Posts Tagged ‘equities market’

IS THE “DEATH CROSS” A USEFUL INDICATOR?

IS THE “DEATH CROSS” A USEFUL INDICATOR?

Skull

Courtesy of The Pragmatic Capitalist 

At the March highs we were talking about death crosses.  No, not death crosses in the S&P, but the death cross in the one equity index that has proven to be even remotely leading over the course of the last 5 years – China. Today, everyone and their mother is chattering about the death cross in the S&P 500.  Is it of any use?  Jeff Kleintop at LPL says it’s nonsense:

“While much is made of the “death cross” of the S&P 500 50-day moving average falling below the 200-day, it has actually been a buying signal during these periods in the past. A good example of this took place in 2004 when during the soft spot in the recovery the 50-day crossed below the 200-day on August 17, 2004, just as the S&P 500 had completed the low point of its soft spot pullback and embarked upon a double-digit percent gain over the next three months.”

Pierre Lapointe, a macro strategist at Brockhouse Cooper agrees:

“The death cross IS nonsense. They’re no better than a flip of a coin to predict future returns. Check out these odds: Since 1970, only 10 of the 21 occurrences actually resulted in a market pullback a month after the death cross. Three months later, the market was down only 43% of the time. With odds like this, don’t short the market. Go to a casino — you’ll have more fun.”

The S&P 500 and the U.S. equity market has not proven to be a leading indicator of much in recent years.  Many even question its discounting capabilities at all.  The moral of this story?  Don’t wait until after a 15% decline in equities to jump on some technical analysis bandwagon.  Especially one from an index that has proven to be a leading indicator of just about nothing. 


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WHY THE GOOD JOBS REPORT COULD BE BAD NEWS FOR 2010

WHY THE GOOD JOBS REPORT COULD BE BAD NEWS FOR 2010

Courtesy of The Pragmatic Capitalist

Investors are likely to be increasingly concerned about rate increases over the coming months due to the much better than expected non-farm payrolls report.  Using the last few recessions as a reference point it is likely that equity gains could become increasingly difficult to come by as the Fed is pressured to remove their accommodative stance and other programs are wound down.

Teun Draaisma at Morgan Stanley recently noted this in his “tightening checklist”.   I would expect an upgrade across the checklist.  As we expected job creation is certain to begin by Q1 and Fed language should begin to change dramatically.

 WHY THE GOOD JOBS REPORT COULD BE BAD NEWS FOR 2010

Despite higher rates coming shortly, MS expects the rally to continue in the near-term.  I can’t disagree with this outlook.  Stocks are very buoyant heading into Christmas and it’s unlikely that this report will force the Fed’s hand immediately.  Like Draaisma, I believe the rally could move higher into year-end based on this optimism, but could then begin to sputter out as 2010 becomes a year of higher rates and transition into an economy without a government crutch.  MS analysts report:

We expect the sweet spot to last a bit longer. The cyclical bull market has some further to run, in our view.  We expect 20%+ earnings growth in 2010, equity valuations are still attractive versus rates, and sentiment is not ultra-bullish yet. We prefer equities to fixed income, and we expect a further 9% upside to reach our 1200 bull case target for MSCI Europe based on the mid-cycle multiple on mid-cycle earnings of 15x 12% ROE.

Lessons from past tightening cycles. The start of tightening phases tends to lead to some indigestion and a defensive rotation in equity markets, for two quarters or more. The 1994 and 2004 episodes led to a 16% and 8% fall in MSCI Europe over eight and five months. Sector performance was defensive, but Oil and Materials outperformed, too. In the aftermath of secular bear markets tightening phases have been more severe, with equities falling on average 25% over 13 months.

Draaisma notes that it’s silly trying to jump on the back end of a 70% rally in an attempt to time the final leg up.  As we wrote earlier this week:

But Draaisma


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Zero Hedge

The Ultra Wealthy Are Selling Billions Of Dollars In Stock

Courtesy of ZeroHedge View original post here.

