Posts Tagged ‘stress tests’

Monday Market Measurement – Just Right?

Welcome to dead center! 

We are finally back to the middle of our predicted trading range.  It's the range that our 5% rule predicted since October of 2008 so we're hardly going to be shocked to be here now.  Usually we are shocked when we're NOT in our range.  I detailed the movement this weekend in our 5% Rule Update, so I won't get into it all here but let's just focus on our short-term chart and embrace the uncertainty as we move back to the middle of our range at 1,100

I say it all the time and I'll say it again:  I'm not bullish or bearish – I'm rangeish.  That means I get more bullish at 5% under our line and I get more bearish at 5% over our line and I get extremely bullish or bearish as we get into that 10% zone because – if the market fundamentals don't change – then my midpoint doesn't change and the opportunity is to play us to return to "reality" at S&P 1,100 (Dow 10,200). 

Just look at those nifty little resistance points we have to watch now – the 200 dma is at 1113 and the 50 dma is at 1,084 and we just ran up from 1,030 (we ignore spikes) past the 5% rule at 1,081, which just so happens to be pretty much the 50 dma so that will be our key test for the week as our bottom to top run from 1,101 to 1,102 is close enough to 10% to merit a 2% (20% of the run) pullback back to, WHOOPS!, 1,080.  So 1,080, 1,080 and 1,080 is our line in the sand for the week.  If the rally is real, the number will hold and, if it doesn't hold (especially with all the earnings and economic data we have coming in) then we have to look at the drop from 1,220 to 1,020 (200 points) and consider the move back to 1,120 nothing more than a strong, 50% bounce back to our mid-range. 

We are past the EU Stress tests but JPM says 54 banks should have failed for the following reasons:

  • Lack of rigour in macroeconomic stresses, leading to low virtual portfolio loss rates
  • Sovereign haircuts were applied only to trading


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More Stress Test Shenanigans

More Stress Test Shenanigans

Magician performing trick on stage

Courtesy of Washington’s Blog

AFP reports:

The Federal Reserve will expand its so-called stress tests of the banking system to ensure they have enough capital during difficult periods, Fed chairman Ben Bernanke said Friday.

Bernanke highlighted the positive impact of stress tests conducted earlier this year on major banks, a move aimed at ensuring their financial health and building confidence.

"Building on the success of this initiative, we will conduct more frequent, broader, and more comprehensive horizontal examinations, evaluating both the overall risk profiles of institutions as well as specific risks and risk-management issues," Bernanke told a conference organized by the Boston Federal Reserve.

The highly publicized stress tests conducted earlier this year focused on 19 major banks, and indicated 10 needed additional capital.

Bernanke said the Fed would step up efforts to review bank capital requirements to avoid a recurrence of the credit crisis that has spread around the world.

"Additional steps are necessary to ensure that all banking organizations hold adequate capital," he said.

He noted that the Financial Stability Board — a global watchdog made up of senior representatives of national financial authorities — had called for "significantly stronger capital standards," and that the Group of 20 "has committed to develop rules to improve both the quantity and quality of bank capital."

"The Federal Reserve supports these initiatives. The structure of capital requirements should also be reviewed," Bernanke said.

Should we be reassured by the new round of stress tests?

Well, let’s take a look:

  • Time Magazine called the previous stress tests a "confidence game" and Geithner a "con man" for running them deceptively
  • Paul Krugman called the stress tests a mere "self-esteem class" for banks that no bank would be allowed to fail
  • Nouriel Roubini said the stress tests "fail the basic criterion of a reality check"
  • William K. Black called them "a complete sham"
  • FDIC head Sheila Bair didn’t believe they were credible
  • The stress tests were a P.R. stunt devised by the banks themselves
  • The government has more or less admitted that the stress tests were meaningless (see this and this)

In addition, AFP quotes Bernanke as saying:

"For example, to reduce the tendency of current capital requirements to


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Hey, Look, The Stress Tests Really Weren’t Stressful Enough

Hey, Look, The Stress Tests Really Weren’t Stressful Enough

Courtesy of Henry Blodget at ClusterStock

Calculated Risk illustrates what we already knew: the bank stress tests weren’t nearly stressful enough.

