I stole Thorsday again.
So Rock is back looking at relative strength to see where money is currently flowing. The list is sorted best to worst relative strength, and the numbers indicate the percentages of these herds are leading or trailing the S&P index. If you have a favorite herd that’s not here, let me know and I’ll add it. I try to select sector-based herds which are hard to find for some sectors. Some herds are balanced across several sectors, and I don’t follow them. The Dow Jones money report shows money is flowing out of the markets, making low volumes cause big swings (VXX is at almost 52 as of this writing).
Note that Gold and Silver are now in the worst positions. Just a few short weeks ago, they were the only ones making money. How quickly sentiments change, and a clear indicator you can’t turn your back for a minute. I got stopped out of my gold investment positions, but haven’t reinvested in anything. Looks like oils are also getting tanked. And the Solars are still in the cellar.
Notice money is flowing into banks. I find this very surprising, but maybe the banks were so beat up that investors think it’s time to get back in. I think the jury's still out, in case PIIGS write down their debt. I don’t trade financials, for religious reasons. IAK is insurance, and qualifies in the “financials”.
Note also $DJTCNS has turned around in the last 5 days. Again, the housing sector was so beat down, it may be that the housing materials (the first to recover in a real recovery) is seeing some investment. $DJTCNS has LOWE, HD, Owens-corning, etc. It’s not the homebuilders.
On an individual note, AAPL and IBM have both had nice pullbacks, and it may be time to put them on your watchlist. The Nasdaq has been trailing the S&P for the last several days, so I’m looking for a continued downpressure on the markets, Like I said before, I’d like to see a hit or crossover of 1140 before we get a turnaround, to make a meaningful move up. We’re almost there, I’m thinking by Monday, with a Turnaround Tuesday of next week.
The format of this table is ETF, 5 day relative strength, and relative strength trend.
IAK 0.031 Rising
$BKX 0.03 Rising
UCC 0.03 Flat
$DJTCNS 0.027 Rising
KIE 0.026 Rising
XLF 0.023 Rising
ITA 0.022 Rising
KBE 0.022 Rising
ITB 0.019 Flat
KRE 0.016 Flat
$DJTATO 0.014 Rising
$DJT 0.013 Rising
$DJTENG 0.013 Rising
DIG 0.013 Rising
IGV 0.013 Rising
KCE 0.012 Flat
IXJ 0.011 Falling
XHB 0.011 Flat
$DRG.X 0.009 Flat
$DJTFOB 0.008 Falling
USO 0.008 Rising
$OIX.X 0.006 Rising
IHI 0.006 Falling
$HIG.X 0.005 Flat
UTH 0.004 Flat
$DJTCHE 0.003 Rising
IXI 0.001 Rising
SLX 0 Rising
XLU -0.001 Falling
XRT -0.001 Falling
KOL -0.002 Rising
$DJULTC -0.003 Falling
XLK -0.003 Falling
XLV -0.003 Falling
$DJTFVS -0.004 Rising
VHT -0.007 Falling
IYH -0.008 Falling
IHE -0.009 Falling
IYE -0.01 Rising
RTH -0.01 Falling
SMH -0.01 Falling
GEX -0.011 Rising
XLP -0.011 Falling
BBH -0.012 Falling
$DJTTR -0.013 Falling
IYZ -0.013 Flat
ICF -0.015 Flat
IRET -0.02 Falling
DBA -0.021 Flat
$SOX.X -0.027 Falling
IBB -0.029 Falling
XME -0.029 Rising
XBI -0.034 Falling
$DJTBAS -0.035 Rising
XOP -0.039 Flat
XES -0.04 Rising
OIH -0.051 Rising
TAN -0.069 Flat
GLD -0.1 Falling
GDX -0.103 Rising
SLV -0.174 Flat
Thursday, September 29, 2011
Friday, September 23, 2011
Going Shopping
If we hold the 1120 line, that will give me confidence that there are buyers here. If there are buyers here, then that means we’ll likely retrace the latest pullback, albeit slowly and painfully. Here’s the SPY.
You can see the two boundaries I’ve drawn for the upper and lower edges of the range. If we fall below that range, well, in my opinion, it’s “look out below”. But I don’t think that will happen. On the right, you’ll see the Fibonacci breakdown of the move from 121 to 113. The 38% retracement is at 116, and I’m looking for a quick rebound to that point. After that I think it will be a 5-10 day painful move up. On the technical side, I see the stochastics haven’t returned to the 20% level, but the large move due to the words of the Fed has basically reset that number as thought it were at 20%. Of course, the darkside of me looks at the large selloff and increasing volume over the last couple of days, and I’m thinking those words were leaked to a few friends.