As the market has "rebounded" off its lows back in March, the world's super wealthy are jumping at the chance to offload billions of dollars in stock while global central banks - and most notably the Federal Reserve - keeps a bid under the market and acts as a Mr. Magoo-like counterparty.

Many investors have been prompted to sell by market volatility over the last two weeks, which appears as though it could be signaling an end to the V-shaped recovery. This has likely helped spook the ultra wealthy into take some cash off the table. 

Seo Sang-young, an analy...



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ValueWalk

Markets Crash Two Days In A Row: The American Dream Is Dead

By Eloise Williams. Originally published at ValueWalk.

The American dream is dead, she thinks to herself. After all her hard work. All the blood, sweat and tears. Long nights in the office away from her family.  Diligently saving up every penny so they could have that white picket fence. A big screen television. And even an iPhone 11 Pro.

Q2 2020 hedge fund letters, conferences and more

The American Dream Is Officially Dead

Emma slowly sips her bourbon while sitting on her porch. Deep wrinkles caused by stress are embedded into her once smooth face. A chunk of her blonde hair falls to the ground.&#x...



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Phil's Favorites

What if he doesn't leave?

 

What if he doesn’t leave?

Courtesy of 

If Donald Trump loses the election – by any margin – does anyone see him actually conceding? Me neither. Biden may not be so fast to concede either, especially given the nature of a pandemic at the polls. The (mostly made up) controversy about mail-in ballots is sure to make this an election to remember. Contested elections have been rare in recent history, but not unheard of. How might the market react, before, during and after?

Listen to the new episode of my ...



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Politics

What if he doesn't leave?

 

What if he doesn’t leave?

Courtesy of 

If Donald Trump loses the election – by any margin – does anyone see him actually conceding? Me neither. Biden may not be so fast to concede either, especially given the nature of a pandemic at the polls. The (mostly made up) controversy about mail-in ballots is sure to make this an election to remember. Contested elections have been rare in recent history, but not unheard of. How might the market react, before, during and after?

Listen to the new episode of my ...



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Kimble Charting Solutions

Gold Breakout Triggers Buy Signal, Is $3000 Next Target?

Courtesy of Chris Kimble

90-days ago this cup & handle pattern was discussed on See It Market when Gold was trading at 1717.

Fast-forward to today and Gold is up 15 percent. So it’s time for an update!

As we pointed out 90-days ago, the initial price magnet for the rally was the 261.8 Fibonacci extension that marked the 2011 high at (1).

That high has served as price resistance for nearly 9 years! …But it may be ...



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Biotech/COVID-19

Smoke from wildfires can worsen COVID-19 risk, putting firefighters in even more danger

 

Smoke from wildfires can worsen COVID-19 risk, putting firefighters in even more danger

Firefighters have battled camp crud before, but COVID-19 brings new risks with the potential for heart and lung damage. Robyn Beck/AFP/Getty Images

By Luke Montrose, Boise State University

Two forces of nature are colliding in the western United States, and wildland firefighters are caught in the middle.

Emerging research suggests that ...



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Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker

Golds bullish trend has worked well in 2020, so what is next over the immediate 3 to 6 months? Will we continue to see a golden future.

The US dollar had been strong into COVID 19, since then the FED has printing a lot of money, and they are also considering YCC (Yield Curve Control), last seen during WW2. [Note YCC lasted 9 years over WW2. WOW, that is a lot of money printing.]

The FED is now forecast to over take competing central banks balance sheets in size, and the release valve will be a falling US dollar. Therefore we should continue to see the US dollar maintain is slow leak down over the next 3 to 6 month, say on the DXY 82 to 88. 

Also, US election worries will add to the weakening of the dollar. Of course extreme chaos in W...

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Digital Currencies

Cryptocurrencies Rarely Used To Launder Money, Fiat Preferred

Courtesy of ZeroHedge View original post here.

Authored by Shaurya Malwa via Decrypt.io,

Traditional channels continue to dominate the estimated $2 trillion global money laundering racket instead of cryptocurrencies, a report says.

In brief
  • Money laundering via cryptocurrencies is not a preferred tool for criminals, a report said...



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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.
...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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