I am spending some time on the road and found something very interesting. We all know how the world thinks Americans are very American-centric and we are. When I logged into the hotel internet in the Dominican Republic, the page it brought me to was Google.com.do - as you might expect. Then the eye-opener.
Wednesday, March 31, 2010
Monday, March 29, 2010
In today's column I look at bonds, a potential breakdown and a return to sanity in the corporate bond market. What I mean by that last part is that corporates have gone a different way than Treasuries, which is odd since corporates are usually priced off Treasuries, adding a little risk premium in the form of higher yield.
Apparently, the market thinks the gubmint is a riskier proposition than even a junk bond. Are you listening Mr. Treasury Secretary? Congress? (both sides)?
Rates are going up. It is just a matter of when and I mean that on the scale of weeks, not months.
Will be on the road this week so posts here will be infrequent. Happy Holidays to all!
Thursday, March 25, 2010
Wednesday, March 24, 2010
A poke is a sack or bag. It has a French origin as 'poque' and, like several other French words, its a diminutive is formed by adding 'ette' or 'et' - hence 'pocket' began life with the meaning 'small bag'. Poke is still in use in several English-speaking countries, notably Scotland and USA, and describes just the sort of bag that would be useful for carrying a piglet to market.
The poke is where two of the PIIGS are right now - Greece, Portugal and Spain. All three have had death crosses, the latter two just last week, right in time for Portugal's debt downgrade.
Death cross (black cross) - opposite of the golden cross when the 50-day average crosses under the 200-day.
Yeah, the markets shrugged off Greece and its death cross in January. Greece was a tiny market, they said. But the contagion is now spreading, isn't it? Italy is just a few days from its own death cross and Italy is no small market.
No, it's not the UK but guess what has been linked to Portugal? That's right, the UK. MarketWatch - Portugal and the UK-joined-at-hip-with-budget-woes
Where there is smoke there is fire and I smell BAACON (OK a bad attempt to say fried sliced PIIGS).
Can the US market move higher? You betcha, Sarah. The trend is still up.
I still say that when it finally turns, it will be a house of cards a-tumbling. Do you have any other explanation for the price of US government bonds absolutely tanking today?
Tuesday, March 23, 2010
Just got the word that a later edition of Technical Analysis, Plain and Simple will be translated into Russian. That makes this book, in all of its three editions, out in English, Russian, German, Greek and an English version unique to India.
If you are reading this blog from a country speaking one of those languages, odds are there is a technical analysis society there, too. Come, on, France, how about demanding a French version?
For those looking to learn charting, I also recommend my third book "A Beginner's Guide to Charting Financial Markets." It is a follow-up to my MoneyShow and AAII presentations.
Monday, March 22, 2010
Do we believe another low volume rally? One that followed a higher volume decline? Or one that erased Friday's bearish key reversal patterns across the board?
Soros had it right - hop on the trend where the crooks live and hop off before they get discovered.
But where are the bears? Indeed.
Do you get the feeling that everyone is starting to drink the kool-aid? For kicks, go read TedBits at traderview.com. A bit extreme on the panicky side but the chickens are coming home to roost. When they get here is the question and we can go broke anticipating it.
Sunday, March 21, 2010
Just some observations for a Sunday night:
- CNN Money reported Dow futures down 100
- Futuresource had them down 53
- And the dollar is still firm after a strong Thursday and Friday
- Which means commodities are weak
This is not a political blog so no comments in that arena, please.
Thursday, March 18, 2010
I have given up trying to figure out what is happening in the short-term. This is different than figuring out what to do. For the former, I'd be sitting on a goose egg in the trading account. For the latter, we're long despite what we thought.
Plain and simple (book plug), individual stocks broke out from patterns. Now they are all overbought so we ride stops and sleep at night.
Anyone notice the big reversal in Alcoa today?
