Posts Tagged ‘corporate buybacks’

Will We Hold It Wednesday – Strong Bounce Edition

What an amazing recovery!  

Just one week ago the World was coming to and end and now everyone has their rally caps back on.  Investors really are sheep – except I think sheep have better memories…  We're still right on plan of dropping 10% and then bouncing 4% (strong bounces) by Wednesday (today) that was initiated on October 6th by our friends at the Fed (see yesterday's post for the summary).  For those of you keeping score, our strong bounce predictions for today were:

  • Dow 16,466 (weak) and 16,632 (strong).
  • S&P 1,878 (weak) and 1,903 (strong).
  • Nasdaq 4,280 (weak) and 4,360 (strong).
  • NYSE 10,360 (weak) and 10,540 (strong).  
  • Russell 1,104 (weak) and 1,128 (strong).

INDU WEEKLYThe Dow is just 17 points away from our goal and we'll just need the NYSE and the Russell to confirm their bounce lines and THEN we can get bullish again.  Meanwhile, we actually got a bit more bearish in our Short-Term Portfolio (also in yesterday's post) as our Long-Term Portfolio popped right back to up 18.1% for the year so we wanted to lock those gains in with the STP, which finished the day up 81.8%, down from 92% in the morning as the markets rocketed.  

If the rally is real, the Dow should have no problem at all popping our 16,632 line – after all, it jumped 234 points yesterday but stopped dead right at our strong bounce line.  The…
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Will We Hold It Wednesday – Global Correction Edition

You call this a correction?

The Nasdaq is down 4%, Russell is down 5%, the Hang Seng is down 6% and the FTSE is down 3.6% but barely a pause from the rest of our Global Indexes.  The problem is, it's been so long since we had a proper pullback that people think a tiny little correction is the end of the World.  Even in the good old days, before high-frequency trading made a joke out of the market – investors didn't get too upset about a 5% pullback

That may be the problem as well.  The reason the market has marched off to record highs is BECAUSE investors have been led to believe that it's better than bonds, better than cash, even – to have your money in the stock market.  We certainly seem to have convinced a lot of Boards of Directors that the best thing to do with their company's money is to buy back their own stock or the stock of their competitors – no matter how ridiculous the price.  

$533Bn of hard-earned Corporate Profits were spent buying just the S&P 500, by the S&P 500, in the past 12 months alone.  That's 20% more than all of 2013 ($420Bn) and 30% over the 5-year average and that DOESN'T include M&A activity – also at a record pace.   While this has been going on, insiders have been SELLING their company stock at a record pace – Interesting…

So the company uses it's profits, not to invest in it's own future but to prop up it's own stock price – making earnings seem better because you are dividing the profits by a lower number of shares than there were last year.  This inflates the stock price and the insiders get out and that's when you buy – is that about right?  

What a friggin' scam - I can't believe you fell for that!  Seriously, that is such an obvious fraud that you would think people would run screaming away from equities.  The problem is, there's nowhere to run to, is there.  Your cash is being devalued, bonds don't keep up with inflation, real estate is still very…
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INSIDERS AREN’T THE ONLY ONES BOYCOTTING THEIR OWN SHARES

INSIDERS AREN’T THE ONLY ONES BOYCOTTING THEIR OWN SHARES

boycotting stock sharesCourtesy of The Pragmatic Capitalist

Insiders aren’t the only ones who aren’t buying their own shares.  According to S&P U.S. corporations have reduced buybacks of their own shares to levels that haven’t been seen since 1998.  Bloomberg reports:

U.S. companies spent the least on share buybacks in the second quarter since at least 1998, S&P said, as the recession crimped earnings.Standard & Poor’s 500 Index companies paid $24.2 billion to repurchase shares, a 72 percent decline from the $87.9 billion they spent a year earlier and 86 percent less than the record $172 billion in the third quarter of 2007. That’s the least since S&P began tracking the trend in 1998, the New York-based research and credit rating firm said. In the second quarter, 169 companies bought back stock, compared with 288 a year earlier.

The worst recession in seven decades convinced companies to stop buying back shares even after valuations fell to their lowest level in two decades, according to data compiled by Bloomberg. Executives use repurchases to lower the amount of outstanding shares and increase stockholders’ stake in profits.

“Weak economies, poor growth prospects, the credit crunch, all of those factors that pushed stock prices down were also impacting revenue, and cash on hand, and all the things needed to repurchase shares,” said James Gaul, a money manager at Boston Advisors LLC in Boston, which oversees $1.5 billion. “In a situation where you’re really strapped for day-to-day expenses, you’re not going to be buying back stock.”

The collapse of the subprime mortgage market spurred $1.6 trillion in bank losses and writedowns worldwide, dragged the U.S., Europe and Japan into the first simultaneous recession since World War II and froze credit markets.

Buybacks Drop

The decline in share buybacks came after the S&P 500 fell to its lowest price relative to profits in 24 years in March. The index traded at an average price-earnings ratio of 14.2 in the second quarter, compared with 16.9 a year earlier and 16.6 in the third quarter of 2007.

