Bernanke said that the recession is "most likely over"; but added that the recovery would be jobless.

Moreover, recent surveys show that many companies expect to shed jobs
in the next 12 months and do not expect to reach former staffing levels
before 2012. The question is: How will that affect the economy and the markets?

Are They Buying or Selling the News?

I'm paying attention to indications that the markets have begun selling-off after news.  This is typical behavior near tops and during bearish swings.  In contrast, during the recent rally, the Markets often went up despite bad news.

There Still Is Not Much Selling Pressure.

From a technical and market psychology perspective, we are seeing short spikes of intra-day selling that have not had much follow-through.  However, it seems to me that fewer people are buying the dips and a bunch of negative divergences are in place.  All that means is that it is time to watch major trend lines; they will tell you when something changes. 

Is Something Fishy Churning Just Beneath the Surface of Our Markets?

Several articles claim that up to 40% of the volume in the New York Stock Exchange, recently, occurred in just four financial stocks: Bank of America, Citigroup, Fannie Mae, and Freddie Mac. 

It could be normal, or at least something simple and innocent. Nonetheless, I am suspicious and a little skeptical that such a small group of low-priced stocks could account for such an unusual percent of the trading volume on the NYSE. Realistically, I doubt that it was retail investors jumping-in to drive the rally higher.

So was it churning, high-frequency flash trading, or a tacit government
sanctioned way to allow certain funds and brokers to profit while
making the markets appear healthier than they are?  I don't know; but it has started people talking.  And it is something that will stay on my radar.

The Changing Face of the Giants of Finance.

On a related topic, the NYTimes had a great interactive graphic showing how the Giants of Finance have changed.  Since the stock market’s peak in October 2007, Wall Street’s landscape has been permanently altered. Lehman Brothers, gone. Bear Stearns, gone. Merrill Lynch, gone. Main Street’s landscape has also changed. Wachovia, National City, Washington Mutual and Countrywide, all gone. These financial giants all crumbled under the weight of the financial crisis.

Those that were left shrank down to a fraction of their former market capitalizations by early 2009, but since then, they all have grown. While most are nowhere near their former size, two — JPMorgan Chase and Wells Fargo — are slightly larger than they were at the market’s peak.  Click the image to play.

Let me know what you think. Hope you have a great week.

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

• Retail Hopes Running Ahead of Reality. (WSJ)
• As Biggest Banks Repay Bailout Money, the U.S. Sees a Profit. (NYTimes)
• Foreign-Account Holders May Face Double Trouble Treasury & IRS.(InvestNews)
• Wall Street’s Math Wizards Forgot a Few Variables. (NYTimes)
• Econophysicist Predicts Date of Chinese Stock Market Collapse. (TechReview)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• What Do Dogs See, Smell, and Know? (NYTimes)
• How to Profit from Uncertainty While Limiting Your Risk. (Wharton)
• SmartPhoniacs – Addicts of the Information Age. (WSJ)
• The No-Junk Business iPhone Apps Finder for Business. (InfoWorld)
• Why Don't More Apps Take Advantage of Multi-Core Chips? (Forbes)
• More Posts with Lighter Ideas and Fun Links.

Bernanke said that the recession is "most likely over"; but added that the recovery would be jobless.

Moreover, recent surveys show that many companies expect to shed jobs
in the next 12 months and do not expect to reach former staffing levels
before 2012. The question is: How will that affect the economy and the markets?

Are They Buying or Selling the News?

I'm paying attention to indications that the markets have begun selling-off after news.  This is typical behavior near tops and during bearish swings.  In contrast, during the recent rally, the Markets often went up despite bad news.

There Still Is Not Much Selling Pressure.

From a technical and market psychology perspective, we are seeing short spikes of intra-day selling that have not had much follow-through.  However, it seems to me that fewer people are buying the dips and a bunch of negative divergences are in place.  All that means is that it is time to watch major trend lines; they will tell you when something changes. 

Is Something Fishy Churning Just Beneath the Surface of Our Markets?

Several articles claim that up to 40% of the volume in the New York Stock Exchange, recently, occurred in just four financial stocks: Bank of America, Citigroup, Fannie Mae, and Freddie Mac. 

It could be normal, or at least something simple and innocent. Nonetheless, I am suspicious and a little skeptical that such a small group of low-priced stocks could account for such an unusual percent of the trading volume on the NYSE. Realistically, I doubt that it was retail investors jumping-in to drive the rally higher.

