Thoughts about the markets, automated trading algorithms, artificial intelligence, and lots of other stuff
As a public service, I am sharing this Formal Apology from the Bureau of Communication.
Failure to use it has consequences.
For example, have you seen this video of what an angry father can do to his daughter's laptop?
Do you applaud the standard he is trying to teach her … or are you tempted to call Child Protective Services?
If she had just used the apology form …
There has been a disconnect. Individual investors don't seem to care that the market continues to rally.
Here is a chart showing continued investor out-flows, even as the Dow Jones Industrial Average hits multi-year highs.
History seems to be on the Bulls' side. Here is a Bespoke chart showing what has happened after the S&P 500 Index rallies 15% (or more) in a three-month period.
It has been a pretty bullish indicator.
Moreover, sentiment is not not so frothy since the rally has been so widely ignored by individual investors. As a result, traders don't expect much panic-selling on a move down.
In addition, the Markets have been resilient through some scary news cycles recently.
The question is: can it continue?
Well, if the Market can't shake-out some sellers, the next surprise could very well be another move higher.
There has been a disconnect. Individual investors don't seem to care that the market continues to rally.
Here is a chart showing continued investor out-flows, even as the Dow Jones Industrial Average hits multi-year highs.
History seems to be on the Bulls' side. Here is a Bespoke chart showing what has happened after the S&P 500 Index rallies 15% (or more) in a three-month period.
It has been a pretty bullish indicator.
Moreover, sentiment is not not so frothy since the rally has been so widely ignored by individual investors. As a result, traders don't expect much panic-selling on a move down.
In addition, the Markets have been resilient through some scary news cycles recently.
The question is: can it continue?
Well, if the Market can't shake-out some sellers, the next surprise could very well be another move higher.
You don't have to look hard to find prices going up.
Here are some of the posts that caught my eye. Hope you find something interesting.
You don't have to look hard to find prices going up.
Here are some of the posts that caught my eye. Hope you find something interesting.
A simple explanation of what happens in the Market.
Are you an Optimist, Pessimist, Realist or Opportunist?
A simple explanation of what happens in the Market.
Are you an Optimist, Pessimist, Realist or Opportunist?
Here are some of the posts that caught my eye. Hope you find something interesting.
Here are some of the posts that caught my eye. Hope you find something interesting.
Is This Market Rally Too Overbought to Trust?
While the optimists, pessimists and realists argue about whether the rally has gone too far (or is 'fake' because of government intervention) … opportunistic traders have enjoyed the ride.
So how far and long has this rally really come? Despite all the worrying, objects in the rear-view mirror may be closer than they seem.
The graphic (below) from Chart of the Day, puts over a century of market rallies in context.
As the Dow Jones Industrial Average flirts with post-financial crisis rally highs (and the 13,000 level), it may seem as if the current market rally has grown long-in-the-tooth …
Nonetheless, history says rallies can go much longer and higher than this.
To provide some perspective to the current Dow Jones market rally that began back in early October 2011, all major market rallies of the last 111 years are plotted on this chart. Each dot represents a major stock market rally as measured by the Dow.
As the chart above illustrates, the Dow has begun a major rally 28 times over the past 111 years which equates to an average of one rally every four years.
Also, most major rallies (78%) resulted in a gain of between 30% and 150% (29.8% to 150.5% to be exact) and lasted between 200 and 800 trading days (9.5 months to 3.2 years) — highlighted in this chart with a light blue shaded box.
As it stands right now, the current Dow rally (hollow blue dot labeled you are here) would be classified as well below average in both duration and magnitude.
Interesting.
