Thoughts about the markets, automated trading algorithms, artificial intelligence, and lots of other stuff

  • Capitalogix Commentary for the Week of 08/23/10

    We are in the dog-days of summer.  Perhaps it is a good time to travel, just so you are not tempted to watch the news.

    100821 Recovery Status Cartoon - Stein

    Biggest Negative Fund Flow Out of U.S. Stocks Since During the Crisis.

    Money is flowing out of equity markets into the bond market.  According to the NYTimes, investors withdrew a staggering $33.12 billion from domestic stock market mutual funds so far this year.

    In the chart, below, the red bars represent fund flows for U.S. equity mutual funds, and the gray bars represent fund flows for bond mutual fund.  The data for this chart is based on the fund flow data of long term mutual funds tracked by the Investment Company Institute.

    100822 Money Moving Out of Stocks and Into Bonds

    Likewise, according to Rasmussen research, consumer & investor confidence has fallen to a 2010 low.

    The Consumer Metrics Institute's Growth Index.

    It's easy to get distracted by other data, but (for the most part) price is the primary indicator to use when analyzing a stock chart. Of course, it's still useful to try and get an early indicator of how a well-followed metric may perform.

    The chart below shows three different data points. The S&P 500 index, GDP, and the Consumer Metrics Institute's Growth Index.  Historically, the Growth Index has given an early indication of what GDP and the stock market are likely to do soon after. So, its recent decline might be an early indicator of continued weakness.

    100822 Consumer Metrics Growth Index
    This is something that bears watching.  If you're interested, here's a link from dshort.com that covers this topic in more detail.

    As more people worry that our economy is not changing as hoped; some things are changing … technology and legislation.

    How Does Technology Change the Investment Landscape?

    Duncan Niederauer, NYSE Euronext CEO, sat down with Maria Bartiromo at the "Techonomy Conference" in Lake Tahoe to talk about technological advancements and what they mean for the future of trading.

     

    My guess is that we are going to see a whole new round of cries for regulation of financial technology.

    Here is an Explanation of How Laws Are Made.

    For the past two years, Financial Reform has been in the news.  Here is is a link to a discussion of what it can accomplish. Now that the Dodd-Frank Bill has become law, I thought it might be helpful to show the path it had to take?  Here is an informative infographic put together by  Mike Wirth that lays out how a Bill becomes a Law.  Click the image to see a larger version.

    HowlawsmadeWIRTH2

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Market Data Firm Spots the Tracks of Bizarre Robot Traders. (Atlantic)
    • Will the New Financial Reform Law Affect Big Bank Profits? (RollingStone)
    • Soros Flees Stocks, Yet Remains Bullish On 'The Ultimate Bubble' in Gold. (BI)
    • Rising Profits Are Good, But Sales Haven't Kept Pace. (NYTimes)
    • More M&A: Why Did Intel's Pay $7.68 Billion to Purchase of McAfee? (Newser)
    • Following Jobs Report, Consumer & Investor Confidence Falls to 2010 Low.
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week:

    • Surprising Research on the Effect of Interruptions on Your Work. (BothSides)
    • 10 Amazing James Bond Gadgets That You Can Actually Buy. (BusinessInsider)
    • Big Brother is Watching: Judges Divided Over Growing GPS Surveillance. (NYTimes)
    • At Least It Wasn't Cancer: Doctors Find Pea Growing In Man's Lung. (NPR)
    • Class of 2014 Doesn't Know Cursive: Snapshot of a Generation. (Newser)
    • More Posts with Lighter Ideas and Fun Links.
    Related articles by Zemanta
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  • Capitalogix Commentary for the Week of 08/23/10

    We are in the dog-days of summer.  Perhaps it is a good time to travel, just so you are not tempted to watch the news.

    100821 Recovery Status Cartoon - Stein

    Biggest Negative Fund Flow Out of U.S. Stocks Since During the Crisis.

    Money is flowing out of equity markets into the bond market.  According to the NYTimes, investors withdrew a staggering $33.12 billion from domestic stock market mutual funds so far this year.