So was it churning, high-frequency flash trading, or a tacit government
sanctioned way to allow certain funds and brokers to profit while
making the markets appear healthier than they are?  I don't know; but it has started people talking.  And it is something that will stay on my radar.

The Changing Face of the Giants of Finance.

On a related topic, the NYTimes had a great interactive graphic showing how the Giants of Finance have changed.  Since the stock market’s peak in October 2007, Wall Street’s landscape has been permanently altered. Lehman Brothers, gone. Bear Stearns, gone. Merrill Lynch, gone. Main Street’s landscape has also changed. Wachovia, National City, Washington Mutual and Countrywide, all gone. These financial giants all crumbled under the weight of the financial crisis.

Those that were left shrank down to a fraction of their former market capitalizations by early 2009, but since then, they all have grown. While most are nowhere near their former size, two — JPMorgan Chase and Wells Fargo — are slightly larger than they were at the market’s peak.  Click the image to play.

Let me know what you think. Hope you have a great week.

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

• Retail Hopes Running Ahead of Reality. (WSJ)
• As Biggest Banks Repay Bailout Money, the U.S. Sees a Profit. (NYTimes)
• Foreign-Account Holders May Face Double Trouble Treasury & IRS.(InvestNews)
• Wall Street’s Math Wizards Forgot a Few Variables. (NYTimes)
• Econophysicist Predicts Date of Chinese Stock Market Collapse. (TechReview)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• What Do Dogs See, Smell, and Know? (NYTimes)
• How to Profit from Uncertainty While Limiting Your Risk. (Wharton)
• SmartPhoniacs – Addicts of the Information Age. (WSJ)
• The No-Junk Business iPhone Apps Finder for Business. (InfoWorld)
• Why Don't More Apps Take Advantage of Multi-Core Chips? (Forbes)
• More Posts with Lighter Ideas and Fun Links.

Let's Get Ready to Rumble.

Football season came just in time. The economy, health-care, and wars were starting to harsh my mellow.

Watching football is like a national meditation technique; it helps
quiet the noise and is a great distraction from the daily grind.

The Markets seem to be doing a good job of avoiding what's going on around them.  Price going up despite seemingly bad news is bullish.  Sometimes it seems hard to remember that.

Where Do We Stand on a Longer-Term Chart of the Markets? 

This chart of the S&P 500 Index goes
back to 2002. The thick horizontal red line marks the naturally occurring support and resistance line
going back to 2003 and 2004. Just above
that is the 50% retracement level of the recent decline. So, while price has rallied nicely for more than five months off the recent lows, overhead resistance may soon come into play. Click the chart to see a bigger version.

The chart above also shows that Volume has
been a little light; but some of that is seasonal. I expect volume to
pick-up soon. The question, of course, is whether prices will trade
higher or lower when that happens.

Average Daily Change Plummets.

Bespoke reminds that one of the most remarkable characteristics of last year's market crash was its daily volatility.  At its peak, the 50-Day Average Absolute Daily Change of the S&P 500 surpassed 4%.  That means that the Market gained or lost 4% to 5% of its total value on a daily basis for two months. 

In contrast, the 50-Day Average Absolute Daily Change of the S&P 500 is now under 1%.  This is the lowest level since July of last year.  Markets fall much faster than they rise, so it's no surprise that this number has gone down significantly as the S&P rallied off of its lows.

Shorter-Term, The Market Looks Strong.

The next chart overlays the NASDAQ's Net New Highs on top of the index
itself. This measure counts the number of NASDAQ Components making new
52-week highs, and subtracts the number of NASDAQ components
making new 52-week lows . So, we get more Net New Highs when the markets
are doing better. As it stands, A lot of NASDAQ Components are making highs for the year. 
Yet, there are slightly less Net New Highs than we saw in mid-July. So,
while this is a little picky, it does constitute a negative
divergence. Consequently, I'm watching for a drop-off in this measure
as a potential early warning indicator of impending market weakness.

It's been easier to make money on the long side for a long time. I sense a lot of the smart money is daytrading long exposure. In other words, they're happy to trade long, but they're not as happy to take that risk home overnight.

