Posts Tagged ‘cycles’

S&P 500: On a knife’s edge

S&P 500: On a knife’s edge

Courtesy of Prieur du Plessis, Investment Postcards from Cape Town

Last Thursday was a so-called 90% down-day for American stock markets (and many other bourses also recorded downward dynamics). A 90% down-day is defined as a day when downside volume equals 90% or more of the total upside plus downside volume and points lost equal 90% or more of the total points gained plus points lost. The historical record show that 90% down-days do not usually occur as a single incident on the bottom day of an important decline, but typically on a number of occasions throughout a major decline. As far as the very short term is concerned, 90% down-days are often followed by two- to seven-day bounces.

The stock market is on a knife’s edge at the moment as seen in the chart below, showing the long-term trend of the S&P 500 Index (green line) together with a simple 12-month rate of change (ROC) indicator (red line). Although monthly indicators are of little help when it comes to market timing, they do come in handy for defining the primary trend. An ROC line below zero depicts bear trends as experienced in 1990, 1994, 2000 to 2003, and in 2007. And 2010? With the ROC delicately perched just above the zero line, the primary trend is still bullish, but barely so.

Source: StockChart.com.

Regarding seasonality, I have done a short analysis of the historical pattern of monthly returns for the S&P 500 Index from 1950 to August 2010. The results are summarized in the graph below.

Source: Plexus Asset Management (based on data from I-Net Bridge).

As shown, the six-month period from May to October has historically been weaker than the period from November to April as seen in the average monthly return of 1.05% for the “good six months” compared with 0.25%% for the “bad six months”. Importantly, when considering individual months, September (-0.18%) and October (-0.19%) have historically been the only two negative months of the year. (A word of warning, though: one should take cognizance of seasonality but understand that it is not a stand-alone indicator and it is anybody’s guess whether a specific year will conform to the historical pattern.)

Where does this leave us at this juncture? Considering an array of indicators, we are somewhat in no-man’s land regarding whether the bull or bear will…
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Historical PE Ratios: Marking the Tops of Economic Expansions

Historical PE Ratios: Marking the Tops of Economic Expansions (and Warning of Coming Economic Contractions)

Courtesy of Michael Clark 

Robert Schiller recently posted a chart showing the history of American interest rates in the 20th Century and the history of PE ratios in American stocks.

Note the similarity between the historical PE ratios (blue line) and our contention that financial cycles run in 36-year periods, top to top.  We don’t agree exactly with the dates of economic tops in this chart — but we’renearly in agreement.

We have American economic cycles in the Twentieth Century exhibiting tops in the following years:

TOPS

1893
1929
1965
2001

BOTTOMS

1911
1947
1983
2019

Interest rates should be lowered as we proceed toward economic bottoms and should be raised as we proceed toward economic tops.  Had we begun raising interest rates slowly as we approached 2001 then we would have avoided all this mess of this decade — and the coming decade.

We need to realize that Nature has patterns and cycles — and we need to put our human ego aside (the human desire to control nature) and work WITH these cycles, instead of against them.  

We CANNOT have perpetual economic expansion in a system that has dual movements of expansion AND contraction.  Inflation needs to be followed (each time) by deflation.  Our view that inflation is GOOD and deflation is BAD may be true for the rich in the nation but it is not true for the society as a whole. 


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Ukrainians are divided over Trump's 'quid pro quo'

 

Ukrainians are divided over Trump's 'quid pro quo'

Ukrainians don’t agree on how their president should have handled Trump’s request. Andreas Wolochow/Shutterstock.com

Erik C. Nisbet, The Ohio State University and Olga Kamenchuk, The Ohio State University

As Americans turn their attention to the first p...



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Zero Hedge

What Blackout Period: BofA Just Had Its 6th Busiest Week Ever For Stock Buybacks

Courtesy of ZeroHedge View original post here.

It's time to finally put the entire "buyback blackout" myth to pasture.

Commenting on its client flows during the past week in which the S&P 500 closed up 0.9%, Bank of America clients were net buyers of US equities after a week of net selling. Both single stocks and ETFs saw inflows, marking the ninth straight week of ETF inflows.

Looking at the breakdown of client activity that crossed its trading desk, BofA writes that hedge funds were net sellers after buying for six weeks, while in a mirror image of activity, institutional clients bought for the ...



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The Technical Traders

Welcome to the Zombie-land Of Investing - Part II

Courtesy of Technical Traders

In Part I of this research post, we highlight how the ES and Gold reacted 24+ months prior to the 2007-08 market peak and subsequent collapse in 2008-09.  The point we were trying to push out to our followers was that the current US stock market indexes are acting in a very similar formation within a very mature uptrend cycle.

We ended Part I with this chart, below, comparing 2006-08 with 2018-19.  Our intent was to highlight the new price hig...



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Kimble Charting Solutions

Bank Breakout Of Financial Crisis Highs or Double Topping Again?

Courtesy of Chris Kimble

If the saying “So Goes The Banks, So Goes The Broad Market” is true, banks are facing a critical breakout/resistance test in my opinion.

This chart looks at Financials ETF (XLF) over the past 12-years. This chart reflects that a double top took place prior to the financial crisis getting started.

XLF has remained inside of rising channel (1) since the lows in 2012. It hit double resistance at (2), then it declined nearly 25%.

The decline then tested rising support at (3) and a strong rally has followed. The rally now has XL...



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Insider Scoop

Barrington Downgrades Fluent After Earnings Miss, Stock Drop

Courtesy of Benzinga

Fluent Inc (NASDAQ: FLNT) fell short of top- and bottom-line third-quarter estimates. Some suspect the missed metrics herald longer-term underperformance.

The Rating

Barrington Research analysts James Goss and Patrick Sholl downgraded Fluent to Market Perform but maintained a $5 price target....



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Digital Currencies

3 Reasons Why One Trader Didn't "Manipulate" Bitcoin Price To $20K

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Bitcoin price highs in 2017 were not the result of a single trader on an exchange, the CEO of payment company Circle claims. In a series of tweets on Nov. 4, Jeremy Allaire disputed ...



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Chart School

Gold Gann and Cycle Review

Courtesy of Read the Ticker

Gold has performed well, golden skies are here again. In fact it has been a straight line move, and this is typically unusual and a pause can be expected.

It seems the markets are happy again, new highs in the SP500, US 10 year interest rates look to re bound, negative interest may soften. The US FED has reversed their QT and now doing $250BN (not QE) repo. The main point is the FED has stopped QT, and will do QE forever. The evidence now is the FED put is under market risk and the possibility of excessive losses do not exist. 

Point: If in future if there is market risk, the FED will print it's way out of it.
Subject To: In this blog view. The above is so until the amount required rocks confidence in the US dollar as a reserve currency.&n...



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Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...



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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

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



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

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