Posts Tagged ‘Road to Recovery’

HAS THE RALLY ALREADY EXHAUSTED ITSELF?

HAS THE RALLY ALREADY EXHAUSTED ITSELF?

Courtesy of The Pragmatic Capitalist

Dshort has an excellent chart out comparing the road to recovery using the rebounds that occurred following similar bear markets.  Excluding the 1929 data, I’ve used the S&P 500 oil crisis recovery and the tech crash to calculate potential future returns.  Assuming a total recovery of 61% (the average) from the bottom we can expect just 8.2% total returns in the coming 2 years after the incredible 5 month run we’ve already experienced.  That’s a whopping 4% compound annual growth rate.

There is no doubt that the rally off the bottom has been swift and incredible, but now investors have to begin wondering whether or not the stock market is substantially ahead of itself in the near-term?  4% annual returns would certainly imply a very poor risk/reward environment which is in-line with our current thinking.  Two pieces of data are by no means a solid scientific study, but the questions remain: is the stock market ahead of the road to recovery?  Is it different this time?

 HAS THE RALLY ALREADY EXHAUSTED ITSELF?

Unfortunately, taking the long-term perspective comes to much the same conclusions.  As I’ve mentioned before, one of the primary problems with bubbles is that the effect can often be as long and drawn out as the cause.   The only reasonable explanations for a v-shaped stock market recovery would be either 1. a miraculously quick de-leveraging & turnaround in the U.S. consumer (which isn’t occurring) or 2. rampant inflation caused by the Federal Reserve.   Unfortunately, the latter is unlikely to occur as borrowing remains extraordinarily low, banks continue to hoard cash and the consumer fails to recover quickly.  The only logical expectation is that this recovery and stock market performance will be similar in terms of performance as all of those bubbles that preceded it:

historysbubbles11 HAS THE RALLY ALREADY EXHAUSTED ITSELF?

Source: Dshort.com

 


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Doug Short and a New Look at the Four Bad Bears

Doug Short and a New Look at the Four Bad Bears

Courtesy of Bill Luby’s VIX AND MORE

While we are waiting to see what the FOMC has to say, I thought I would use this lull to highlight the work of Doug Short, which can be found at dshort.com.

Yesterday, in The Road to Recovery, Doug looked at the profile of recoveries from four strong bear markets. Given the relative ease with which stocks have recovered from their March lows (see chart below), Doug adopts a skeptical tone (which I share) about the path forward for stocks:

For a related post and graphic that puts the above in a different perspective, readers are encouraged to check out Doug’s The “Real” Mega-Bear Quartet 2000.

Road to Recovery

[source: dshort.com]

“Our current market is now 47% above the March 9th low. It has significantly outperformed the 1974 and 2002 rebounds over the equivalent period, and it briefly surpassed the 48% rally in the 1929 Dow. Will it continue to show resilience?”

 


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Zero Hedge

S&P Futures Surge 10 Points In One Tick On $3.2BN Market On Close Buy Imbalance

Courtesy of ZeroHedge View original post here.

It has been nearly two months since the market was so illiquid it would surge (or plunge) on news of the size of the daily market on close (MOC) imbalance. But it now appears that illiquidity is back, baby, because at exactly 350pm ET when the MOC closing imbalance is disclosed, the Emini soared 10 points in seconds when...



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ValueWalk

ICCR "Investment Group" On A Re-commitment to "Racial Justice"

By Anna Peel. Originally published at ValueWalk.

As our country collectively shudders at this most recent in a series of racial flash points – the very public and cruel execution by Minneapolis police of yet another black person, George Floyd – it is easy to turn away and surrender to a feeling of hopelessness and the belief that the cycle of systemic oppression and discrimination followed by public protests and promises of reform, is destined to repeat. This would be a mistake.

Q1 2020 hedge fund letters, conferences and more

Fighting Systemic Racism

In his last book, “Where Do We Go From Here: Chaos or Community?...



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Phil's Favorites

Momentum Monday - Rioting, Looting and Froth

 

Momentum Monday – Rioting, Looting and Froth

Courtesy of Howard Lindzon

[Originally published on June 1.]

I joked on Saturday on Twitter that ‘The FED would do an emergency rate cut on Sunday to stoop the riots'.

Combine riots and looting with some of the frothy sentiment signals I am seeing in the streams I would not be surprised at a strong pullback.

This weekend there were hundreds of peaceful protests and too many scenes of violence. It was heartbreaking to see videos and pictures including the Coronado bridge being closed down for the day as police stood guard. [Below.]...



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Kimble Charting Solutions

Aussie Dollar Suggesting Much Higher Commodities And Yields On The Way???

Courtesy of Chris Kimble

Is the Aussie Dollar about to jump higher and signal that Commodities and interest rates are about to do the same? Possible!

This chart looks at the Aussie Dollar on a monthly basis over the past 16-years.

The AU$ created a bottoming pattern over several months in late 2008/early 2009 at (1). While creating the bottom, a couple of monthly bullish reversal patterns formed. What did commodities and yields do following the bottoming process in the AU$? Both were creating bottoms as well!

The 9-year decline in the AU$ has it testing triple support a...



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The Technical Traders

Comparing Bitcoin and Ether During the Coronavirus Pandemic

Courtesy of Technical Traders

You don’t need a crystal ball — or an economics degree — to notice the pandemic is having a historic impact on the stock market and commodities.

Gold initially went down (like all assets) in the mid-March meltdown, but is up 14% YTD. Oil bid negative, for the first time ever, as May futures traders dumped contracts to avoid taking delivery amid a lack of storage. It has since rebounded partially due to production cuts and the lifting of lockdowns. Orange juice is up over 26% YTD on adverse weather than impacted Brazil’s crop and increased consumer demand.

The most surpris...



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Biotech/COVID-19

Antibody injections could fight COVID-19 infections - an infectious disease expert explains the prospects

 

Antibody injections could fight COVID-19 infections – an infectious disease expert explains the prospects

Antibodies (pink) attacking a virus particle (blue). STEVEN MCDOWELL/SCIENCE PHOTO LIBRARY

Courtesy of Dimiter Stanchev Dimitrov, University of Pittsburgh

Antibodies are part of us – literally.

We have billions of them in our bodies with a combined weight of about 100 grams, or about the weight of a bar of soap. If there are so many antibodies inside our b...



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Chart School

Silver volume says something is near boiling point

Courtesy of Read the Ticker

Fundamentals are important, but they must show up in the chart. And when they do and if they may matter, it is a good sign if price and volume waves show a change of character.

The Point and Figure chart below is readtheticker.com version of PnF chart format, it is designed to highlight price and volume waves clearly (notice the Volume Hills chart).

Silver ETF volume is screaming at us! The price volatility along with volume tells us those who have not cared, are starting to, those who are wrong are adjusting, and those who are correct are loading up. Soon the kettle will blow and the price of silver will be over $20. 

Normally silver suffers in a recession, maybe this time with trillions of paper money being creat...

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Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due

 

US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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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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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

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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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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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