Markets are reacting as though there were a monumental change overnight. That’s just not so. There is nothing new that should have caused such a large overnight move. So I’m anticipating bargain hunters will come in, probably overnight again, and do some buying.
Time for us to go shopping, I think.
Because of the volatility in individual names, I’m thinking of focusing on ETF’s but there are a few names that deserve an honorable mention. Two of them are
1. IBM. The relative strength of IBM is unbelievable. Here’s the chart:
You can see the 5-day relative strength is over 5% better than the S&P, and even the 20 day is almost 5% better. They don’t get much better than that. So IBM’s had a pullback and it’s time to buy.
2. AAPL. Again, a monument to relative strength
You can see the 5 day relative strength is again over 5%, but look at the 20 day, it’s over 9%! This stock is a deal on a pullback. Which we just had. BTW, look at the slope of the relative strength curve, both the 5 day and the 20 day.
Now you may ask why we would buy stocks that don’t pull back with the market, instead of stocks that fell off a cliff, hoping for a rebound. Remember this: RIMM. If you bought RIMM after it fell off a cliff, hoping for a rebound, it would have taken you to the cleaners.
Buy strength. Short weakness. Never short AAPL or IBM.
Now let’s think about the general economy, and it’s strengths and weaknesses. In 2008 when we had the big fall, we all knew the banks were weak. If we’d bought SKF at 25, it went over 200. We shoulda known. I did know, but I had no courage for my conviction. So what’s weak this time, and what’s going strong?
My opinion is that we’re still in recession and never left it. As a result, we see deflation in assets happening, at least until the asset is no longer offered. (once an asset reaches a certain low price, then it’s value may go infinite due to the inherent shortage at that price). I see nothing on the horizon to pull the world out of this negative spiral, and it could be that we will continue this sawtooth price action down to the old 666. It may take awhile, though, so in the meantime, where do we trade?
I don’t have a clear gut feel this time, except I’d love to figure out how to short the European banks. So let’s see what the market says:
The worst ETFs are:
KOL DIG TAN XES SLX XOP XME and OIH. Their relative strength is between 3% to 13% lower than the S&P. What this tells me is that the most basic resources are in the worst shape: coal’s not necessary because we don’t need as much energy. Oil and gas are terrible again because we don’t need as much energy. Most energy is used to create and transport things, and we don’t need that now. TAN’s down a lot because we don’t need more energy, and the cost premium for alternative energy solutions is still prohibitive. And of course steel. We don’t need the things.
The best ETFs are:
IRET XLU GDX $DRG.X $DJULTC IHE GLD BBH RTH IBB. Look at all the biotechs in there. Also, we’ve got the golds and gold creators. Also, we’ve got real estate (rental, not builders), utilities, and retail. The basic stuff we need to survive or take a long term hedge on our debt.
So this tells us that we don’t need more stuff and aren’t buying it, but we are buying pharmas and the necessities, with a hedge on the golds.
So, if you believe we’re at the bottom of the price swing with yesterday’s action, then buy long from the best ETFs. If you believe we’re at the precipice about to fall of the edge of the financial cliff, then short the worst ETFs.
Or use these categories to trade individual stocks and concentrate your risk.
As an aside, it is interesting to note that the slope of the relative strength curve is negative for the worst ETFs, and positive for the best ETFs (except for one single deviation). This says that compared to the overall S&P, the worst ETFs are getting worser, and the best ETFs are betting better.
And yes I know worser isn’t a word.
You can see the two boundaries I’ve drawn for the upper and lower edges of the range. If we fall below that range, well, in my opinion, it’s “look out below”. But I don’t think that will happen. On the right, you’ll see the Fibonacci breakdown of the move from 121 to 113. The 38% retracement is at 116, and I’m looking for a quick rebound to that point. After that I think it will be a 5-10 day painful move up. On the technical side, I see the stochastics haven’t returned to the 20% level, but the large move due to the words of the Fed has basically reset that number as thought it were at 20%. Of course, the darkside of me looks at the large selloff and increasing volume over the last couple of days, and I’m thinking those words were leaked to a few friends.
Markets are reacting as though there were a monumental change overnight. That’s just not so. There is nothing new that should have caused such a large overnight move. So I’m anticipating bargain hunters will come in, probably overnight again, and do some buying.
