said during an interview at the 92nd Street Y in New York with Norman Pearlstine, chairman of Bloomberg Businessweek. “The world doesn’t need the U.S. in a food fight right now, with everything that’s going on in Europe. We should be the safe harbor.”

But what’s his definition of this?  Why, to make sure GE can continue to siphon off more and more money from the productive economy via GE Capital!

“Financial services is a very important industry in this country,” Immelt said. “Goldman Sachs has been a partner to GE for a long time. We trust them, they’ve done great work for us.”

Yep – hinky derivatives deals are great for Goldman, and might be great for GE as well.  For the rest of the world that actually produces something?  Not so much.

“This point about damning Wall Street isn’t good for the American economy,” Immelt said.

“Some theoreticians that convinced themselves that you can have a great, productive country


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Zero Hedge

An American Horror Story: Rabobank On The Recession Of 2020

Courtesy of ZeroHedge View original post here.

Authored by Philip Marey via Rabobank,

Summary
  • While the outlook for 2020 remains sketchy, heavily dependent on non-economic factors, we now expect GDP to fall by 6% in 2020.

  • With a slowdown in February and a sharp contraction of the economy in March, we expect GDP growth in Q1 to be negative (-5% quarter on quarter at an annualized rate).

  • However, the most extreme economic growth figure is likely to be Q2 GDP growth with the lockdown continuing through at least April and l...



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Phil's Favorites

The PhilStockWorld.com Weekly Webinar - 04-08-2020

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here.

 

Major Topics:

00:01:34 - Checking on the Markets
00:04:32 - Current News
00:31:34 - LEVI
00:35:08 - AMZN
00:39:26 - Mark Mahaney's Stock Coverage
00:43:00 - Public Transportation & Disinfecting
00:48:08 - Petroleum Status Report & OPEC
01:00:24 - COVID-19 Update | WYNN
01:16:00 - Portfolio Projection: Income Portfolio
01:17:23 - FUTURES
01:18:49 - Earnings Portfolio
01:19:27 - STP | LTP
01:22:52 - S&P 500
01:30:05 - AAPL
01:34:15 - VIX
01:36:00 - M
01:42:56 - VIAC
01:47:02 - XOM
01:50:29 - LB
01:52:44 - IRBT
01:57:48 - Crude Oil WTI
02...



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ValueWalk

Public pensions face liquidity crunch amid volatility

By Michelle Jones. Originally published at ValueWalk.

Public pensions have had weak liquidity for a long time, but the recent volatility has made a bad situation even worse. S&P noted that pensions‘ investment horizons are decades long. As a result, many funds claim that market turmoil doesn’t affect their returns because they have plenty of time to ride out volatility. However, funds with weak liquidity don’t have that luxury in the current volatility.

Q1 2020 hedge fund letters, conferences and more

Public pensions in liquidity stress

S&P Global Ratings analyst Todd Kanaster and team said in a recent report that because of ...



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Biotech/COVID-19

COVID-19 is hitting black and poor communities the hardest, underscoring fault lines in access and care for those on margins

 

COVID-19 is hitting black and poor communities the hardest, underscoring fault lines in access and care for those on margins

Nurse Shelia Rickman participates in an after-shift demonstration on Monday, April 6, 2020, in Chicago’s Hyde Park neighborhood, after media reports of disproportionate numbers of black people dying from COVID-19 in the city. AP Photo/Charles Rex Arbogast

Grace A. Noppert, University of North Carolina at Chapel Hill

As the COVID-19 epidemic continues to ravage the American public, an unsurprisin...



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Kimble Charting Solutions

Silver/Gold Indicator Creates Largest Bullish Pattern In Decades!

Courtesy of Chris Kimble

Is an important metals indicator sending one of the largest bullish messages in nearly 50-years? Very Possible!

This chart looks at the Silver/Gold ratio on a monthly basis since the mid-1970s. Historically metals bulls want to see the ratio heading up, to send the metals complex a solid bullish message.

The ratio hit the top of the falling channel (A) back in 2011, where it created a large bearish reversal pattern. Since creating the bearish pattern at resistance, the ratio has experienced a significant decline.

9 years after hitting the top of the channel the ratio hit the bottom of the channel at (1) last month, where it looks to have created one of the largest monthly b...



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The Technical Traders

Adaptive Fibonacci Suggests Much Lower Prices Yet To Come - Part I

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system suggests a much deeper price move is in the works and the current price rally will likely end near resistance levels identified by the Adaptive Fibonacci Price Modeling system.  We are posting this research post for friends and followers to help them understand the true structure of price and to allow them to prepare for what we believe will become a much deeper downside price move in the future.

Fibonacci Price Theory teaches us that price moves in waves within up and down price cycles. The recent peak in price, near February 25, 2020, has resulted in a very deep -36% price collapse in the S&P 500 (ES) recently. This dow...



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Chart School

The Big Short movie guides us to what is next for the stock market

Courtesy of Read the Ticker

There is nothing new in WallStreet, it is only the players that change. Sometimes a market player or an event gets ahead of the crowd and WallStreet has to play catch up.

Previous Post Dow 2020 Crash Watch Dow, Three strikes and your out!

It is important to understand major WallStreet players do not want to miss out on a money making moves.  







...

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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.
...

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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.