Wednesday, March 17, 2010
Today's column is about volume and how it may not matter now but will in the future. Here is a chart that I chose not to include in it. You will definitely have to click on it to see the whole thing.
What we see here is a chart starting in September 2001 although you cannot see that far back. Why September 2001? It was the last time the 50-day average of NYSE volume was as low is it is now.
I ran a regression line from there to the peak of 50-day volume in the summer of 2007. And then another from the peak to today.
How does that fit with a bear and bull cycle we have seen? Beats me. But don't let anyone tell you volume is not falling. Either all the volume has moved to off-exchange areas or the heyday of the stock market is on the wane setting up a fall.
Note - Volume was indeed exaggerated in September 2001 (9/11) so the actual peak may have been in June 2006.
Monday, March 15, 2010
Bent but not really broken - arguably.
But a few weeks ago - before the earthquake hit top producer Chile - I wrote a piece for MarketWatch saying copper and copper stocks looked bad. Then the earthquake hit and copper jumped up - a lot.
Blame the dollar if you like but today's action is bearish and we may look back on last week's trading as the second peak in a double top.
And for your odd music enjoyment, "Bend It" from 1966. You know there is always an ulterior motive in my blog titles.
Friday, March 12, 2010
I promise, I'll get to the suggested topics soon but I am fuming once again with the banking industry.
I was rather happy with the service I got at my Washington Mutual branch even though that's where the whole problem started. I was even happier with the nice people at my local NatWest before they sold to Fleet and then Fleet sold to Bank of America but that is ancient history.
Do you get the feeling that there will only be 5 banks in this country soon?
Anyway, last summer Chase decided to charge me overdraft fees on a debit card and I blogged about this last year. I did not know there was overdraft "protection" on the card where they would honor my 5 dollar Starbucks purchase and charge me 32 dollars for the privilege. When I learned of that, they said they could take the overdraft protection off.
Off course, they did not and fees started to rack up again.
It has been many months and I finally got in touch with the regional manager. It was like talking to a recording - we do care about our customers, we cannot refund fees, we now let you opt out of overdraft protection. What a drone. I then told her that I made a specific feature request and they gave me the wrong one. They should have said I would be better off with a credit card as it would have worked exactly the same as a debit card with overdraft. Only with no fees.
Then I hit her with a real bit of thinking. I would take my business elsewhere unless she refunded the fees. I did not tell her I would compromise and split it with her but I would have done so.
No leg to stand on, you say? Here is where someone who actually had responsibility for business, not just keeping order, would come in.
I am not a giant fish but I do pay them interest on a mortgage. There are other legit fees but let's keep it simple. I pay them $600 per month in interest and I am asking for a $300 fee refund. Think about this for a second. In order to keep a month after month stream of $600 they would have to give up $300 one time.
Expand it out - $600 times 12 months is $7200. And I have had this thing for over four years with the intention of keeping it for several more years.
So, by not refunding fees that never should have been charged in the first place (because they basically lied about the card features, intentionally or unemotionally), they would have a nice revenue stream for several years. I have one more level in the company to try but I have already started to shop around.
Which brings me to Capital One. Granted, nobody has a branch on every corner like Chase. Not even Starbucks can match that in this part of the world. But Capital One has four within reasonable distance from my house and office so it would be fine.
I walk in and the very lovely (personality) bank officer starts telling me about rewards programs and .05% interest rates. She did not know squat about their mortgages and was not too swift on the website, either. While I wait for a mortgage person to get back to me, I left the branch shaking my head.
What a Dumas! (Remember that TV commercial? Change the syllable accent).
Does any bank have people who know what they are doing? I said, show me a competitive mortgage rate to Chase and I move business checking and credit card, personal checking and savings plus two more credit cards over to them.
"Here, let me tell you about how many miles you earn when you write checks."
Too big to fail? Too big to give a crap.
I have to get a bigger mattress.