Time for us to go shopping, I think.
Because of the volatility in individual names, I’m thinking of focusing on ETF’s but there are a few names that deserve an honorable mention. Two of them are
1. IBM. The relative strength of IBM is unbelievable. Here’s the chart:
You can see the 5-day relative strength is over 5% better than the S&P, and even the 20 day is almost 5% better. They don’t get much better than that. So IBM’s had a pullback and it’s time to buy.
2. AAPL. Again, a monument to relative strength
You can see the 5 day relative strength is again over 5%, but look at the 20 day, it’s over 9%! This stock is a deal on a pullback. Which we just had. BTW, look at the slope of the relative strength curve, both the 5 day and the 20 day.
Now you may ask why we would buy stocks that don’t pull back with the market, instead of stocks that fell off a cliff, hoping for a rebound. Remember this: RIMM. If you bought RIMM after it fell off a cliff, hoping for a rebound, it would have taken you to the cleaners.
Buy strength. Short weakness. Never short AAPL or IBM.
Now let’s think about the general economy, and it’s strengths and weaknesses. In 2008 when we had the big fall, we all knew the banks were weak. If we’d bought SKF at 25, it went over 200. We shoulda known. I did know, but I had no courage for my conviction. So what’s weak this time, and what’s going strong?
My opinion is that we’re still in recession and never left it. As a result, we see deflation in assets happening, at least until the asset is no longer offered. (once an asset reaches a certain low price, then it’s value may go infinite due to the inherent shortage at that price). I see nothing on the horizon to pull the world out of this negative spiral, and it could be that we will continue this sawtooth price action down to the old 666. It may take awhile, though, so in the meantime, where do we trade?
I don’t have a clear gut feel this time, except I’d love to figure out how to short the European banks. So let’s see what the market says:
The worst ETFs are:
KOL DIG TAN XES SLX XOP XME and OIH. Their relative strength is between 3% to 13% lower than the S&P. What this tells me is that the most basic resources are in the worst shape: coal’s not necessary because we don’t need as much energy. Oil and gas are terrible again because we don’t need as much energy. Most energy is used to create and transport things, and we don’t need that now. TAN’s down a lot because we don’t need more energy, and the cost premium for alternative energy solutions is still prohibitive. And of course steel. We don’t need the things.
The best ETFs are:
IRET XLU GDX $DRG.X $DJULTC IHE GLD BBH RTH IBB. Look at all the biotechs in there. Also, we’ve got the golds and gold creators. Also, we’ve got real estate (rental, not builders), utilities, and retail. The basic stuff we need to survive or take a long term hedge on our debt.
So this tells us that we don’t need more stuff and aren’t buying it, but we are buying pharmas and the necessities, with a hedge on the golds.
So, if you believe we’re at the bottom of the price swing with yesterday’s action, then buy long from the best ETFs. If you believe we’re at the precipice about to fall of the edge of the financial cliff, then short the worst ETFs.
Or use these categories to trade individual stocks and concentrate your risk.
As an aside, it is interesting to note that the slope of the relative strength curve is negative for the worst ETFs, and positive for the best ETFs (except for one single deviation). This says that compared to the overall S&P, the worst ETFs are getting worser, and the best ETFs are betting better.
And yes I know worser isn’t a word.
Monday, September 19, 2011
Trending or chop
Sorry about dropping out of sight. I had an unexpected turn of events, but everything is working itself out. If nothing else from working the markets, I should have learned patience.
All we’re going to trade on is news out of Europe. It’s the markets versus the policy makers. The policy makers are the tactical managers of the markets. Right now it’s the policy makers’ responsibility to move the markets up to save the retirement programs, so you’re going to see “cooked” policy statements. Like “orderly default”. That’s a little like “jumbo shrimp” or “military intelligence”. The drop over the weekend was caused by the policy makers losing headway. This morning, the news is full of “Greece is running out of money” rather than “bankers take steps to support Greece”. The PM’s don’t realize that the situation is worsening and as a result, they must be on top of everything everyday, covering the situation in words.
A lot of headlines to trade off right now. Obama’s numbers have hit a new low. July business inventories fell last quarter, but are up this quarter by a tiny amount. No change in retail inventory, though. The news is bad, the market is up (on low volume).
Reports are 1000 is the buy level being watched. I think it will be awhile before we see 1000, so I’m trading long with reasonable tight stops. This week I’m looking for a pullback with a turnaround midweek (or perhaps even Tuesday) to go higher. Did you see Prada’s numbers? If the PMs do their job and spin the words, we’ll see that happen.