    In the chart, below, the red bars represent fund flows for U.S. equity mutual funds, and the gray bars represent fund flows for bond mutual fund.  The data for this chart is based on the fund flow data of long term mutual funds tracked by the Investment Company Institute.

    100822 Money Moving Out of Stocks and Into Bonds

    Likewise, according to Rasmussen research, consumer & investor confidence has fallen to a 2010 low.

    The Consumer Metrics Institute's Growth Index.

    It's easy to get distracted by other data, but (for the most part) price is the primary indicator to use when analyzing a stock chart. Of course, it's still useful to try and get an early indicator of how a well-followed metric may perform.

    The chart below shows three different data points. The S&P 500 index, GDP, and the Consumer Metrics Institute's Growth Index.  Historically, the Growth Index has given an early indication of what GDP and the stock market are likely to do soon after. So, its recent decline might be an early indicator of continued weakness.

    100822 Consumer Metrics Growth Index
    This is something that bears watching.  If you're interested, here's a link from dshort.com that covers this topic in more detail.

    As more people worry that our economy is not changing as hoped; some things are changing … technology and legislation.

    How Does Technology Change the Investment Landscape?

    Duncan Niederauer, NYSE Euronext CEO, sat down with Maria Bartiromo at the "Techonomy Conference" in Lake Tahoe to talk about technological advancements and what they mean for the future of trading.

     

    My guess is that we are going to see a whole new round of cries for regulation of financial technology.

    Here is an Explanation of How Laws Are Made.

    For the past two years, Financial Reform has been in the news.  Here is is a link to a discussion of what it can accomplish. Now that the Dodd-Frank Bill has become law, I thought it might be helpful to show the path it had to take?  Here is an informative infographic put together by  Mike Wirth that lays out how a Bill becomes a Law.  Click the image to see a larger version.

    HowlawsmadeWIRTH2

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Market Data Firm Spots the Tracks of Bizarre Robot Traders. (Atlantic)
    • Will the New Financial Reform Law Affect Big Bank Profits? (RollingStone)
    • Soros Flees Stocks, Yet Remains Bullish On 'The Ultimate Bubble' in Gold. (BI)
    • Rising Profits Are Good, But Sales Haven't Kept Pace. (NYTimes)
    • More M&A: Why Did Intel's Pay $7.68 Billion to Purchase of McAfee? (Newser)
    • Following Jobs Report, Consumer & Investor Confidence Falls to 2010 Low.
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week:

    • Surprising Research on the Effect of Interruptions on Your Work. (BothSides)
    • 10 Amazing James Bond Gadgets That You Can Actually Buy. (BusinessInsider)
    • Big Brother is Watching: Judges Divided Over Growing GPS Surveillance. (NYTimes)
    • At Least It Wasn't Cancer: Doctors Find Pea Growing In Man's Lung. (NPR)
    • Class of 2014 Doesn't Know Cursive: Snapshot of a Generation. (Newser)
    • More Posts with Lighter Ideas and Fun Links.
    Related articles by Zemanta
    Enhanced by Zemanta

  • Make a PhotoMosaic Image From Your Friend’s Profile Pictures

    This image was created by Frinter, and is made up of many profile pictures from my Twitter and Facebook accounts.

    100819 HMG PhotoMosaic

    It doesn’t cost anything (unless you want to buy a poster).  So, try it with one of your pictures.

     

     

    Related articles by Zemanta
    Enhanced by Zemanta

  • Make a PhotoMosaic Image From Your Friend’s Profile Pictures

    This image was created by Frinter, and is made up of many profile pictures from my Twitter and Facebook accounts.

    100819 HMG PhotoMosaic

    It doesn’t cost anything (unless you want to buy a poster).  So, try it with one of your pictures.

     

     

    Related articles by Zemanta
    Enhanced by Zemanta

  • Classic Photo: Misspelled “School” Zone Sign

    As kids gear-up to go back to school, here is photo showing that some people need it more than others.

    100814 Somebody Has to Go Back to School

    According to this story,  a road contractor hired to paint the word "school" on a freshly paved stretch of road near Southern Guilford High School in North Carolina rendered the traffic area in question a "shcool" zone.

