Posts Tagged ‘small investors’

Week Gone By at Phil’s Stock World

Week Gone By at Phil’s Stock World 

By Elliott and Ilene 

A man rides a bicycle in front of the construction site of a residential complex in Kolkata August 31, 2010. Tuesday's data showed annual rate of growth picked up to 8.8 percent from 8.6 percent in the previous quarter, underscoring continued growth momentum in Asia's third-largest economy amid a slowing pace of global recovery. REUTERS/Rupak de Chowdhuri (INDIA - Tags: BUSINESS CONSTRUCTION)

Globalism is featured in several of this week’s Favorites articles. The ever insightful Paul Craig Roberts asks whether “economists have made themselves irrelevant” in his article "Death by Globalism".

Michael Synder points out that globalism is no longer "something that is going to happen in the future", but is instead a hard reality that is currently annihilating our middle class in his article "Winners and Losers."  Of our new global economy, Michael writes: 

"…American workers are just far too expensive.  So middle class manufacturing jobs are fleeing our shores at a staggering pace.

Since 1979, manufacturing employment in the United States has fallen by 40 percent.

Are you alarmed yet?

You should be.

The truth is that we did not have to merge our economy with nations like China.  China does not have the same minimum wage laws that we do.  China does not have the same environmental protection laws that we do.  In China, companies can treat their workers like crap.  As a result of open trade with the United States, scores of shiny new factories have opened all over China while once great manufacturing U.S. cities such as Detroit have degenerated into rotting war zones.  We continue to expand trade with China even though their communist government stands for things that are absolutely repulsive and has a list of human rights abuses that is seemingly endless.

But politicians from both parties swore up and down that globalism would be so good for us.  Now we have created a network of free trade agreements that would be virtually impossible to unwind…"

What is the result? We have the disparity of multinational corporations doing remarkably well in the face of a weak and sickly U.S. economy. The large corporations are relying on the U.S. consumer less and less. They have moved their factories overseas, avoided U.S. taxes, laid off U.S. workers, and taken advantage of cheap off shores labor.  And their earnings may continue relatively unharmed by a lull, double dip, or continued recession in the U.S. – depending on whose perspective. (See Consumer Metrics Institute’s report on the U.S. consumer and our economic malaise.) The result of this corporate earnings/U.S. economy disparity is reflected in the stock market’s performance which seems to have decoupled…
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High Frequency Chicanery

High Frequency Chicanery

Courtesy of MIKE WHITNEY writing at CounterPunch

Here’s something to munch on from Dennis K. Berman in last week’s Wall Street Journal:

"Today, small investors are fleeing the equities markets in droves, according to data from the Investment Company Institute, pulling out a net $34 billion from stock funds so far this year…..They say, "I still feel like someone is screwing me……trading feels different than it used to."

Berman traces the problem to its source, the "inscrutable interplay between myriad exchanges and high-frequency traders, whose volume now accounts for an estimated two-thirds of all trading"…"a market that many perceive as tainted and prone to gaming by a cadre of insiders."

That sounds like a long-winded way of saying the market is rigged.

High-frequency trading (HFT) is algorithmic-computer trading that finds "statistical patterns and pricing anomalies" by scanning the various stock exchanges. It’s high-speed robo-trading that oftentimes executes orders without human intervention. HFT allows one group of investors to see the data on other people’s orders ahead of time and use their supercomputers to buy in front of them. It’s called frontloading, and it goes on every day right under the SEC’s nose.

In an interview on CNBC, market analyst Joe Saluzzi was asked if the big HFT players were able to see other investors orders (and execute trades) before them. Saluzzi said, "Yes. The answer is absolutely yes. The exchanges supply you with the data, giving you the flash order, and if your fixed connection goes into their lines first, you are disadvantaging the retail and institutional investor."

Frontloading is cheating pure and simple, but rather than go after the "big fish" who run these enormous computerized skimming operations; regulators have been rolling up rogue traders who abscond with the trading code.