Margaret Brennan of Bloomberg reported that hedge funds are net short right now. So it’s time to shop for stocks. The short-covering rally will be incredible. (Remember Hedge fund managers are “retiring” and I’ve heard a lot of reports on Bloomie that “even pros are finding it difficult to make money in this market”. I’ve been long overnight now 4 nights with full positions, but I exited over the weekend, because the PM’s take a break then, but the bad news doesn’t. If we get some good news out of Europe, I think we might see the mother of all short-covering rallys.
“When the VIX is high, you buy. When the VIX is low, you go”. So where do we shop? Because of the volatility right now in individual names, I’m thinking to start buying mutual funds again. This will mitigate my individual stock exposure in an incredibly volatile market. I’ve had some fun day trading the trending ultras. It’s pretty easy.
So here’s my report on the funds: Sorry it gets all stuck together, but if you want to work with it, you can cut this and paste it into Word, replace the spaces with a “,”, and import it into Excel as a CSV file.
The order is
Fund, relative strength to S&P, 5 day rel str trend, my notes on what the ticker is.
$BKX -0.01 falling KBW bank sector index
$DJT 0.01 Flat DJ 20 Transports
$DJTCHE -.01 falling Chemicals Titans
$DJTATO 0.02 Rising
$DJTBAS -0.03 Rising
$DJTCHE 0.007 Rising
$DJTENG -0.015 Rising Dow Jones Oil & Gas Titans
$DJTCNS -0.004 Rising
$DJTFOB -0.016 Falling DJ food titans
$DJTFVS -0.005 Flat DJ titans financial
$DJTTR 0.04 Rising DJ Transports Avg Total R
$DJULTC 0.02 Rising DJ US Large Corp Tech index
$DRG.X -0.02 Rising NYSE ARCA Pharms index
$HIG.X -0.01 Flat
$OIX.X -0.01 Flat
$SOX.X 0.02 falling Philx Semiconductor sector
BBH 0.02 Rising Biotech Holders Tr Depository Recpts
DBA -0.07 Falling
DIG -0.004 Falling
GDX -0.02 Rising Gminers
GEX -0.02 Falling
GLD -0.04 Falling Gold
IAK 0 falling Ishares Imsurance index
IBB 0.004 Rising iShares NASDAQ Bio index
ICF -0.01 Flat Cohen &St Realty
IGV 0.02 falling Ishares NA Software
IHE -0.006 Rising Ishares DJ Pharma index
IHI 0.001 Rising Ishares DJ Med devices
IRET -0.06 Falling Investors Real Estate Trust
ITA 0.018 Flat
ITB -0.006 Flat
IXI 0.01 Flat
IXJ 0.02 Rising Ishares Tr S&P Global Healthcare
IYE -0.014 Flat Ishares tr DJ US energy
IYH -0.009 Rising Ishares Tr DJ US Healthcare
IYZ -0.009 Rising Telecomms
KBE -0.016 Falling SPDR KBW Banks
KCE -0.003 Falling SPDR CAP
KIE -0.016 Falling SPDR Insurance
KOL -0.07 Falling Coals
KRE -0.01 Falling SPDR KBW regional Bnaks
OIH -0.03 Falling Oil Svc Holders
RTH 0.012 Rising Retail Holder's Trust JWN=0.12, flat TIF=0.16, high URBN=.24, high
SLV -0.046 Rising
SLX -0.018 Flat Steels
SMH 0.018 Falling Semi trust holders dep rcpt
TAN -0.104 Falling Solars
UCC 0 Falling Proshares consumer Services
USO -0.06 Falling
UTH -0.01 Flat Utilities holders Trust depository rcpt
VHT -0.005 Rising Vanguard World FDS Healthcare
XBI -0.001 Flat SPDR S&P Biotech
XES -0.023 Falling S&P SPDR Oil & Gas Equipment
XHB -0.004 Flat
XLF -0.017 Falling SPDR SBI INT Financial
XLK 0.01 Flat SPDR tr SBI int-Tech
XLP -0.014 Rising
XLU -0.009 Rising Utils
XLV -0.015 Rising SPDR Tr SBI healthcare
XME -0.03 Falling Metals and Mining
XOP -0.014 Flat SPDR Oil & Gas
XRT -0.004 Falling SPDR S&P retail
Doing a quick sort, the worst performers are
TAN DBA KOL IRET USO SLV GLD $DJTBAS
And the only rising trends are SLV and $DJTBAS
The best performers are
$DJTTR IXJ IGV, BBH $SOX.X $DJULTC $DJTATO
I think I know Thor is into F, and it seems autos are doing well. One of the best performers and a rising relative strength trend.