  • Classic Photo: Misspelled “School” Zone Sign

    As kids gear-up to go back to school, here is photo showing that some people need it more than others.

    100814 Somebody Has to Go Back to School

    According to this story,  a road contractor hired to paint the word "school" on a freshly paved stretch of road near Southern Guilford High School in North Carolina rendered the traffic area in question a "shcool" zone.

  • Inspirational Video from Facing the Giants

    "If you think you can do a thing … or think you can't do a thing; you're right."

    -    Henry Ford

    I love football season, and I'm a sucker for plot devices like this.

    Here is a clip from the movie "Facing the Giants".

     

     

    There are times in life when it is hard to imagine finding a path to victory.

    Facing the Giants DVD CoverSo often the answer is as simple as committing to the outcome desired, showing-up, playing full-out, and giving your best until there is absolutely nothing left.

    Related Articles:

     

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  • Inspirational Video from Facing the Giants

    "If you think you can do a thing … or think you can't do a thing; you're right."

    -    Henry Ford

    I love football season, and I'm a sucker for plot devices like this.

    Here is a clip from the movie "Facing the Giants".

     

     

    There are times in life when it is hard to imagine finding a path to victory.

    Facing the Giants DVD CoverSo often the answer is as simple as committing to the outcome desired, showing-up, playing full-out, and giving your best until there is absolutely nothing left.

    Related Articles:

     

    Enhanced by Zemanta

  • Capitalogix Commentary for the Week of 08/16/10

    Tracking the Hindenburg Omen: How Much Danger Is There?

    100815 Hindenburg Crash"Friday the 13th" got a little scarier than normal as warnings were heard from many corners of the financial blogosphere that the Hindenburg Omen triggered.

    What is it?  It is a fairly obscure technical analysis pattern, which supposedly gives an early warning of unstable market conditions (and even potentially stock market crashes).

    While the calculation is based on five factors, the primary conditions indicate that there is a big disagreement about market conditions.

    For example, two of the conditions are that a substantial number of stocks have to be at yearly highs, while a substantial number of stocks have to be at new annual lows.  Ultimately, it is hard for those two conditions to be met in a short period of time, unless there's uncertainty in the market.  Moreover, after a rally, uncertainty is often a precursor to a decline.

    In addition, technically (in order for the pattern to be complete), a second sighting of the five elements must occur within 36 days. Logically, lingering uncertainty is a momentum killer.

    While this pattern has correctly predicted every big stock market swoon of the past two decades, including the October 2008 decline (that set the global economic recession into motion), not every Hindenburg Omen has been followed by a crash. Resorting to a geometry analogy: All rectangles are squares, but not all squares are rectangles.

    Personally, I don't make trade decisions based solely on indicators like this. Nonetheless, it has a pretty good track record, seems to be based on reasonable theories, and might be useful as just another data point urging caution.

    Tough Week for World Markets.

    Taking a macro view, many markets around the world went down last week.  Notably, the NASDAQ was down 5%, the Nikkei was down 4%, and many other indices were down 3%.

    100813 Tough Week for World Markets

    Here in America, the Federal Reserve’s Open Market Committee startled financial markets by raising its terror alert level over the economy and declaring it would keep buying bonds to maintain its loose-money stance and fight deflation.  Despite the promise of help, the markets continued lower.

    Let's Look at a Chart of the S&P.

    What does a daily chart of the S&P 500 Index show?  Price has retreated from the resistance area (marked by the pink highlight).  In addition, price has gapped below the up-trend line (marked by the green line).  Combine that with a negative divergence in MACD momentum, and the picture is technically weaker than before.

    100815 SP500 Trend Break

    Bulls are looking for an oversold rally.  Bears are looking at the unfilled gaps as breakaway gaps.

    As always, it should be interesting.

