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

  • Why Cloud Computing Irks Larry Ellison, But Benefits You.

    The network is becoming the computer.

    Here is a short video that puts "Cloud Computing" in perspective.  In it, Ellison jokes that someone decided to change the word "Internet" to
    "Cloud" because it was a lot easier than innovation.


    Microsoft is spending a lot of time and money to make sure it does better gaining an early lead and monetizing this type of "Internet" service.  Their cloud computing platform is called Azure.

    Amazon also has a cloud offering worth a look. 

    Why Should You Care?

    Basically, you can “rent” a current version Windows Server for as little as 12 cents per hour, and only pay for the hours you need it each month. That’s $12 bucks to use 100 servers for an hour. You also pay for data transfer and storage, but that is negligible. The nice thing is that you can fire up an army of servers to run a batch process … then stop paying when they complete their work.

    You can get access even cheaper under a program where you bid on unused capacity within the cloud at any given time (Spot pricing). 

    I still have reservations about using cloud computing for many daily business applications. However, for “crunch on demand” processes … this model makes much more sense that investing in piles of hardware that all too soon becomes obsolete.

    Most of the data from this post comes from Tim McDonald, the president of Infassure, a technology consulting and out-sourcing company in the Dallas area.  They've been a big help to us on this, and many other matters.

  • Capitalogix Commentary 02/14/10

    The markets did rally, a little, last week.  However, they are still beneath the overhead resistance and the longer-term downwards sloping trend-line. 

    The Dow Jones Industrial Average has been able to hold above the 10,000 level. Is that important?

    Does
    Dow 10,000 Really Mean Something?

    The WSJ published an
    article called "Milestone Figures Grab Attention, but Their Impact Is
    Hazy    ".  A similar message comes from Barry Ritholtz; that Dow 10,000 has become “a
    meaningless number, without any impact technically or quantitatively.
    It's no surprise that the Dow did not hold over 10k for very long. It's
    been over 26 times, starting in 1999. And hear it is, 10 years later —
    zero progress. Why anyone — other than TV producers and silly hat
    manufacturers — cares about Dow 10k is quite simply beyond my
    comprehension.”  If you are curious, here is the chart that shows what that looks like.

    100213 WSJ Chart of Dow 10K Crosses

    If big round numbers don't mean anything, is there something to potentially point the way?

    Is Lumber Sending a Bullish Signal About the Broader Market?

    If you are looking for a potentially bullish early indicator, then Lumber may be sending you a signal.  It has continued higher, even during the recent equity market decline (marked by the orange rectangle).  Why do traders consider lumber an early indicator for the broader market?  Since lumber is a primary raw material in the early stages of new construction, the logic is that lumber purchases signal new construction.

    100214 Lumber Showing Strength

    What Can Copper Tell Us?

    Like Lumber, traders also look to Copper as another early indicator of new construction because it commonly used in things like wires and pipes.  Recently, several commentators have mentioned that the Copper/Gold Ratio is an interesting composite measure of economic activity.  The chart below shows weakness and a negative divergence of the Copper/Gold Ratio (in comparison to the S&P 500 Index) since last summer.  Most recently, price has been falling steeply.  We will see if that is an early indicator of broader market weakness?

    100214 Does the Copper - Gold Ratio Predict Market

    A similar flattening of trading range occurred in the Financial Sector as well.

    What Does the Financial Sector Tell Us?

    Financials often lead rallies higher.  The logic is that banks make more money when they are lending, doing deals, and helping companies go public.  The past six months have shown the hesitation investors have to buy into further gains in this sector.  However, price is now at the bottom of its six month trading range.  In bull markets, this is where the buying comes in.  So, let's see how this sector responds.  A move down from here would hurt the bullish case.

    100214 Financials at Bottom of Trading Range

    This is a holiday-shortened options expiration week.  Recently, those have been rally triggers.  Best wishes for a great week.

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

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Easy = True: How ‘Cognitive Fluency’ Shapes Our Beliefs &
      Investments. (Boston)
    • New and Easier CPR Technique from Mayo Clinic. (YouTube)
    • Google's Experiment: Leapfrogging ISPs to Deliver Ultra-High-Speed
      Web
      Access. (ZDNet)
    • Angry at Obama Regulation Proposals, Wall Street is Donating Less to

      Democrats. (Newser)

    • Clever Questions You Should Ask Every Job Candidate. (BizMore)
    • More Posts with Lighter Ideas and Fun Links.

  • Capitalogix Commentary 02/14/10

    The markets did rally, a little, last week.  However, they are still beneath the overhead resistance and the longer-term downwards sloping trend-line. 

    The Dow Jones Industrial Average has been able to hold above the 10,000 level. Is that important?

    Does
    Dow 10,000 Really Mean Something?