Here’s a blurp from wired.com:

"Monday’s arrest of Samarth Agrawal, 26, came nine months after a Goldman Sachs programmer was arrested on similar charges that he, too, stole his employers source code for software, his employer used to make sophisticated, high-speed, high-volume stock and commodities trades.

“The Securities and Exchange Commission is investigating the use of these programs that many believe give their users an unfair advantage over other traders. Nevertheless, stealing the code to these suspect programs remains illegal. ("Second banker accused of stealing high frequency trading code", wired.com)

Right; so stealing from stock cheats who are gaming the system is…
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SMALL INVESTORS WADE BACK INTO EQUITIES

SMALL INVESTORS WADE BACK INTO EQUITIES

Courtesy of The Pragmatic Capitalist 

The latest monthly survey from the AAII shows that small investors increased their equity allocation despite the tumbling market. This is in stark contrast to the recent State Street Survey of institutional money which shows that the “smart money” is moving out of stocks.  According to the historical data the current equity reading of 55% is 5% below the average while bonds remain 5% overweight and cash is right in-line with the historical average.

Historical Averages (November 1987 through August 2010)

  • Stocks Total: 60%
    • Highest Value: 77.0% (January 2000 & March 2000)
    • Lowest Value: 40.8% (March 2009)
  • Bonds Total: 15%
    • Highest Value: 25.5% (May 2010)
    • Lowest Value: 6.9% (November 2000)
  • Cash: 25%
    • Highest Value: 44.8% (March 2009)
    • Lowest Value: 11.0% (March 1998)
  • aaii SMALL INVESTORS WADE BACK INTO EQUITIES


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26 of Last 88 Trading Days have been 90% Days (Either Up or Down); 7 More Lean Years in Stock Market?

26 of Last 88 Trading Days have been 90% Days (Either Up or Down); 7 More Lean Years in Stock Market?

Courtesy of Mish 

computer tradingHere is an interesting snip from August 31 Market Commentary by Art Cashin for UBS. Sorry, no link.

Monday’s market evaporated nearly all the gains from Friday’s rally. Despite lighter volume, it was a 90% down day. That means the bears got a lopsided advantage in negative breadth and negative volume. In Friday’s rally, the bulls had had a similar 90% advantage. Robert McHugh of Main Line Investors says 26 of the last 88 trading days have been 90% days – one way or another. Any wonder the public is wary.

Are these 90% Days a Good Thing?

While the big boys push the market around, small investors have thrown in the towel and are not coming back.

Market volume now consists of black boxes pushing all stocks one way or the other on 30% of the days. Is this a good thing? For who? Investors or Goldman Sachs?

Holding the Line

Today, the 1040 level on the S&P held for about the 8th time on "fabulous" news consumer confidence rose to 53. Bear in mind number in the 70′s are typical of recession lows.

How long the 1040 level can hold is a mystery, but each bounce seems to be weaker and weaker.

Last Friday, I noted Market Cheers 1.6% Growth; Treasuries Hammered; while asking "what’s next?"

We have a partial answer already. Treasuries have regained the entire selloff that started (and ended) on the "great news" that 2nd quarter GDP was +1.6% instead of the expected +1.4%. Never mind that growth was revised down twice from above +2.5% to +1.6%.

Looking ahead, I expect GDP to be negative in the 3rd quarter.

Art Cashin’s 17.6 Year Cycles

A little over a year ago Art Cashin commented Dow Trapped in 17-Year Cycle

Art Cashin, director of floor operations at UBS Financial Services, offered CNBC his stock-market insights. Cashin decried the idea of a second stimulus, in light of the "infamous" first attempt.

"There was no ‘stimulus’ in the stimulus package. It was mostly social engineering," Cashin said. Thus, talk of a new plan is shaking markets with fears of even more debt — with "nothing to show for it."