I got this in the email this morning:
"TrimTabs Investment Research reporting their latest real-time economic data shows US economy is on the road to recovery and attributing the economic rebound mostly to low interest rates and government stimulus."
Really? You guys wrote this in the beginning of February:
"TrimTabs using real-time numbers estimates that job losses for January were 105,000, much higher than Wall Street expectations that the BLS on Friday will report 5,000 January job losses. TrimTabs warns the BLS estimates are highly inaccurate because of incomplete survey data and illogical seasonal adjustments, among other things. Which means government policy, business and investment decisions based on these numbers are useless, and in fact, dangerous."
Here is the blog post for that - Trim Tabs Expects Bomb
The technicals are lousy but the fundamentals are worse. One month, the government is dangerous and the next they get all the credit for the recovery.
All that matters is the specter of lifting the stimulus and that was not covered in the CMT exam.
Thursday, March 11, 2010
I still want to hear from readers about topics to cover (see previous post) but this one caught my eye. To wit (or twit):
The U.S. trade deficit narrowed to $37.29 billion in January, the Commerce Department said. A 1.7% decline in imports outpaced a 0.3% drop in exports as the volume of oil imports hit its lowest level in more than a decade.
There is something perverted and innately evil in this report. The trade gap narrowing is a good thing when you are a debtor nation but look how it was done. Imports fell more than exports! Oh, I am all warm and fuzzy now.
When exports actually start to rise, we can talk. This report tells us the economy is still shrinking.
Wednesday, March 10, 2010
Tuesday, March 9, 2010
We've had a lot of discussion in Quick Takes Pro about the low volume rally and even it if is indeed low volume. We found this on the blogosphere so read it with a grain of salt. There is an element of conspiracy in there.
Furthermore, if anyone was merely looking at the trading action in regular hours, one would think there was absolutely no profit made since early September. The reason for that: all the upside since September 14th has come exclusively from afterhours action.
Every single day, minimal volume pushes the futures index higher. Good news, bad news, it don’t matter to the Goldman S&P and Russell 1000 futures desk: they just lift every micro offer, giving the impression that the market is unstoppable, often leapfrogging each other as the latest viagra’ed GDP or unemployment rumor is spread.
Come morning, it is time for the HFT (high frequency trading) brigade to come in and scalp their
trillions of pennies while leaving the market unchanged, then at 4pm handing it off again to leveraged futures manipulation and dark pools. In a nutshell, this is the secret of the past quarter’s phenomenal market performance.
- Peter Cooper, financial journalist
The headline here is intentionally lower case as in a whisper. I am tired of finding bearish evidence in the face of a market that just goes up no matter what. But here goes. I found this at the Pragmatic Capitalist site.
As charts below from the ICI illustrates, portfolio managers have been so nervous to miss any up-moves that they have run down their cash holdings to 3.6% of assets from nearly 6% a year ago — the largest decline in 19 years. Equity cash ratios are back to where they were in September 2007, just as the stock market was hitting its peak.
My own retirement account is half cash.
Sunday, March 7, 2010
From Non-Sequiter by Wiley Miller.
I'd like to jusst link the picture in here but it is not exactly ethical or even legal.
Friday, March 5, 2010
From a chat room:
Arguing persuasively for an immediate and substantial decline are the facts that my main trading account crossed a round number today and that today feels strongly like an all-clear day to me.
- J Bollinger
Everything does seem to line up today, doesn't it? Greece is happy not to get a bailout from Germany. Employment is excellent (on a relative basis, of course). Bears look like fools. Resistance levels smashed.
Why must I be a teenager in love (with the stock market)?
Yes, ladies and gents, the VIX is under 18 and only 9.7% of the population is out of work!
Small cap stocks are at new recovery highs and the Dow is breaking through resistance! Interest rates are still sooo low and retail sales are hot, hot, hot!
I think I just threw up in my mouth. Yes, all of that is true but those happy exclamation points are making we woozy. Are things really that good? Well, stock market investors think so. I better tell my wife she can quit her job and make me a sandwich.