    The WSJ published an
    article called "Milestone Figures Grab Attention, but Their Impact Is
    Hazy    ".  A similar message comes from Barry Ritholtz; that Dow 10,000 has become “a
    meaningless number, without any impact technically or quantitatively.
    It's no surprise that the Dow did not hold over 10k for very long. It's
    been over 26 times, starting in 1999. And hear it is, 10 years later —
    zero progress. Why anyone — other than TV producers and silly hat
    manufacturers — cares about Dow 10k is quite simply beyond my
    comprehension.”  If you are curious, here is the chart that shows what that looks like.

    100213 WSJ Chart of Dow 10K Crosses

    If big round numbers don't mean anything, is there something to potentially point the way?

    Is Lumber Sending a Bullish Signal About the Broader Market?

    If you are looking for a potentially bullish early indicator, then Lumber may be sending you a signal.  It has continued higher, even during the recent equity market decline (marked by the orange rectangle).  Why do traders consider lumber an early indicator for the broader market?  Since lumber is a primary raw material in the early stages of new construction, the logic is that lumber purchases signal new construction.

    100214 Lumber Showing Strength

    What Can Copper Tell Us?

    Like Lumber, traders also look to Copper as another early indicator of new construction because it commonly used in things like wires and pipes.  Recently, several commentators have mentioned that the Copper/Gold Ratio is an interesting composite measure of economic activity.  The chart below shows weakness and a negative divergence of the Copper/Gold Ratio (in comparison to the S&P 500 Index) since last summer.  Most recently, price has been falling steeply.  We will see if that is an early indicator of broader market weakness?

    100214 Does the Copper - Gold Ratio Predict Market

    A similar flattening of trading range occurred in the Financial Sector as well.

    What Does the Financial Sector Tell Us?

    Financials often lead rallies higher.  The logic is that banks make more money when they are lending, doing deals, and helping companies go public.  The past six months have shown the hesitation investors have to buy into further gains in this sector.  However, price is now at the bottom of its six month trading range.  In bull markets, this is where the buying comes in.  So, let's see how this sector responds.  A move down from here would hurt the bullish case.

    100214 Financials at Bottom of Trading Range

    This is a holiday-shortened options expiration week.  Recently, those have been rally triggers.  Best wishes for a great week.

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

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Easy = True: How ‘Cognitive Fluency’ Shapes Our Beliefs &
      Investments. (Boston)
    • New and Easier CPR Technique from Mayo Clinic. (YouTube)
    • Google's Experiment: Leapfrogging ISPs to Deliver Ultra-High-Speed
      Web
      Access. (ZDNet)
    • Angry at Obama Regulation Proposals, Wall Street is Donating Less to

      Democrats. (Newser)

    • Clever Questions You Should Ask Every Job Candidate. (BizMore)
    • More Posts with Lighter Ideas and Fun Links.

  • Valentine’s Day Cartoons as a Sign of the Times

    It is often a bit of uneasy truth that spices up the best editorial cartoons.

    Here are a few cartoons that capture the spirit and sentiment underlying our economy and markets.

    100214 Valentine's Day Cartoon Sign of the Times

    Belt-tightening and under-employment are a focus when Cupid needs a pawnshop or gets laid-off.

     100214 Valentine's Day Cartoon Cupid Laid Off

    And it is tough to fix the structural issues when politics become more important than progress.

    100214 Valentine's Day Cartoon Republicans Don't Heart Obama

    For more cartoons, click here to visit Cagle's site.

  • Valentine’s Day Cartoons as a Sign of the Times

    It is often a bit of uneasy truth that spices up the best editorial cartoons.

    Here are a few cartoons that capture the spirit and sentiment underlying our economy and markets.

    100214 Valentine's Day Cartoon Sign of the Times

    Belt-tightening and under-employment are a focus when Cupid needs a pawnshop or gets laid-off.

     100214 Valentine's Day Cartoon Cupid Laid Off

    And it is tough to fix the structural issues when politics become more important than progress.

    100214 Valentine's Day Cartoon Republicans Don't Heart Obama

    For more cartoons, click here to visit Cagle's site.

  • Helping Haiti Videos – Everybody Hurts and We Are the World 25

    Here are two videos worth watching, in part for the music … and in part for their larger purpose.  They were made to draw attention and raise funds to support humanitarian
    efforts in Haiti.

    The first is a remake of the R.E.M. classic,
    “Everybody Hurts”.  Simon Cowell-produced it; and it is very well done.

    Here is the link if you want to watch the Making of Helping Haiti – Everybody Hurts documentary.  And here is the link to read the story behind the video.  And, here is a longer version.

    The second is a re-make of We Are the World.  Quincy Jones is at again, with a different list of stars and a different cause.  Here is the video.

    And here are links to the We Are the World website. and the story behind the re-make.

  • Helping Haiti Videos – Everybody Hurts and We Are the World 25

    Here are two videos worth watching, in part for the music … and in part for their larger purpose.  They were made to draw attention and raise funds to support humanitarian
    efforts in Haiti.

