Capitalogix

Capitalogix Commentary 04/24/09

How much is a Trillion? If you were paid a dollar per second, it would take you 31,709 years to earn a Trillion dollars.

If you are more graphic,

this link will show you how much it is in more detail.

To put things in perspective, now think about Bailout ... or that the IMF released its Global Financial Stability Report this week; and it's projecting total losses from the global financial crisis to reach $4.1 Trillion.

This Week's Market Charts.

The Markets held up nicely after a sell-off early last week.  Technology is still leading and the Dow has been lagging a little.  Other things nagging at me about the rally is that momentum is fading and volume hasn't been great.  Here is a chart showing how the Dow is positioned at key support and resistance levels.

Trader's Narrative had a chart that caught my eye. It shows that the short term moving average of the CBOE (equity only) Put-Call ratio is still quite low, corresponding to market tops. Adjusting for the upward sloping range of the data we find it at a similar level to October 2007.

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

• Microsoft Disappoints A day after Apple Didn't. (BW)
• Amazon Net Jumps 24%, Resisting Recession (WSJ)
• Hope, Greed and Fear: The Psychology Behind the Financial Crisis (Wharton)
• An interactive map of vanishing employment across the country.(Slate)
• Second Market: A New Form of Public Offering Is Emerging (A VC)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Are You Being Tracked Via Your Cell Phone? (MediaPost)
• Apple Reaches 1 Billion iPhone Apps Downloaded. (TechChuck)
• Who Is Defending Cyberspace, And Are They Doing A Good Job? (USNews)
• How To Spot Technology Trends With Job Postings. (SmallBizTrends)
• Children Surprisingly Willing To Treat Robot Dogs As 'Dog-Like'. (BPS Research)
• More Posts with Lighter Ideas and Fun Links.

Capitalogix Commentary 04/17/09

Stocks continued their advance this week.  The U.S. Markets moved higher for the sixth week in a row. Yet, it was just the seventh positive week for those indices in 2009. 

It is worth noting that the bulk of earnings begin to hit this week. We'll see if people continue to buy into bad news. I'm watching for a change in sentiment.

Long-Term Market Reminder: We have been in a bear market.  So, until proven otherwise, basic trend-following theory implies that the higher probability trades will be on the short side.  That means selling rallies until the bear market ends.

I sense a renewed interest in the market recently by retail investors. For example, just this week I had conversations with several people telling me that they regret not buying Apple and Goldman Sachs while they were down.  I tend to hear this type of conversation at tops.  Here is Goldman's chart.

It is also worth noting that there are reports that Goldman's Q1 Profit was non-recurring and a result of AIG unwinds. Add that to the fact that there we have seen poor bank earnings so far. Yet, it seems that the market sees a much higher likelihood of future financial solvency than it did just two months ago.  Still, this is a sector I'm watching for signs of weakness.  The next chart will explain why.

Here is an interesting chart related to banks from Crossing Wall Street. It could be titled "The Earthquake That's Shaking Our Markets".  It shows recent volatility of Banking Index.

Finally, I thought this was funny. Our peaceful pacifist president has become Obama The Pirate Killer.  Yeah, I know, the SEALs did it ... But I like the chart anyway.

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

• Earnings Are Horrible - And Why It May Not Matter. (Traders Narrative)
• Shiller Says Depression Lurks Unless There’s More Stimulus. (Bloomberg)
• Poorly understood facts about Employment Numbers. (A Dash of Insight)
• Ten principles for a Black Swan-proof world. (Financial Times)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Bullish Signs On The Wall of Worry. (A Dash of Insight)
• How High is Too High? (InvestorWalk)
• Things We Can Be Sure Of and Hopeful Because Of.(Financial Philosopher)
• People Need to Play More - It is important to Society. (LiveScience)
• More Posts with Lighter Ideas and Fun Links.

Who Cut the Cheese?

Clever; but does it make you want to buy a beer?

Here is the direct link on YouTube.

Capitalogix Commentary 04/12/09

The stock market often recovers six months before the economy does; but I don't really believe we are six months away from our economy being fixed.  So, I still classify this as a bear market rally.

It is a big one though. The markets have come quite far off their recent bottom. The U.S. Markets moved higher for the fifth week in a row. Yet, it was just the sixth positive week for those indices in 2009.

The S&P 500 is currently trading more than 8.5% above its 50-day moving average, which is its most overbought reading since May 2001.

This rally has been a welcome respite from a seemingly unrelenting downtrend. Historically, I can't find too much precedent for the continuation of a move like this on a global basis. So a correction could soon be expected, or even welcomed.

Normally a market turning-point is tested within a number of weeks. How the market behaves at that time is important. A light-volume decline to or towards the old lows ... and then a heavy-volume start to a new rally would be ideal.

View From the Trenches.

I was talking to a friend of mine who is a partner in the bankruptcy section of a law firm. His market outlook is bearish because he's never seen his section's work pipeline this full before. There are a lot of bankruptcies in process, and a lot of companies talking to him to investigate whether it's the right option for them to pursue in the future. From his perspective, we're not done yet.  I'm not putting too much meaning into this.  Just passing on the data point.