I read a report this AM that the money flow is out of the market. Looks like Mutt’s observation that the pressure is downward is accurate.
All we’re going to trade on is news out of Europe. It’s the markets versus the policy makers. The policy makers are the tactical managers of the markets. Right now it’s the policy makers’ responsibility to move the markets up to save the retirement programs, so you’re going to see “cooked” policy statements. Like “orderly default”. That’s a little like “jumbo shrimp” or “military intelligence”. The drop over the weekend was caused by the policy makers losing headway. This morning, the news is full of “Greece is running out of money” rather than “bankers take steps to support Greece”. The PM’s don’t realize that the situation is worsening and as a result, they must be on top of everything everyday, covering the situation in words.
A lot of headlines to trade off right now. Obama’s numbers have hit a new low. July business inventories fell last quarter, but are up this quarter by a tiny amount. No change in retail inventory, though. The news is bad, the market is up (on low volume).
Reports are 1000 is the buy level being watched. I think it will be awhile before we see 1000, so I’m trading long with reasonable tight stops. This week I’m looking for a pullback with a turnaround midweek (or perhaps even Tuesday) to go higher. Did you see Prada’s numbers? If the PMs do their job and spin the words, we’ll see that happen.
Margaret Brennan of Bloomberg reported that hedge funds are net short right now. So it’s time to shop for stocks. The short-covering rally will be incredible. (Remember Hedge fund managers are “retiring” and I’ve heard a lot of reports on Bloomie that “even pros are finding it difficult to make money in this market”. I’ve been long overnight now 4 nights with full positions, but I exited over the weekend, because the PM’s take a break then, but the bad news doesn’t. If we get some good news out of Europe, I think we might see the mother of all short-covering rallys.
“When the VIX is high, you buy. When the VIX is low, you go”. So where do we shop? Because of the volatility right now in individual names, I’m thinking to start buying mutual funds again. This will mitigate my individual stock exposure in an incredibly volatile market. I’ve had some fun day trading the trending ultras. It’s pretty easy.
So here’s my report on the funds: Sorry it gets all stuck together, but if you want to work with it, you can cut this and paste it into Word, replace the spaces with a “,”, and import it into Excel as a CSV file.
The order is
Fund, relative strength to S&P, 5 day rel str trend, my notes on what the ticker is.
$BKX -0.01 falling KBW bank sector index
$DJT 0.01 Flat DJ 20 Transports
$DJTCHE -.01 falling Chemicals Titans
$DJTATO 0.02 Rising
$DJTBAS -0.03 Rising
$DJTCHE 0.007 Rising
$DJTENG -0.015 Rising Dow Jones Oil & Gas Titans
$DJTCNS -0.004 Rising
$DJTFOB -0.016 Falling DJ food titans
$DJTFVS -0.005 Flat DJ titans financial
$DJTTR 0.04 Rising DJ Transports Avg Total R
$DJULTC 0.02 Rising DJ US Large Corp Tech index
$DRG.X -0.02 Rising NYSE ARCA Pharms index
$HIG.X -0.01 Flat
$OIX.X -0.01 Flat
$SOX.X 0.02 falling Philx Semiconductor sector
BBH 0.02 Rising Biotech Holders Tr Depository Recpts
DBA -0.07 Falling
DIG -0.004 Falling
GDX -0.02 Rising Gminers
GEX -0.02 Falling
GLD -0.04 Falling Gold
IAK 0 falling Ishares Imsurance index
IBB 0.004 Rising iShares NASDAQ Bio index
ICF -0.01 Flat Cohen &St Realty
IGV 0.02 falling Ishares NA Software
IHE -0.006 Rising Ishares DJ Pharma index
IHI 0.001 Rising Ishares DJ Med devices
IRET -0.06 Falling Investors Real Estate Trust
ITA 0.018 Flat
ITB -0.006 Flat
IXI 0.01 Flat
IXJ 0.02 Rising Ishares Tr S&P Global Healthcare
IYE -0.014 Flat Ishares tr DJ US energy
IYH -0.009 Rising Ishares Tr DJ US Healthcare
IYZ -0.009 Rising Telecomms
KBE -0.016 Falling SPDR KBW Banks
KCE -0.003 Falling SPDR CAP
KIE -0.016 Falling SPDR Insurance
KOL -0.07 Falling Coals
KRE -0.01 Falling SPDR KBW regional Bnaks
OIH -0.03 Falling Oil Svc Holders
RTH 0.012 Rising Retail Holder's Trust JWN=0.12, flat TIF=0.16, high URBN=.24, high
SLV -0.046 Rising
SLX -0.018 Flat Steels
SMH 0.018 Falling Semi trust holders dep rcpt
TAN -0.104 Falling Solars
UCC 0 Falling Proshares consumer Services