The chart below looks at unemployment by quarter.  The green bars are the "base case" in the stress tests (the most likely scenario, in the government’s opinion).  The blue bars are the "adverse case" scenario--unlikely but possible.  And the red bars are what’s actually happening (Q2 is a forecast).

The larger story here, unfortunately, is that the Obama administration continues to blow its credibility on the economy.  By being too optimistic from the get-go, the administration is opening the door for critics and opponents who are already arguing that the Obama plan has failed.

Calculated Risk has a bigger version of the chart and more thoughts here >

 


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Zero Hedge

Watch: Riots Erupt In Israel As Police Enforce COVID-19 Quarantine, Synagogues Shuttered

Courtesy of ZeroHedge View original post here.

Israeli media is reporting that riots have broken out in Arab as well as some Jewish neighborhoods of Israel over quarantine enforcement. Particularly violent clashes in Jaffa also erupted after police confronted and tried to detain a man for reportedly breaking quarantine.

"Dozens of people are demonstrating and rioting in Jaffa after police questioning of a man who apparently broke his mandatory self-quarantine led numerous residents to gather and confront the officers," the ...



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Phil's Favorites

Governors take charge of response to the coronavirus

 

Governors take charge of response to the coronavirus

Washington state Gov. Jay Inslee ordered all bars, restaurants, entertainment and recreation facilities to temporarily close to fight the spread of COVID-19. Getty/Erika Schultz-Pool

Raymond Scheppach, University of Virginia

Just after every gubernatorial election, but before inaugurations, the National Governors Association organizes a two-day “New Governors School.” Current governors serve as the faculty ...



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Biotech/COVID-19

Governors take charge of response to the coronavirus

 

Governors take charge of response to the coronavirus

Washington state Gov. Jay Inslee ordered all bars, restaurants, entertainment and recreation facilities to temporarily close to fight the spread of COVID-19. Getty/Erika Schultz-Pool

Raymond Scheppach, University of Virginia

Just after every gubernatorial election, but before inaugurations, the National Governors Association organizes a two-day “New Governors School.” Current governors serve as the faculty ...



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ValueWalk

Number of new jobless claims hits another record high

By Gorilla Trades. Originally published at ValueWalk.

In an intra Day note to investors, Gorilla Trades strategist Ken Berman, while commenting on the weekly number of new jobless claims, said:

Q4 2019 hedge fund letters, conferences and more

The major indices are all in the green at midday despite another highly volatile pre-market session. The energy sector has been the clear winner of the morning session, but most of the key sectors are sporting gains despite the grim COVID-19 numbers. The price of crude oil surged higher overnight together with global equities, despite yesterday’s huge U.S. ...



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Kimble Charting Solutions

S&P 500 Price Pattern Similar to 2008 Market Crash?

Courtesy of Chris Kimble

Last week’s sharp rally off the lows, gave bulls some relief.

But if the bulls are going to have reason to cheer, they will need to see another move higher… and fast!

Why? Just look at today’s “weekly” price chart of the S&P 500 Index. 

This key broad-based index broke a 10-year bull market trend line in March. And it’s now kissing the underside of the trend line at (2).

The last stock market crash saw a similar pattern in 2008. And after a failed “...



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Insider Scoop

Nestle CEO Says Snack Foods 'Just As Important As Essential Nutrients'

Courtesy of Benzinga

Global food behemoth Nestle (OTC: NSRGY) is "scrambling to meet demand" to keep the world fed, but doesn't want to take much credit, as "this is our main purpose at this hour," CEO Mark Schneider said Wednesday during a "Mad Money" interview with Jim Cramer.

Nestle...

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The Technical Traders

Are Equities Likely To Rally?

Courtesy of Technical Traders


 

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter

Chris Vermeulen

...

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Chart School

Big moving Averages and macro investment decisions

Courtesy of Read the Ticker

When price is falling every one wonders where demand will come in.


RTT black screen Tv videos study the simplest measure of price (simple moving average). What has happen before guides us now. 














Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, ...

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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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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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