The Pyramid of Misery.

The chart below shows a funny and current version of Maslow's Hierarchy of Needs.

That graphic came from Portfolio Magazine, which has had a number of good articles recently.

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

• Is YouTube Doomed? Half a Billion Dollar loss is a tough pill to swallow. (BusinessInsider)
• Salary Cuts Instead of Lay-Offs: Ugly, But It Could Be Worse. (WSJ)
• Loss Aversion: Traders take riskier decisions to avoid losing money. (Economist)
• Teaching Survival Skills to a Technology Start-Up. (NYTimes)
• New Economy Means New Entrepreneurs. (Street.com)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Just 53% of Americans Say Capitalism Better Than Socialism. (Rasmussen Reports)
• In an Age of Austerity, Is Thrift re-emerging as a value? (NYTimes)
• Wikipedia for Spies: The CIA Discovers Web 2.0. (Time)
• How Losing by Just a Little Can Help a Team -- or Company -- Win. (Wharton)
• Brain Researchers Open Door to Editing Memory. (NYTimes)
• More Posts with Lighter Ideas and Fun Links.

You Focus On What You Measure

I have the privilege of knowing many fine entrepreneurs. Some of them are doing surprisingly well. Others are licking their wounds and struggling with the loss of confidence in their business, their business model, or even themselves.

 On some level, recent events could represent the biggest failure that some of these people ever have in their lives.

There are several ways to take that. Here's one to think about.

What would you do if you knew your worst failure was behind you and everything from this point forward was a move upwards or at least provides an opportunity to make progress?

I Sense A Lot of Pain.

If you look at things based on cycles or seasons, then this probably has been winter.  Still, periods like this can teach you a lot about yourself.

I got a phone call this week from a friend who asked where I've been hiding. I was surprised because I hadn't thought about it like that.  Yet, it didn't take much reflection to see that many people I know, including me, have been hiding in one way or another.

For example, one of my closest friends hasn't been returning phone calls. That is one of his early warning signs that tells me he is having a tough time. And several unquestionably smart, resourceful, and successful businessmen have broken down into tears recently while talking to me about the circumstances in which they find themselves.  I get it; there is a lot of pain out there right now.

It affects me too.  A business group that I've participated in for almost 10 years is going on its annual retreat this week. It's designed to be fun and a vehicle to reconnect with ourselves and each other. It's a time for reflection, sharing and hopefully for new insight. Yet, there's a part of me that doesn't want to go.

If I'm honest with myself, it is probably because I don't want to re-examine what happened during the past year.  In other words, I don't want to reflect on what went wrong, again, because I've done that enough already.

But going to the retreat doesn't have to be about that at all. In fact, instead of it being an unpleasant exercise focusing on what I don't want ... it easily can be when I focus on what I do want, and how I'm going to get there in a way that's best for everyone involved. The only difference in those two retreats is what I make it mean - and of course what happens because of that.

You Focus on What You Measure.

So, it occurs to me that I might be measuring the wrong things in several areas. Just because I used to keep score one way, doesn't mean that it's a helpful measure for me now.

Measurement is supposed to give you a sense of your momentum towards your target. Done right, it helps you feel more confident and in-control. Sure it tells you what to do less of ... more importantly, though, it highlights what we can and should do more of.

Cleansing Or Clogging?

I remember being in a Tony Robbins seminar about health and hearing a simple rule that made sense to me about eating. He said: before you put something in your mouth think about whether it's cleansing or clogging. That made sense to me, and it was helpful. The same could hold true for deciding which things to focus on in business or life. Will focusing on this create momentum and energy, or not? 

On some level pain is inevitable.  Yet, for the most part, suffering is optional.

Choose what makes you strong and more likely to take actions that make progress.

It Is Only A Problem Until You Know The Solution

Some challenges seem tough to solve ... until you know the solution.

When I was younger, I spent hours twisting and turning a Rubik's Cube.  It seemed random or even impossible until I found the solution. 

Then it got a lot more fun.

Want to solve it yourself?

• Beginner's Solution to the Rubik's Cube.
• Solving Rubik's Cube Using No Memorized Sequences.
• How to Solve the Rubik's Cube in Seven Steps.
• Solving Rubik's Cube for Speed.

Here is the direct link to the video.

Capitalogix Commentary 04/05/09

The U.S. Markets moved higher for the fourth week in a row. This is just the fifth positive week for these indices in 2009.

The public notices!  I had a guy approach me at the gym to ask if I thought he should start buying again.  He said he knew it could go back down, some, but isn't that "dollar-cost-averaging"?  And I got an e-mail from a friend asking me to recommend a trading course for his wife to take because she is starting to day-trade.  Those things whisper that sentiment is changing.  Hope the market does too.

Rally Symmetry.

While we are still in a downtrend on the longer timeframes, the size of the short-term rally is impressive.  This chart shows that the S&P 500 Index has rallied 27% off its March lows.

This is surprisingly similar to the size of the bear rally swings we saw in October and November.

Is Rising On Bad News a Good Sign?

The latest report on job losses showed that the American economy shed another 663,000 jobs in March and that unemployment rose to 8.5 percent. 