The chart of the VIX above shows it at "support" going back to the 2008 fun years. Apparently, all is forgiven.
While I cannot deny the market's trend and resilience, I just do not see how any analysis - technical or fundamental - justifies the feelings of secular bull market.
Thursday, March 4, 2010
Ask a sewer worker (Ed Norton?) about his job and he says it is full of, well, you know. But, it's honest work. That's not how I feel on Wall Street when I see juxtaposed headlines like this:
• Optimism returns to supermarket aisle
• Grocer Safeway shelves recent pessimism
These two were stacked just like this on MarketWatch. So, optimism returns but Safeway is just less pessimistic. At least I get the "job is full of, you know," feeling.
Do we buy grocer stocks? Of should we just rush out and buy food since demand is coming and we don't want to pay high prices?
How about that chart of Safeway?
Looks to me that the market restored optimism back in October when it smoked through its 200-day average. Now? How about this weekly chart?
1 - Is every politician corrupt? Maybe I am overly sensitive since my last governor was a hooker hound, my current governor is just plain corrupt and a congressman close to my district is a tenured piece of corruption who thinks a temporary resignation from his committee is absolution.
Then in a state close by, someone who has no experience and is shown getting a piledriver by a giant hunk of wrestling beef is going to try to buy an election from a guy who is goofy as all get out.
I say term limits of one term. That way, nobody has any incentive to look good instead of being good.
2 - Earthquakes. Haiti, Chile and now Taiwan? Is the Earth trying to tell us something? Yes, I know quakes happen all the time but these are monsters. I saw Bill Nye the science guy on the tube the other day explaining how the Chile quake was so big it actually slowed down the rotation of the Earth. http://www.cnn.com/video/#/video/tech/2010/03/02/velshi.bill.nye.intv.cnn.
Of course, a dictatorial nut job in the south says the USA's is to blame because we have a device to do it. You want a portfolio implication? He sits on a lot of oil.
3 - Greece! Let me get this straight - they are issuing 10-year government bonds to raise money for a sovereign debt crisis? The interest rate better be 25% payable in gold.
I love gold!
- Mike Meyers as Goldmember (that's a keepa!)
Tuesday, March 2, 2010
In the previous blog post, a reader commented that volume is lousy and he/she does not even follow it anymore. I sort of agree because we don't put volume in the bank. We also cannot fault anyone for making money when a stock goes up without volume. Lack of volume did not make it a bad trade.
So in this low volume environment, we can rejoice in the fact that the Russell 2000 just kissed its old highs! Break out the sham-pain.
The problem with low volume is not that the market cannot keep going up. It is that it has nothing to protect it from even the most minor of shocks. Investors will flee - as in run for the hills - at the sniff of bad news.
It is not where I want to play as I don't get enough sleep as it is.
Monday, March 1, 2010
Yes, AIG and Fannie/Freddy were back at the window looking for more handouts. Nothing topsy or turvey there. Greece and California were on default watch and nothing new there, either.
But now the British Pound is in free fall and the UK credit rating is actually in peril. So is Japan! To put it another way, two G-7 nations are in trouble, too.
But the stock market went up! Well, not Chile as could be expected but the Chilean currency soared. Now that is topsy and turvey - especially since copper closed well off its highs.
Economic data were up in the USA, helping to push stocks up along with an AIG divestiture. Really? Up? The ISM was actually down this month although it was still above the 50 market to indicate good stuff. You can see my skepticism.
A non-financial TV commentator said today that if Japan gets downgraded then they will sell US bonds to raise cash. They are, after all, the largest holder of our debt. And all that supply will compete with all of our new borrowing to push rates higher - way higher.
Good thing the US dollar is going up. Again - oh wait, it is all relative to the others. What is not relative? Gold. Think about it - even though the dollar went up today, gold held its ground.
Call me Midas (the king, not the muffler).