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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ValueWalk

Investors urge pharmas to develop treatments for COVID-19

By Jacob Wolinsky. Originally published at ValueWalk.

Investors urge pharma companies to work collaboratively on developing treatments for COVID-19

Global pandemic calls for urgent and collective action to heal the sick and to prevent further contagion.

Q1 2020 hedge fund letters, conferences and more

NEW YORK, NY, TUESDAY, APRIL 7TH, 2020 - Investor members of the Interfaith Center on Corporate Responsibility have sent ...



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Zero Hedge

Did Capital One Run Into A Commodity Prepay Wall?

ourtesy of ZeroHedge View original post here.

Submitted by Jacques Simon,

In our last post we touted a too-big too fail return in the commodity-sector (a name nobody dare to pronounced. Today prices are down but market volatility is up (VaR is up, prices are down). Capital one, a FDIC-insured bank is allowed to ...



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Kimble Charting Solutions

DAX Index Hits Two 18-Year Support Lines, Creates Large Bullish Reversal

Courtesy of Chris Kimble

Has the DAX index from Germany experience a large decline of late? Yes, it has!

Has the decline broken long-term rising support lines? Not so far!

This chart looks at the DAX index on a monthly basis over the past 25-years. Over the past 6-years, it has traded sideways inside of the blue rectangle at (1).

The decline this year saw the DAX hit two 18-year rising support lines at (2) last month, where a large bullish reversal took place.

Until broken, important support remains in play at (2), which is bullish for this key index....



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Phil's Favorites

Here's how scientists are tracking the genetic evolution of COVID-19

 

Here's how scientists are tracking the genetic evolution of COVID-19

Why do scientists care about mutations on the coronavirus? Alexandr Gnezdilov Light Painting

Niema Moshiri, University of California San Diego

When you hear the term “evolutionary tree,” you may think of Charles Darwin and the study of the relationships between different species over the span of millions of years.

While the concept of an “evolutionary tree” originated in Darwin’s “...



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Biotech/COVID-19

Here's how scientists are tracking the genetic evolution of COVID-19

 

Here's how scientists are tracking the genetic evolution of COVID-19

Why do scientists care about mutations on the coronavirus? Alexandr Gnezdilov Light Painting

Niema Moshiri, University of California San Diego

When you hear the term “evolutionary tree,” you may think of Charles Darwin and the study of the relationships between different species over the span of millions of years.

While the concept of an “evolutionary tree” originated in Darwin’s “...



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Chart School

The Big Short movie guides us to what is next for the stock market

Courtesy of Read the Ticker

There is nothing new in WallStreet, it is only the players that change. Sometimes a market player or an event gets ahead of the crowd and WallStreet has to play catch up.

Previous Post Dow 2020 Crash Watch Dow, Three strikes and your out!

It is important to understand major WallStreet players do not want to miss out on a money making moves.  







...

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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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The Technical Traders

Founder of TradersWorld Magazine Issued Special Report for Free

Courtesy of Technical Traders

Larry Jacobs owner and editor of TradersWorld magazine published a free special report with his top article and market forecast to his readers yesterday.

What is really exciting is that this forecast for all assets has played out exactly as expected from the stock market crash within his time window to the gold rally, and sharp sell-off. These forecasts have just gotten started the recent moves were only the first part of his price forecasts.

There is only one article in this special supplement, click on the image or link below to download and read it today!

...

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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

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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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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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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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.