USO -0.06 Falling
UTH -0.01 Flat Utilities holders Trust depository rcpt
VHT -0.005 Rising Vanguard World FDS Healthcare
XBI -0.001 Flat SPDR S&P Biotech
XES -0.023 Falling S&P SPDR Oil & Gas Equipment
XHB -0.004 Flat
XLF -0.017 Falling SPDR SBI INT Financial
XLK 0.01 Flat SPDR tr SBI int-Tech
XLP -0.014 Rising
XLU -0.009 Rising Utils
XLV -0.015 Rising SPDR Tr SBI healthcare
XME -0.03 Falling Metals and Mining
XOP -0.014 Flat SPDR Oil & Gas
XRT -0.004 Falling SPDR S&P retail
Doing a quick sort, the worst performers are
TAN DBA KOL IRET USO SLV GLD $DJTBAS
And the only rising trends are SLV and $DJTBAS
The best performers are
$DJTTR IXJ IGV, BBH $SOX.X $DJULTC $DJTATO
I think I know Thor is into F, and it seems autos are doing well. One of the best performers and a rising relative strength trend.
I read a report this AM that the money flow is out of the market. Looks like Mutt’s observation that the pressure is downward is accurate.
Tuesday, September 13, 2011
Grece that wheel
Two weeks ago I mentioned Thursday Sep 1 as the first challenge in a raising s&p from the bottom on Aug 9.
Similarly to Aug 9 it played to the day so, yes I'm very glad of the results even though I'm still ways off of the 20 independent calls that I have for a target, in order to evaluate how reliable this kind of out of the box approach is. From Sep 1 we came down, being yesterday the lower mark and of course all because of Grece.
Is going to be a very very unexpected black swan because nobody knows that Grece is having um...some problems.Months ago the chinese appeared backing them up, but with such a secrecy and in such a haste (and being informed only in morning papers all over the world), that probably left some loose ends over there. So they are in problems again.
I was puzzled past Friday when the certainty of a Monday butchery in the equity markets because of a higly unexpected default from Grece.
Bringing the entire civilization to their knees. Don't get me wrong there are counterparty risk but this is what markets are made of; risk. Utterly collapse come with surprise, especially when banksters can make big coin "enabling" that kind of regrettable outcomes, particularly if being bailed out by taxpayers.
Two bailouts in a row (or three years appart) is not highly probable. Bankers know that so they are ranting but there's not going to be a few trillions waiting for them again, just to remain afloat.
Is clear for them that this time is different.They can ransack civilization but not that often.
What are they going to do? Just another big seizure and expect not being nationalized or chop into pieces? They are more sophisticated than that.
The pendulum is moving away from them and the focus is going to become main street otherwise no aggregate demand is going to appear and no more bussines for them. Anyway they are going to be protected if they don't blackmail too much.
Proof of that was Germany letting the entire globe known that they were going to beef up their banks if Grece defaults.
Which lead us to one of the very reason why the crisis became really scary. It wasn't the drying up of the commercial paper for corporations when Lehman brothers collapsed, the trauma.It was their collapse by itself what paralized the financial world and made it's way through the whole economy.
Of course there were lot other reasons but in markets perception is crucial in order to make people willing to bet money to an outcome. Germany was arresting that (perception) issue.
Monetary sovereign nations are going to respond "manufacturing" money and as long as the perception by the population is that they have the power to do that without the public certainty that things are spinning out of control, banksters are going to suck it up because is in their best interest to keep the wheel of economic activity moving, otherwise they are simply toast.
There's not room for a new massive bailout if regular people's lives don't improve, banksters got their trillions and I bet thet are pretty content with that.
For the s&p I'm expecting some important move by the end of the month sep 26-28 I'll study in more detail and post this weekend.
Dan
PS: I'm as perceptive as a caveman but I finally noticed that I'm almost writing alone here and two places for a weekly post is a bit much.