Cashin revisited his theory of "the 17.6-year cycle."

"It’s like the Biblical story of the fat


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ARE SMALL INVESTORS TURNING AGAINST STOCKS?

ARE SMALL INVESTORS TURNING AGAINST STOCKS?

Courtesy of The Pragmatic Capitalist 

Are small investors giving up on Wall Street? After a decade of negative equity returns, multiple asset bubbles, one major market crash, one “flash crash” and what looks more and more like a casino run by the banks for the banks, the small investor is becoming increasingly turned off by the prospect of putting their hard earned money in the equity market.  This was apparent in this month’s AAII allocation survey where small investors reduced their equity exposure by almost 10% to 50.9%.  Cash holdings and bond holdings jumped and remain historically high according to AAII:

“Individual investors held 50.9% of their portfolios in stocks and stock funds according to the May 2010 AAII Asset Allocation Survey. This is a 9.5 percentage-point drop from April and the smallest allocation to equities since May 2009. The historical average is 60%.

Bond and bond funds accounted for 25.5% of individual investor portfolios. This is the highest allocation to fixed income since the survey started in November 1990. The percentage of portfolio dollars held in bonds and bond funds rose 5.1 percentage points from April. The historical average is 15%.

Individual investors kept 23.6% of their portfolio dollars in cash, a 4.4 percentage point increase. The historical average is 25%.”

aaii2 ARE SMALL INVESTORS TURNING AGAINST STOCKS?

According to Charles Rotblut at AAII investors are focusing more on the return OF their capital than the return ONtheir capital:

“Individual investors placed a greater emphasis on return of capital last month because of the volatility in the stock markets. The movement of portfolio dollars out of equities and into bonds/bond funds and cash corresponds with the latest AAII Sentiment Survey, which showed bearish sentiment at 50.9%, the highest level of pessimism recorded since November 5, 2009. (Bearish sentiment is the expectation that stock prices will fall over the next six months.)”

Are small investors beginning to shun the equity markets?  I think that’s highly doubtful as greed tends to be as American as apple pie, but this is a clear sign that investors are becoming less and less likely to leave their money in the market for extended periods of time – thus adding to increased volatility.

If the volatility in the business cycle has increased and increased (failing) government intervention is making the markets more recession prone then we could be on the verge of a renewed de-risking on Main Street. …
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CHART OF THE DAY: THE SMALL INVESTOR HATES THIS RALLY

CHART OF THE DAY: THE SMALL INVESTOR HATES THIS RALLY

from dangerous mindsCourtesy of The Pragmatic Capitalist

As the most hated rally in the history of rallies continues, the small investor remains incredibly pessimistic about the sustainability of any recovery. Is this the contrarian of all contrarian signs or is this simply another case of the public seeing thru a stimulus based rally for what it really is?  David Rosenberg at Gluskin Sheff elaborates on the record lows in sentiment:

As Chart 1 illustrates, a record-low 6.2% of Americans buy into the recovery story  and it looks as if this picture is already in the process of double-dipping.  Rarely, if ever, has the perception gap between Wall Street and Main Street been so wide as it is today.

sent CHART OF THE DAY: THE SMALL INVESTOR HATES THIS RALLY

Source: Gluskin Sheff 


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WSJ – Small Investors Pile into Emerging Markets, Junk Bonds, and Commodities

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WSJ – Small Investors Pile into Emerging Markets, Junk Bonds, and Commodities

crowded trade, lemmings, small investorsPosted by TraderMark at Fund My Mutual Fund

If you’ve been around these markets for a while you generally know by the time the retail investor is piling into a group, chasing huge scores – it’s generally time to run away (at the least) and for the 5% among us who short, begin to think seriously about betting against the small fry. It sounds cold, but this is just the way it tends to work … trust me, I used to be one of these people, so I learned the hard (read: expensive) way. As we read the piece below let us trust in the fact that none of these people were buying in early March, but most likely jumped in when it was "safe" a month or so later.

