Thursday, January 12, 2012 Monday, March 14, 2011
UPDATE: Now down 15+%
UPDATE 2 (12:00 am Chicago): Japanese Stock Exchange Shut down. 

UPDATE: Now down 15+%

UPDATE 2 (12:00 am Chicago): Japanese Stock Exchange Shut down. 

Saturday, March 5, 2011 Thursday, March 3, 2011

Gut Feeling

I dunno why, but I feel like we are about to experience a big move in the markets (in 3 weeks max).  My hunch is that the dollar is in a retesting phase and that this will be another medium (perhaps major) bottom. 

There are way too many risks out there and complacency is just ridiculous. 

"$100 oil won’t be enough to derail the recovery" is the main sentiment of investors…

The VIX plunged 10% today despite Saudi Arabia’s stock market free-falling as the Day of Rage comes up.  Furthermore, just look at the VIX level now (considering a MAJOR oil producer is in danger of riots and oil delivery disruptions) versus the level it achieved when Greece was going down….this comparison bring the obvious conclusion that investors are not paying attention to the worsening situation in the Middle East.

Saturday, February 12, 2011

Something to  Keep An Eye On (Market Breadth) 


These two charts are very interesting in that they may be showing a weakening bull market.  The first chart is the Russell 2000 Advance/Decline Line.  It shows that while equities have rallied to new highs, breadth has not matched the strength of the price action. The second chart is the %age of Stocks Above the 200 Day Moving Average.  Same story here, recent market highs have not seen the same number of stocks showing bullish price action.  These are signs of declining breadth and it’s worth watching closely to see if it corrects, or if something more nefarious is amiss. 

I believe that equity markets will begin to rollover at some point this year.  There are numerous headwinds and dangers that lurk in the investment waters ahead.  Emerging Market inflation is beginning to become a big problem, particularly in China (another potential headwind I analyzed almost 1 year ago).  The Eurozone also has its problems and they seem to be progressively getting worse.  It seems that recent discussions among politicians over there haven’t ameliorated the increasingly edgy bond markets. Throw in there reduced spending from the US government (another topic I covered here), a double-dipping housing market (which is in my thesis as well), and increasing commodity prices as investors continue to poor money into raw materials due to fears of the Federal Reserve destroying the value of the dollar (think summer 2008); and you have an environment fraught with risks that are not being correctly priced into the equity market.  Complacency is rampant and most analysts are expecting continued recovery and rising stock markets.  What was that what Warren Buffet said? 

"Be fearful when others are greedy and greedy when others are fearful."

Charts Courtesy of freestockcharts.com

Wednesday, February 9, 2011 Wednesday, February 2, 2011

Bull/Bear Quickie

Bull:

Manufacturing ISM numbers come in strong (Chicago PMI too)…manufacturing continues to carry the US economy on the back of a weaker dollar and increasing global growth.  This is translating to expanding hiring plans. 

In December, consumers did their part in helping the recovery as their spending and income numbers posted healthy increases.  Contrary to bears making the claim that consumers will remain cautious, they continue to surprise.

ADP and ISM employment sub-index shows that job growth is improving.  Challenger Job-Cut survey shows that all in all, the firings are completed.  Companies are running lean.  

Bear

Geopolitics continues to be a headwind as uncertainty on how Egypt will play out (contagion effects?) has oil steadily rising.  If oil and other commodities continue climbing, company profits may get squeezed as they find it more difficult to pass rising costs to consumers, or consumers buy less (in the US). 

Retail sales numbers are starting to signal weakness in growth.  While winter storms are cited as the reason, the real one is because we still have a weak job market and uncertainty on whether job growth will come back.  Growth up to this point in the job market has remained quite weak. 

Housing remains in a funk.

Wednesday, December 8, 2010 Thursday, December 2, 2010 Sunday, November 28, 2010

Addendum to Irish Bailout Announcement

After about an hour for the Euro to absorb the Irish bailout news, it still remains undecisive which way it wants to go (there could be a bullish inverted head and shoulders forming). 

Market action this week will be very interesting as it may signal whether the bailout plan was successful in establishing confidence that the Eurozone has seen the last of its debt problems. 

Tuesday, November 23, 2010