    The first is a remake of the R.E.M. classic,
    “Everybody Hurts”.  Simon Cowell-produced it; and it is very well done.

    Here is the link if you want to watch the Making of Helping Haiti – Everybody Hurts documentary.  And here is the link to read the story behind the video.  And, here is a longer version.

    The second is a re-make of We Are the World.  Quincy Jones is at again, with a different list of stars and a different cause.  Here is the video.

    And here are links to the We Are the World website. and the story behind the re-make.

  • Capitalogix Commentary 02/07/10

    How easy will it be to pass the $3.8 Trillion Dollar Budget?  Well, here is a chart that shows President Obama's Job Approval ratings. So, harder than it would have been.

    100207 President Obama Job Appoval Poll

    Perhaps this is a better graphic to explain what is happening.

    100207 President Obama and the Economy Cartoon

    It is interesting that markets have gone up while President Obama's popularity continues to go down.  Apparently, sentiment is not caused by what happens in the markets.  Beware, however, if market price is caused by sentiment … because sentiment is not pretty right now.

    Critical Juncture for the Equity Markets.

    Markets are often confusing.  This is one of those relatively rare times where the main issue is staring the world in the face.  I say that because so many of the world equity market charts look the same.

    This chart shows a weekly view of the S&P 500 Index.  There is a pretty clear down-trend line starting from the market's high in October 2007.  The market rallied back to the underside of the line, and has fallen from there.

    100207 SP500 Down Trend Line

    In order for the market to meaningfully rally, it must get past that overhead resistance (marked by the big red arrow).  In the short-term, bulls can take some comfort on the way the market rallied off the lows to close Friday's session.  That is often a sign of a bullish reversal.

    100207 SP500 Volume Reversal

    We'll see what happens.

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

    • Will Obama's Proposed 3-Year Freeze on Some Types of Spending Work? (NYTimes)
    • Bernanke to Testify on Fed Exit Strategy this Week. (Bloomberg)
    • Taleb:
      "Every Single Human Being" Should Short Treasuries. (BusinessInsider)
    • Money Market Funds Can Now Prevent Redemptions. (MoneyNews)
    • Rep. Barney Frank Calls for Abolishing Fannie Mae, Freddie Mac. (USAToday)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

  • Capitalogix Commentary 02/07/10

    How easy will it be to pass the $3.8 Trillion Dollar Budget?  Well, here is a chart that shows President Obama's Job Approval ratings. So, harder than it would have been.

    100207 President Obama Job Appoval Poll

    Perhaps this is a better graphic to explain what is happening.

    100207 President Obama and the Economy Cartoon

    It is interesting that markets have gone up while President Obama's popularity continues to go down.  Apparently, sentiment is not caused by what happens in the markets.  Beware, however, if market price is caused by sentiment … because sentiment is not pretty right now.

    Critical Juncture for the Equity Markets.

    Markets are often confusing.  This is one of those relatively rare times where the main issue is staring the world in the face.  I say that because so many of the world equity market charts look the same.

    This chart shows a weekly view of the S&P 500 Index.  There is a pretty clear down-trend line starting from the market's high in October 2007.  The market rallied back to the underside of the line, and has fallen from there.

    100207 SP500 Down Trend Line

    In order for the market to meaningfully rally, it must get past that overhead resistance (marked by the big red arrow).  In the short-term, bulls can take some comfort on the way the market rallied off the lows to close Friday's session.  That is often a sign of a bullish reversal.

    100207 SP500 Volume Reversal

    We'll see what happens.

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

    • Will Obama's Proposed 3-Year Freeze on Some Types of Spending Work? (NYTimes)
    • Bernanke to Testify on Fed Exit Strategy this Week. (Bloomberg)
    • Taleb:
      "Every Single Human Being" Should Short Treasuries. (BusinessInsider)
    • Money Market Funds Can Now Prevent Redemptions. (MoneyNews)
    • Rep. Barney Frank Calls for Abolishing Fannie Mae, Freddie Mac. (USAToday)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

  • This Post Will Help You Predict the Future of Our Economy

    Have you ever seen a funny photo that was captured just before a "something bad" happens? The tag-line is usually something like … This isn't going to end well.

    Well, after the news came out about President Obama seeking a $3.8 Trillion budget.  I remembered seeing this chart; and it isn't so funny.

    Federal Spending Is Growing Faster Than Federal Revenue.

    Since 1965, federal tax revenues and spending have soared. Revenues have increased by more than $1.5 trillion, and spending is up by $3.3 trillion. In 2009, federal revenue will drop, while federal spending is expected to increase by nearly $1 trillion.

    100207 Federal Spending Exceeds Revenue

    To give you some context for this issue, here is an interactive U.S. Debt Clock.

    100207 Click to see US Debt Clock

    Click the picture and you'll see a version that updates in real-time.