Companies in the S&P 500 hoarded cash in the second quarter to weather a record eighth consecutive decrease in quarterly profit. They held a combined $1.06 trillion in cash in the period, 21 percent more than a year earlier and 29 percent more than the in the third quarter of 2007,


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INSIDERS AREN’T THE ONLY ONES BOYCOTTING THEIR OWN SHARES

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INSIDERS AREN’T THE ONLY ONES BOYCOTTING THEIR OWN SHARES

boycotting stock sharesCourtesy of The Pragmatic Capitalist

Insiders aren’t the only ones who aren’t buying their own shares.  According to S&P U.S. corporations have reduced buybacks of their own shares to levels that haven’t been seen since 1998.  Bloomberg reports:

U.S. companies spent the least on share buybacks in the second quarter since at least 1998, S&P said, as the recession crimped earnings.Standard & Poor’s 500 Index companies paid $24.2 billion to repurchase shares, a 72 percent decline from the $87.9 billion they spent a year earlier and 86 percent less than the record $172 billion in the third quarter of 2007. That’s the least since S&P began tracking the trend in 1998, the New York-based research and credit rating firm said. In the second quarter, 169 companies bought back stock, compared with 288 a year earlier.

The worst recession in seven decades convinced companies to stop buying back shares even after valuations fell to their lowest level in two decades, according to data compiled by Bloomberg. Executives use repurchases to lower the amount of outstanding shares and increase stockholders’ stake in profits.

“Weak economies, poor growth prospects, the credit crunch, all of those factors that pushed stock prices down were also impacting revenue, and cash on hand, and all the things needed to repurchase shares,” said James Gaul, a money manager at Boston Advisors LLC in Boston, which oversees $1.5 billion. “In a situation where you’re really strapped for day-to-day expenses, you’re not going to be buying back stock.”

The collapse of the subprime mortgage market spurred $1.6 trillion in bank losses and writedowns worldwide, dragged the U.S., Europe and Japan into the first simultaneous recession since World War II and froze credit markets.

Buybacks Drop

The decline in share buybacks came after the S&P 500 fell to its lowest price relative to profits in 24 years in March. The index traded at an average price-earnings ratio of 14.2 in the second quarter, compared with 16.9 a year earlier and 16.6 in the third quarter of 2007.

Companies in the S&P 500 hoarded cash in the second quarter to weather a record eighth consecutive decrease in quarterly profit. They held a combined $1.06 trillion in cash in the period, 21 percent more than a year


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Phil's Favorites

'What Betrayal Looks Like': UN Report Says World on Track for 2.7°C of Warming by 2100

 

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Image by Gerd Altmann from Pixabay

'What Betrayal Looks Like': UN Report Says World on Track for 2.7°C of Warming by 2100

"Whatever our so-called 'leaders' are doing," said Swedish climate activist Greta Thunberg, "they are doing it wrong."

By Jake Johnson, Common Dreams

The United Nations warned Friday ...



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Politics

'What Betrayal Looks Like': UN Report Says World on Track for 2.7°C of Warming by 2100

 

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Image by Gerd Altmann from Pixabay

'What Betrayal Looks Like': UN Report Says World on Track for 2.7°C of Warming by 2100

"Whatever our so-called 'leaders' are doing," said Swedish climate activist Greta Thunberg, "they are doing it wrong."

By Jake Johnson, Common Dreams

The United Nations warned Friday ...



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Biotech/COVID-19

FDA panel recommends limiting Pfizer booster shots to Americans 65 and older, and those at high risk of severe COVID-19

 

FDA panel recommends limiting Pfizer booster shots to Americans 65 and older, and those at high risk of severe COVID-19

No third dose for now. AP Photo/Robert F. Bukaty

Courtesy of Matthew Woodruff, Emory University

The key scientific advisory council of the Food and Drug Administration has voted to deny authorization of...



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Zero Hedge

Elon Musk's China Ass-Kissing Tour Has Resumed

Courtesy of ZeroHedge View original post here.

With interesting questions now being raised about Tesla's sales in China seemingly not matching official insurance data for registrations, Elon Musk is continuing his Chinese ass kissing tour that he began earlier this year.

In a forum on Friday, Musk praised Chinese automakers - also known as Tesla's competition - as “the most competitive in the world”. Musk also said China had "great potential" as a nation for elect...



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Digital Currencies

Animal Spirits: Crypto's Gateway Drug

 

Animal Spirits: Crypto’s Gateway Drug

Courtesy of Michael Batnick

Today’s Animal Spirits is brought to you by YCharts

On today’s show we discuss:

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Chart School

Gold and Silver Volume Waves Review

Courtesy of Read the Ticker

The sign says it all. The professionals want the public to focus on the words, to scare out the weak hands, but the color of the sign underlines the value in a money printing world, its gold stupid.

Point and figure (PnF) charts draw price waves with the sum of volume per wave. PnF charts high light true accumulation underneath price action. This is why Richard Wyckoff favored PnF charts.    

In the charts below we see price moving sideways to down, yet volume on up waves are greater than volume on down waves. At the moment there is no heavy selling on down waves. Or in other words price is being moved down at a low volume expense to allow accumulation at a lower price.

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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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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.

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Lee's Free Thinking

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

 

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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

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  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
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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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