I'll just keep posting at dastrostockmarket.com and let other people make efforts in trying to accompany Rock's good and solid work.
Cheers
Similarly to Aug 9 it played to the day so, yes I'm very glad of the results even though I'm still ways off of the 20 independent calls that I have for a target, in order to evaluate how reliable this kind of out of the box approach is. From Sep 1 we came down, being yesterday the lower mark and of course all because of Grece.
Is going to be a very very unexpected black swan because nobody knows that Grece is having um...some problems.Months ago the chinese appeared backing them up, but with such a secrecy and in such a haste (and being informed only in morning papers all over the world), that probably left some loose ends over there. So they are in problems again.
I was puzzled past Friday when the certainty of a Monday butchery in the equity markets because of a higly unexpected default from Grece.
Bringing the entire civilization to their knees. Don't get me wrong there are counterparty risk but this is what markets are made of; risk. Utterly collapse come with surprise, especially when banksters can make big coin "enabling" that kind of regrettable outcomes, particularly if being bailed out by taxpayers.
Two bailouts in a row (or three years appart) is not highly probable. Bankers know that so they are ranting but there's not going to be a few trillions waiting for them again, just to remain afloat.
Is clear for them that this time is different.They can ransack civilization but not that often.
What are they going to do? Just another big seizure and expect not being nationalized or chop into pieces? They are more sophisticated than that.
The pendulum is moving away from them and the focus is going to become main street otherwise no aggregate demand is going to appear and no more bussines for them. Anyway they are going to be protected if they don't blackmail too much.
Proof of that was Germany letting the entire globe known that they were going to beef up their banks if Grece defaults.
Which lead us to one of the very reason why the crisis became really scary. It wasn't the drying up of the commercial paper for corporations when Lehman brothers collapsed, the trauma.It was their collapse by itself what paralized the financial world and made it's way through the whole economy.
Of course there were lot other reasons but in markets perception is crucial in order to make people willing to bet money to an outcome. Germany was arresting that (perception) issue.
Monetary sovereign nations are going to respond "manufacturing" money and as long as the perception by the population is that they have the power to do that without the public certainty that things are spinning out of control, banksters are going to suck it up because is in their best interest to keep the wheel of economic activity moving, otherwise they are simply toast.
There's not room for a new massive bailout if regular people's lives don't improve, banksters got their trillions and I bet thet are pretty content with that.
For the s&p I'm expecting some important move by the end of the month sep 26-28 I'll study in more detail and post this weekend.
Dan
PS: I'm as perceptive as a caveman but I finally noticed that I'm almost writing alone here and two places for a weekly post is a bit much.
I'll just keep posting at dastrostockmarket.com and let other people make efforts in trying to accompany Rock's good and solid work.
Cheers
Wednesday, September 7, 2011
M’s, W's, and Relative Strength
Sorry about Rock’s unavailability over the last couple of weeks, but we’re finally seeing some progress on the home front. I’ve been out of the trading scene for the relocation and unpacking weeks, so don’t have any real feeling about the progress of the tape. And, I haven't had time to catch up on the blog comments.
A couple weeks ago, I commented that I felt we would see significant chop around the 1100-1200 range. I can’t remember the numbers exactly, but looking at the tape action , it seems this chop is in fact happening. I don't like this chop especially with big overnight moves. I haven't been trading, but it's hard to make money with this kind of market.
It seems we’re starting to do the turnaround, with the previous 110.27 low still intact. Looking more closely at the numbers, it seems we may be forming a series of w’s where the right side is higher than the left. This is bullish in the long run, but it takes nerves of steel to stay in over the long term during this chop.
I think the big question is what will break us out of this chop, and in which direction the breakout will happen. Here are the factors I’m considering:
1. The breakup of the Euro. If Merkle decides to support the greek sovereign debt problem, she’s likely out of a job, and will be replaced with someone without that sentiment. I think I heard the greek 2-year bonds are running around 50%. Wow.
2. Dollar strength is likely to improve. I need to get out of my RMB investment. There will still be the “flight to quality”, and as Japan proved, the condition of a country's economy is of no concern for the strength of its currency.
3. Bank contagion over exposure to euro debt. The reports I’ve seen indicate the US bank exposure is fairly low and containable. Maybe Buffet’s right and a long position in the banks should be considered. Every time I hear what Buffet is doing, I short his position short-term and prepare to get out on a reversal. It’s made money for me every time.
