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

  • Market Commentary from July 4th, 2008

    As we moved into the July 4th long weekend, the bears remained in control.  This chart comes from Breakpoint Trades.  It is a long-term chart of the S&P500 Index with a 20-Month moving average. 

    080705 SP500 20M MA

    Yes, we are deeply oversold and sentiment is sufficiently fearful that a rally is likely soon. On the other hand, we haven’t really seen capitulation, and earlier market bottoms this year had some help from the Fed. 

    It is certainly possible that we get a bottom without getting the “easy trade.”  Lots of traders are looking for the big volume reversal and the VIX spike.  But how often does the market give people clear signals?

    Here is a follow-up to last week’s chart showing how correlated and poorly most global markets have performed recently.  This table is from an article called “Nowhere to Hide” by Prieur du Plessis.

    080703 World Stock Markets Performance

    Finally, here are a few of the posts I found interesting this week:

    • That Was Ugly: The Worst First Half of a Year Since 1970 (Bespoke)
    • Hot Wheels and Matchbox Cars Don’t Need Gas: Mattel’s value beats GM  (Bloomberg)
    • Bearish Battalions: economic growth & profits down, interest rates & inflation up (Economist)
    • What Really Killed Bear Stearns? (NYTimes and Vanity Fair)
    • Traders Dump Lehman (Minyanville)
    • A contrarian considers whether it’s possible that we’ve seen the low for this year (Street.com)
    • Financial Down 53% from Their Highs – the easier path might now be up (VIX and More)
    • Former NYSE Head, Grasso, Keeps the Money in Dispute Over $187MM Pay (InvestmentNews)
    • Trading volume down at CME – interest rate product volume off 17% (Financial News)
    • Doug Kass Says America is in Debt and Decline, and it is Time for a Change (Street.com)
    • Jobs Decline Again, for 6th Consecutive Month (Global Economic Trend Analysis)

    And, a little bit extra:

    • A New Middle Name: Obama Supporters Take His Name as Their Own (NYTimes)
    • Woman Offers Chance to Marry Her … If You Buy Her House (MSNBC)
    • Not Dead, Can’t Quit: No Limit Thinking with Ex-Navy Seal Trading Coach (TradingMarkets.com)
    • Who Runs the World – wrestling for a seat at the “Grown-ups Table” (Economist)
    • Adobe Makes Flash Content Searchable (BusinessWeek)
    • New Flexible Electronic Paper May Change the Way You Read (NYTimes)

  • 11 Foods You’re Not Eating – But Should

    The NYTimes had an interesting article about 11 foods that are good for you and easy to find, but that most people don’t eat.  Here is the link and here is a link to a related article on the Men’s Health site.

  • 11 Foods You’re Not Eating – But Should

    The NYTimes had an interesting article about 11 foods that are good for you and easy to find, but that most people don’t eat.  Here is the link and here is a link to a related article on the Men’s Health site.

  • Is It Bush, Or the Recession?

    American-flag
    Today is July 4th.  And as my son and I were driving into our neighborhood, we noticed how few flags we saw waving.

    A few years ago, at least two-thirds of the houses had flags.  Today I would get estimate that number being 15% to 20% of the houses.

    In our neighborhood, there is a $75 per year service that provides flags for patriotic holidays (like Independence Day, Memorial Day, etc.).

    So, did the economy make the $75 outlay feel too extravagant?  Or did the collective level of patriotism drop significantly? 

    My guess … a little of both; but it probably has more to do with the economy.  What do you think?

  • Is It Bush, Or the Recession?

    American-flag
    Today is July 4th.  And as my son and I were driving into our neighborhood, we noticed how few flags we saw waving.

    A few years ago, at least two-thirds of the houses had flags.  Today I would get estimate that number being 15% to 20% of the houses.

    In our neighborhood, there is a $75 per year service that provides flags for patriotic holidays (like Independence Day, Memorial Day, etc.).

    So, did the economy make the $75 outlay feel too extravagant?  Or did the collective level of patriotism drop significantly? 

    My guess … a little of both; but it probably has more to do with the economy.  What do you think?

  • Einstein Had a Beautiful Mind

    Albert-einstein-marilyn-monroe

    Interesting hybrid image.

    To see the change, you have to get out of your seat and walk away from your
    computer.

    Up close, you see Albert
    Einstein.  But if you stand 10 to 15 feet away, it will become Marilyn Monroe.
    Give it a try.

    For more on this, here is an article;
    and here are more examples.

  • Einstein Had a Beautiful Mind

    Albert-einstein-marilyn-monroe

    Interesting hybrid image.

    To see the change, you have to get out of your seat and walk away from your
    computer.

    Up close, you see Albert
    Einstein.  But if you stand 10 to 15 feet away, it will become Marilyn Monroe.
    Give it a try.

    For more on this, here is an article;
    and here are more examples.

  • The Only Constant is Change

    Change is constant.  Learning to respond and adapt faster and better is
    one of the foundational keys to success.

    Bill Gate VideoOne of the best illustrations of that in business has been the story of Bill Gates and Microsoft. 

    This week, was Bill’s last as a full-time Microsoft employee.  So, there was a lot of hoopla.

    This video is interesting, and puts his contribution in perspective. 

    It is worth watching.

  • The Only Constant is Change

    Change is constant.  Learning to respond and adapt faster and better is
    one of the foundational keys to success.

    Bill Gate VideoOne of the best illustrations of that in business has been the story of Bill Gates and Microsoft. 

    This week, was Bill’s last as a full-time Microsoft employee.  So, there was a lot of hoopla.

    This video is interesting, and puts his contribution in perspective. 

    It is worth watching.

  • Market Commentary from June 27th, 2008

    The Dow lost almost 500 points in the last two days.  Longer term, the stock market has been down sharply since May 2; in fact, it has been down five of
    the last six weeks. Several commentators note that the Dow experienced its worst June since 1930.
    Moreover, with this decline, it has also given back all of the gains it made since September, 2006.

    080627 Dow Low Divergence 600p

    Also worth noting is that the Dow just made new lows for the year, entering “Bear Territory” by sinking more than 20% from its October peak.  However the MACD’s downward momentum did not make new lows, even while the index price plummeted. 

    Perhaps more important, though, is that the Index broke below its 28-Year Up-Trend line.

    Dow 28 Year Uptrend 630p

    Also, Bespoke had an interesting chart comparing returns of various international indices.  Here it is:

    0806 Global Return Comparison from Bespoke

    Finally, here are a few of the posts I found interesting this week:

    And a little bit extra …

    • Trading Desks Turn to Video Game Technology to Speed Analytics. (Wall Street & Technology)
    • Your Money and Your Brain (Phil’s Favorites)
    • The Petabyte Age: Because More Isn’t Just More — More Is Different. (Wired)
    • The New Name Game: Internet Naming Rules About to Change. (CNN)
    • Will Brain Downloads will make lessons pointless? (Telegraph)
    • The Philosophy of George Carlin (Financial Philosopher)