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

• Is Commercial Real Estate Lurking as Next Potential Mortgage Crisis? (WSJ)
• The Failure Caucus: These Guys are Rooting for the Economy to Fail. (Slate)
• Evolving a Business Strategy: New Book on Revising Business Plans.  (Forbes)
• Inquiry Stokes Unease on High-Speed Trading. (DealBook)
• Is the World Losing Faith in the U.S. Dollar? (Wharton)
• Budget Crisis Causing States to Close Offices a-Day-at-a-Time. (TDB)
• Doug Kass: The Next Move Down? It's Different This Time. (TheStreet)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Are Video games the Future of Education? (Economist)
• New Form of Rehab: Center Treats Web Addicts. (NYTimes)
• How Teams of Geeks Crack Spy Trade. (WSJ)
• VMware May Be Microsoft’s Top Rival After Google. (NYTimes)
• YouTube Said to Be in Talks To Offer Full-Length Pay Movies. (NYTimes)
• Apple's Next Big Thing: Still the iPhone; But the Carrier is New. (TheStreet)
• iPhones Overload AT&T's Network, Angering Customers. (NYTimes)
• More Posts with Lighter Ideas and Fun Links.

Let's Get Ready to Rumble.

Football season came just in time. The economy, health-care, and wars were starting to harsh my mellow.

Watching football is like a national meditation technique; it helps
quiet the noise and is a great distraction from the daily grind.

The Markets seem to be doing a good job of avoiding what's going on around them.  Price going up despite seemingly bad news is bullish.  Sometimes it seems hard to remember that.

Where Do We Stand on a Longer-Term Chart of the Markets? 

This chart of the S&P 500 Index goes
back to 2002. The thick horizontal red line marks the naturally occurring support and resistance line
going back to 2003 and 2004. Just above
that is the 50% retracement level of the recent decline. So, while price has rallied nicely for more than five months off the recent lows, overhead resistance may soon come into play. Click the chart to see a bigger version.

The chart above also shows that Volume has
been a little light; but some of that is seasonal. I expect volume to
pick-up soon. The question, of course, is whether prices will trade
higher or lower when that happens.

Average Daily Change Plummets.

Bespoke reminds that one of the most remarkable characteristics of last year's market crash was its daily volatility.  At its peak, the 50-Day Average Absolute Daily Change of the S&P 500 surpassed 4%.  That means that the Market gained or lost 4% to 5% of its total value on a daily basis for two months. 

In contrast, the 50-Day Average Absolute Daily Change of the S&P 500 is now under 1%.  This is the lowest level since July of last year.  Markets fall much faster than they rise, so it's no surprise that this number has gone down significantly as the S&P rallied off of its lows.

Shorter-Term, The Market Looks Strong.

The next chart overlays the NASDAQ's Net New Highs on top of the index
itself. This measure counts the number of NASDAQ Components making new
52-week highs, and subtracts the number of NASDAQ components
making new 52-week lows . So, we get more Net New Highs when the markets
are doing better. As it stands, A lot of NASDAQ Components are making highs for the year. 
Yet, there are slightly less Net New Highs than we saw in mid-July. So,
while this is a little picky, it does constitute a negative
divergence. Consequently, I'm watching for a drop-off in this measure
as a potential early warning indicator of impending market weakness.

It's been easier to make money on the long side for a long time. I sense a lot of the smart money is daytrading long exposure. In other words, they're happy to trade long, but they're not as happy to take that risk home overnight.

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

• Is Commercial Real Estate Lurking as Next Potential Mortgage Crisis? (WSJ)
• The Failure Caucus: These Guys are Rooting for the Economy to Fail. (Slate)
• Evolving a Business Strategy: New Book on Revising Business Plans.  (Forbes)
• Inquiry Stokes Unease on High-Speed Trading. (DealBook)
• Is the World Losing Faith in the U.S. Dollar? (Wharton)
• Budget Crisis Causing States to Close Offices a-Day-at-a-Time. (TDB)
• Doug Kass: The Next Move Down? It's Different This Time. (TheStreet)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Are Video games the Future of Education? (Economist)
• New Form of Rehab: Center Treats Web Addicts. (NYTimes)
• How Teams of Geeks Crack Spy Trade. (WSJ)
• VMware May Be Microsoft’s Top Rival After Google. (NYTimes)
• YouTube Said to Be in Talks To Offer Full-Length Pay Movies. (NYTimes)
• Apple's Next Big Thing: Still the iPhone; But the Carrier is New. (TheStreet)
• iPhones Overload AT&T's Network, Angering Customers. (NYTimes)
• More Posts with Lighter Ideas and Fun Links.