While the Dow Jones Industrial Average initially fell on the news, it quickly shrugged-off the data, and closed back above 8,000 for the first time since early February.

Bad news everywhere, and the Markets continued higher.  I thought it was an April Fool's joke.  It still may turn out that way?  In my book, though, that is a bullish sign.

Another Bullish Sign, Markets Are Above Their 50-Day Moving Averages.

For me, most notable is that our major indices are now above their 50-day moving averages for the first time in a very long time.  Even better, tech is leading the way. So until the 50-day is broken back to the downside, this market deserves some respect.

Yes, shorter term, markets are overbought ... but they have been overbought for more than a week. I can't believe I'm saying this ... remember that overbought can also be a sign of strength.

Recession Length.

While the stock market has rallied nicely since bottoming on March 9th, the economy continues to struggle. For some perspective on the current economic recession, the chart below illustrates the duration of all US recessions since 1900.

The five longest recessions all began prior to 1930. The length of the current recession (now entering its 16th month) is above average, and equal to the longest recessions (1973 & 1981) since the Great Depression.

Since it is unlikely that the Recession is over, the question is how much longer till it ends?

In addition, something I'm paying more attention to is the amount of talk I'm hearing about the inevitable devaluation of the dollar.  Let me know what you think about it.

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

• How Can Small Investors Get In on the Bailout? (NYTimes)
• A Few Drops Don't Make the Glass Half Full. (Barrons)
• Have We Nationalized Banks in response to the current economic crisis? (Duke)
• Credit bubble looms as investors rush to credit, distressed debt and CTA's. (Reuters)
• G-20 Expands IMF Lending Powers to $1 Trillion to reignite world growth. (WSJ)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Heart Muscle Renewed Over Lifetime, Study Finds. (NYTimes)
• Tax Day Tea Party: The resistance is brewing. (TaxDayTeaParty)
• Is Google In Talks To Acquire Twitter? (TechCrunch)
• AI Advance: Robot scientists can think for themselves. (Reuters)
• More Posts with Lighter Ideas and Fun Links.

A Breath of Fresh Air

Do gadgets that help you focus on conscious breathing work?  I found three that worked for me: Resperate, Helicor's StressEraser, and Heart Math's emWave.

My biggest complaint is that once I learned the relaxation techniques each of these devices teach,  I didn't need the device to get the results.  That also is a positive, isn't it?

I think, feel, and communicate better when I'm calm.  Learning to access that state at will is an important skill ... in business and personal life. 

So, with that in mind, here are my impressions and experience with each.

Resperate.

The Resperate unit is a little bigger than a portable CD-ROM player, with a built-in elastic strap that goes around your ribcage to monitor your breathing.  The concept behind this tool is very simple.  It relaxes you by helping you slow your breathing down. 

Resperate starts by pacing your in-and-out breaths with higher and lower pitched sound cues.  Over time it moves these tones farther apart, leading you to breathe slower and more deeply.

How did it work?  It helped me move easily from 6 to 10 breaths-per-minute, down to two or three breaths-per-minute.  This promotes much deeper breathing and relaxes the body and mind.  I find that I enjoy using this tool for about 10-minutes at a time; and I definitely feel relaxed after using it.  

While Resperate provided the most relaxation, it is the one I use least.  Perhaps because it is a little bigger and requires the belt.  Not big hurdles; but apparently big enough.

Helicor's StressEraser. 

The StressEraser is a portable biofeedback device, smaller than a deck of cards.  On the top, there is a hinged slot to put your finger.  The finger reader measures your pulse and galvanic skin response. There is also an LED screen on this device that helps you pace your breathing, and shows your level of stress or relaxation.

Without focusing, the line is erratic and jagged.

However, with only a little bit of training, it's easy to create a very smooth sign wave that indicates a steady breathing and a healthy heart rate pattern.

With this tool, I get the best (most relaxing) results with an in-breath of about five seconds and an out-breath of about the same length. I like doing this for five minutes or so; it is a nice break in the middle of the day, before an important phone call, or a decision-making session. 

I find that it helps me focus. Of the three tools, this is the one I find myself using most often.  This might be because I like the graph and how it gives me instantaneous feedback about my breathing and focus.

HeartMath's emWave.

This is the smallest of the tools.  The emWave relies on either a thumb sensor or, my preference, a clip that attaches to your earlobe. The technique is very similar to what you learn with the StressEraser. It involves steady breathing and a focus on reducing heart beat variability.  It has four levels of challenge.

It sounds strange, and I don't claim to understand the science behind it, however focusing your attention on your heart while doing the breathing exercise seems to make a difference.  Somehow, when you focus your attention on your heart, that is when the machine changes color to indicate that there is "coherence". And, in my experience, this is the most relaxing part of the exercise. More coherence equals less stress.

I tend to use this tool less than five minutes at a time to feel calm and refreshed.  It was also the easiest for me to have success with (in this case, to get the "green light" to come on).  So, the emWave is the smallest, easiest and quickest of the three ... and it works.  I'm going to use this more often.

So why did I use one that is more challenging?  Habit, or perhaps that defines part of the reason I need to relax?