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Goldman Had 10 Days of Trading Losses in Q2. (WallSt&Tech)
    • The Options Market's Take On H-P: Frenzied Buying in Put Options. (Barrons)
    • Grand Tetons Possibly for Sale: Governor of Wyoming Says They Are Desperate. (Alternet)
    • How Far Should Google Go to Profit From the Data It Has About People's Activities? (WSJ)
    • Skype Files Plans for $100 Million IPO. (WSJ)

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Hedge Fund Predicts "Apple Will Sell 50 Million iPads A Year". (BusinessInsider)
    • Swarm Intelligence: Why Mimicking the Behaviour of Ants & Bees Is Smart. (Economist)
    • What Your Appetite Reveals About How Your Brain Works? (PsychologyToday)
    • BlackBerrys & Encryption – Spies, Secrets and Smart-Phones. (Economist)
    • Google Goggles Lets You Search the Web With Your Mobile Phone Images. (Kurzweil)
    Related articles by Zemanta
    Enhanced by Zemanta

  • Capitalogix Commentary for the Week of 08/16/10

    Tracking the Hindenburg Omen: How Much Danger Is There?

    100815 Hindenburg Crash"Friday the 13th" got a little scarier than normal as warnings were heard from many corners of the financial blogosphere that the Hindenburg Omen triggered.

    What is it?  It is a fairly obscure technical analysis pattern, which supposedly gives an early warning of unstable market conditions (and even potentially stock market crashes).

    While the calculation is based on five factors, the primary conditions indicate that there is a big disagreement about market conditions.

    For example, two of the conditions are that a substantial number of stocks have to be at yearly highs, while a substantial number of stocks have to be at new annual lows.  Ultimately, it is hard for those two conditions to be met in a short period of time, unless there's uncertainty in the market.  Moreover, after a rally, uncertainty is often a precursor to a decline.

    In addition, technically (in order for the pattern to be complete), a second sighting of the five elements must occur within 36 days. Logically, lingering uncertainty is a momentum killer.

    While this pattern has correctly predicted every big stock market swoon of the past two decades, including the October 2008 decline (that set the global economic recession into motion), not every Hindenburg Omen has been followed by a crash. Resorting to a geometry analogy: All rectangles are squares, but not all squares are rectangles.

    Personally, I don't make trade decisions based solely on indicators like this. Nonetheless, it has a pretty good track record, seems to be based on reasonable theories, and might be useful as just another data point urging caution.

    Tough Week for World Markets.

    Taking a macro view, many markets around the world went down last week.  Notably, the NASDAQ was down 5%, the Nikkei was down 4%, and many other indices were down 3%.

    100813 Tough Week for World Markets

    Here in America, the Federal Reserve’s Open Market Committee startled financial markets by raising its terror alert level over the economy and declaring it would keep buying bonds to maintain its loose-money stance and fight deflation.  Despite the promise of help, the markets continued lower.

    Let's Look at a Chart of the S&P.

    What does a daily chart of the S&P 500 Index show?  Price has retreated from the resistance area (marked by the pink highlight).  In addition, price has gapped below the up-trend line (marked by the green line).  Combine that with a negative divergence in MACD momentum, and the picture is technically weaker than before.

    100815 SP500 Trend Break

    Bulls are looking for an oversold rally.  Bears are looking at the unfilled gaps as breakaway gaps.

    As always, it should be interesting.

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Goldman Had 10 Days of Trading Losses in Q2. (WallSt&Tech)
    • The Options Market's Take On H-P: Frenzied Buying in Put Options. (Barrons)
    • Grand Tetons Possibly for Sale: Governor of Wyoming Says They Are Desperate. (Alternet)
    • How Far Should Google Go to Profit From the Data It Has About People's Activities? (WSJ)
    • Skype Files Plans for $100 Million IPO. (WSJ)

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Hedge Fund Predicts "Apple Will Sell 50 Million iPads A Year". (BusinessInsider)
    • Swarm Intelligence: Why Mimicking the Behaviour of Ants & Bees Is Smart. (Economist)
    • What Your Appetite Reveals About How Your Brain Works? (PsychologyToday)
    • BlackBerrys & Encryption – Spies, Secrets and Smart-Phones. (Economist)
    • Google Goggles Lets You Search the Web With Your Mobile Phone Images. (Kurzweil)
    Related articles by Zemanta
    Enhanced by Zemanta