Capitalogix

The Egg Trick: TV From a Different Age

Here is a skit from Johnny Carson and Dom DeLuise.  It's funny to see how talk shows have changed.

It is a different kind of clean ... and a different kind of dirty.

Related articles by Zemanta

• Michael Giltz: Who's The King Of Late Nite? Craig Ferguson (huffingtonpost.com)
• Oprah's exit is like Johnny Carson leaving The Tonight Show (tvsquad.com)
• Conan leaves NBC with $45M payout: reports (calgaryherald.com)

The Illusion of Focus and Meaning

Recently, the concept of "Focus" keeps coming to mind when I try to make sense of what's happening in the markets.

As I review stories, news, and data, I'm trying to be more aware of where the bias is (even if it is unintentional).

Focus, Bias and Perspective.

The photo series, below, is an example of how our perception can be easily shaped.  The far left version looks violent.  The far right version looks compassionate.  It could be both (or neither).

Each of us perceives the world through our own filters.  It is as if we're producing a film (which could be edited into a comedy, drama, or thriller ... based on what we focus on, highlight, or ignore). Except that we often don't know it's just a film, edited by an amateur ... Instead, we perceive it as truth because it is what we perceive.

The point is that perspective matters.

Capitalogix Commentary 02/21/10

It seems like everywhere I look, there is bad news about the economy. Recently, however, venture capital and M&A activities have been picking-up.  Both of those are early indicators of economic optimism. In addition, here are two other signs that economic winter may soon give way to spring.

First, a Bankruptcy Partner in a major Dallas law firm just told me that he sees fewer filings in the pipeline. In addition, he says that credit has started opening-up to corporations, which is giving them the lifeline they need to start making progress again.

 Second, speaker bookings for corporate meetings seem to be picking-up again. I suspect that this is an indicator that corporations are willing to spend money on motivation, teamwork, and culture. In Maslow's hierarchy of needs, that's certainly a tier above food and shelter. In other words, when money frees-up for these types of activities, it suggests that corporations are starting to feel more comfortable about the short-term ... and more optimistic about the longer-term.

From a technical analysis perspective, optimism shows itself in the charts.

Where Are We?

In last week's commentary, I indicated that a holiday-shortened options expiration week was a likely time to expect a bounce. Well, even though the Fed announced a surprise discount rate hike to banks, the markets did rally.  While impressive on some levels, it happened on low trading volume and takes us to a resistance level.

It is decision-time for the S&P 500 Index. The weekly chart, below, shows the downward sloping trend-line from the 2007 highs, as well as the rally off the 2009 lows. More recently, we've seen a nice rally off the high volume reversal bar from several weeks ago (marked by the yellow highlight in the green circle).  Nonetheless, the bigger issue is whether price will be able to rally and hold above the down-trend line (marked by the red arrow)?

If the markets do sell-off soon, then many eyes will shift to the 200-day moving average (similar to the 40-week average marked in blue) as a likely support level.

It Is a Matter of Perspective ... But the Real Story is the Lack of Selling.

I read an article that claims to outline the three basic causes of the market rally since March of 2009.

1. The first is that the Fed has recently chosen to pump liquidity into the financial systems during options expiration week.
2. The second is that markets closed higher on approximately 75% of Monday's since the recent market low (with 80% of the gains, since those lows, happening on Mondays).
3. The third is that virtually all of the Q4 2009 market gains occurred in the overnight futures session, when US markets are closed. 

The chart, below shows the gains and losses that occurred during the normal trading session versus during after-hours sessions.

My first reaction was that this probably was the result of government action or manipulation by some unseen hand. Pushing the market higher during light futures trading periods (like weekends or after-hours) resulted in bigger gap-up openings.

After a little thought, however, these actions make sense. Even if these after-hour pushes were the result of the government, it was easier, took less capital (and thus cost less to do it) after-hours than it would have during periods of thicker trading. So, it was smart to do it that way.

More importantly, this is a free market; so if the market "disagrees" with the push higher, then sellers can freely take their profits or positions. The bigger issue is that even though the markets have been pushed higher, we still haven't gotten to the point that triggers selling volume.

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

• Fed Raises Rates to Banks; Signals Pivot to Normal Policy. (NYTimes & MarketWatch)
• Which Banks Are Worth Betting-On During the Recovery? (WSJ)
• Bailout Hustle: Banks Pocketing Trillions & Re-Creating Conditions For Crash. (Taibbi)
• Fund Flows: Equity Investors Find the Exits Again. (BusinessInsider)
• M&A Picking-Up: Google Buys Aardvark. (InformationWeek)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Utah Mulls Eliminating 12th Grade to Save Money. (Newser)
• Herbal Medicines Can Be Lethal, Pathologist Warns. (MedicalNews)
• Dan Ariely: Bonuses Boost Activity, Not Quality. (Wired)
• Evil Kneber Malware Seeks to Mine Financial Data. (TechNews & PCWorld)
• MetaCritic - Interesting idea. One Place to Go for Reviews. (MetaCritic)
• More Posts with Lighter Ideas and Fun Links.

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.

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.

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?

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.

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:

• Google Revenues Reach $1.34 Million Per Employee. (BusinessInsider)
• CME Buys 90 Percent of Dow Jones Index Unit for $607M. (NYTimes)
• The Birth of BRIC & a Few Other Countries to Watch. (SeekingAlpha)
• Does George Soros Think Gold is an Asset Bubble? (Slate)
• Putting Apple's Giant Pile of Cash In Context. (BusinessInsider)
• More Posts Moving the Markets.

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.

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

 

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

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.

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.

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

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.

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.

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

• Amazon Losing the E-Book Pricing Battle. (ZDNet)
• A Different Type of Telescope That Sets Its Sights On Cyber-Crime. (NewScientist)
• 'American Idol' Wants Howard Stern to Replace Simon Cowell as Judge. (NYPost)
• Innovation - How Far Can You Trust an AI Assistant? (NewScientist)
• Priest Checks Fingerprints of Mass Attendees. (Reuters)
• More Posts with Lighter Ideas and Fun Links.

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.

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

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

One Small Step for the Saints, One Giant Leap for New Orleans

Mardi Gras does not officially start for another week ... but the party has already started.

Watching with my son, I was amazed how many times he would tell me he wanted Doritos ... right after seeing their ad.

Here is a link to watch all the 2010 Super Bowl Ads in one place.