4. Nobody’s paying attention to the debt ceiling anymore. Now, Job creation is the focus. Who cares about debt. Just our grandchildren, I guess (too bad they don't know it yet). It seems the world agrees, with the strength of the dollar reflected in this support.
5. As I’ve said before, we’re in recession. The numbers are beginning to show it, so to fix it, the government needs to adjust the price of housing lower. This is easily done, so the government numbers will show we’re not in recession. This is a 2 edged sword, because it basically ties Bernank’s ability to do anything—why do something when we’re not in or headed to official recession?
6. The market almost always falls after the President speaks.
7. The confidence numbers are low. This is one statistic the government economists can’t fudge. This will be very difficult for Obama to overcome in any election, so he’s really got to try to do something in the short term. IMHO, nothing can be done in the short term so he’s burnt toast.
8. Austerity programs cause economic downturns. “Ok, Princess, how low can you go?”
So where’s the money flowing during this downtrend leg (besides out of the market, in general)? To try to get caught up, I’ve done yet another herds 5-day RELATIVE STRENGTH analysis. Here it is. First, the worst performers:
TAN -9%
KRE -4.8%
$BKX KCE KBE –4.4%
XLF –3.3%
UCC –3%
IAK XES -2.6%
And the best performers:
$DRG.X IHE IYH XLV IBB 2%
XLU 2.5%
GLD 9.6%
GDX 10%
From an investment perspective, the only ones making money are GLD and GDX. It’s interesting that the Solars are taking the pipe big time.
Again, the “Relative Strength” is a cumulative 5-day performance relative to the performance of the SPX index.
Trade safe in this chop, folks.
A couple weeks ago, I commented that I felt we would see significant chop around the 1100-1200 range. I can’t remember the numbers exactly, but looking at the tape action , it seems this chop is in fact happening. I don't like this chop especially with big overnight moves. I haven't been trading, but it's hard to make money with this kind of market.
It seems we’re starting to do the turnaround, with the previous 110.27 low still intact. Looking more closely at the numbers, it seems we may be forming a series of w’s where the right side is higher than the left. This is bullish in the long run, but it takes nerves of steel to stay in over the long term during this chop.
I think the big question is what will break us out of this chop, and in which direction the breakout will happen. Here are the factors I’m considering:
1. The breakup of the Euro. If Merkle decides to support the greek sovereign debt problem, she’s likely out of a job, and will be replaced with someone without that sentiment. I think I heard the greek 2-year bonds are running around 50%. Wow.
2. Dollar strength is likely to improve. I need to get out of my RMB investment. There will still be the “flight to quality”, and as Japan proved, the condition of a country's economy is of no concern for the strength of its currency.
3. Bank contagion over exposure to euro debt. The reports I’ve seen indicate the US bank exposure is fairly low and containable. Maybe Buffet’s right and a long position in the banks should be considered. Every time I hear what Buffet is doing, I short his position short-term and prepare to get out on a reversal. It’s made money for me every time.
4. Nobody’s paying attention to the debt ceiling anymore. Now, Job creation is the focus. Who cares about debt. Just our grandchildren, I guess (too bad they don't know it yet). It seems the world agrees, with the strength of the dollar reflected in this support.
5. As I’ve said before, we’re in recession. The numbers are beginning to show it, so to fix it, the government needs to adjust the price of housing lower. This is easily done, so the government numbers will show we’re not in recession. This is a 2 edged sword, because it basically ties Bernank’s ability to do anything—why do something when we’re not in or headed to official recession?
6. The market almost always falls after the President speaks.
7. The confidence numbers are low. This is one statistic the government economists can’t fudge. This will be very difficult for Obama to overcome in any election, so he’s really got to try to do something in the short term. IMHO, nothing can be done in the short term so he’s burnt toast.
8. Austerity programs cause economic downturns. “Ok, Princess, how low can you go?”
So where’s the money flowing during this downtrend leg (besides out of the market, in general)? To try to get caught up, I’ve done yet another herds 5-day RELATIVE STRENGTH analysis. Here it is. First, the worst performers:
TAN -9%
KRE -4.8%
$BKX KCE KBE –4.4%
XLF –3.3%
UCC –3%
IAK XES -2.6%
And the best performers:
$DRG.X IHE IYH XLV IBB 2%
XLU 2.5%
GLD 9.6%
GDX 10%
From an investment perspective, the only ones making money are GLD and GDX. It’s interesting that the Solars are taking the pipe big time.
Again, the “Relative Strength” is a cumulative 5-day performance relative to the performance of the SPX index.
Trade safe in this chop, folks.
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