Contrast the lemmings running into "what’s hot" with what you’ve been reading here – about a month ago I was saying commodities is crowded and I would not want to be exposed highly there. People who heeded that thought process avoided the sand blasting that has gone on for 3 weeks running in this sector. While I do like these emerging markets for the long term, I think they are vulnerable here as well; some are beginning to roll over – Russia has already been in a "technical" bear market (down over 20% from peak). And I am saying the same thing I said in commodities a month ago, now for the latest darling – technology. It is crowded – everyone is hiding there. Beware.

I don’t really talk much bonds but while junk bonds (highest risk) has provided the most juice the past 3-4 months, its basically been a parallel to the stock market. The ‘worst of breed’ has run up the most as green shoots flower across the world. Just as with the green shoots themselves, I find the junk bond love way premature. This economy is stalled and I expect many more companies to suffer – so buying bonds of the worst seems not such a great intermediate term strategy. I’d be more interested


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Phil's Favorites

Being on the wrong side of this decade's investing mega-trend

 

Being on the wrong side of this decade’s investing mega-trend

Courtesy of 

Josh Brown and Michael Batnick discuss the recent post “I did everything I was supposed to do”, which is the story of a man whose spent his whole career working for asset management firms and now finds himself on the wrong side of the active vs passive debate. There are real world consequences of the massive outflows of cash coming from actively managed mutual funds. This was Josh’s attempt to look at the issue from the other side.

The post spread around the financial web like wildfir...



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Zero Hedge

BMO: Everything Will Change After Tomorrow's "Quad Witching"

Courtesy of ZeroHedge

Don't look to the Fed to explain today's torrid, global rally: according to a controversial take by BMO's bearish technical analyst, Russ Visch, yesterday’s FOMC announcement was a non-event "as markets shrugged off the interest rate decision and follow-up presser with Chairman Powell", and today's action has an entirely different catalyst, resulting in "no change" to Visch's short-term outlook.

And in another contrarian take, Visch claims that "the quality of the rally since late May (narrow participation, extremely light volume) suggest it’s nothing more than a relief rally within an ongoing medium-term downtrend" as shown in the chart below.

...



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Kimble Charting Solutions

Silver; Multi-Year Bull Market Getting Started?

Courtesy of Chris Kimble.

Is a multi-year bull market about to start in Silver? We should find out soon!

This chart looks at Silver since the early 1970s. It has spent the majority of the past 35-years inside of rising channel (1).

It created a series of flat bottoms and lower highs in the late 1990s. When it broke out at (2), it rallied for years to come, where it gained several hundred percent.

Silver hit the top of this channel back in 2011 at $50, where a long-term bear market started. The 65% decline over the past 8-years has it testing the bottom of this mul...



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Insider Scoop

Baird Applauds Tapestry's New CFO Pick

Courtesy of Benzinga.

Tapestry Inc (NYSE: TPR) announced its new chief financial officer hire Wednesday.

The Analyst 

Baird analyst Mark Altschwager reiterated an Outperform rating on Tapes...



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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

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

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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Chart School

Silver Review

Courtesy of Read the Ticker.

The folks in the federal reserve will debase the US dollar currency to an extreme degree silver will finally lift off the floor.. 

Note: Readers should re watch the silver back screen news video, here.

The following video looks at price action and Wyckoff logic.

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If gold moves, silver wi...

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Digital Currencies

Cryptos Are Crashing As Asia Opens, Bitcoin Back Below $8k

Courtesy of ZeroHedge. View original post here.

Having survived the day's bloodbath in US tech stocks, cryptos are crashing in the early Asian session, apparently playing catch-down to the day's de-risking.

While no catalyst is immediately evident, there are some reports noting 13 large global banks are preparing to launch digital versions of major global currencies next year, though we suspect this drop was more algorithmic that fundamental-driven.

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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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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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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