Capitalogix

Capitalogix Commentary for the Week of 05/10/10

Well, that was something you don't see very often ... a nearly 2000 point swing in the Dow.

Here is what that looked like intra-day.

There has been unusual volatility for a while, but this was noteworthy. 

A Weekly View of the S&P 500 Index Shows the Bigger Picture. 

The recent rally stalled at a well-known Fibonacci retracement level.  In addition, it doesn't bode well for the bulls (at least in the short-term) that price just broke down through critical support, and on high volume.

When markets are ready to change course, we often see violent moves. The side that was enjoying the trend is fighting to keep it alive. The new side, taking over, will have nothing to do with that. Back-and-forth it goes ... then all it takes is a massive move to spark a little fear and greed ... and you saw what can happen.

What Does the VIX Show?

Here is a chart of the Volatility Index ("VIX") from Bespoke.

Apparently, the VIX is not the only way to measure fear in the markets.  Another way is to follow what "insiders" do.  The idea is that if they believe the market will get stronger, then they hold their stock.

So, What Does Insider Activity Tell Us?

According to Trader's Narrative, insider selling continues to dominate buying by a wide margin. We’ve seen a continuously extreme reading from insider activity measures for the past 12 months. The market has - until recently - ignored this vote of "no-confidence" and plowed ahead. This sustained level of selling pressure by insiders is unprecedented in recent history. Usually we see the buy/sell ratio fluctuate between the two extremes.

NYSE CEO Explains the Sell-Off.

NYSE Euronext CEO, Duncan L. Niederauer, says his exchange slowed trades of stocks including 3M, Accenture and P&G during the 998 point drop.  So, you'll be happy to hear that it was a "feature" ... not an "error".

We are now pretty over-sold and due for a bounce. Throughout the recent rally, pull-backs triggered buying.  It would surprise me if that happened again here.

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

• Questioning Whether the Recovery Can Be Sustained? (FTAlphaville)
• Unpalatable Choices re Euro for Germany & European Central Bank. (WSJ)
• Obama to Nominate Three to the Central Bank. (NYTimes)
• Merger Will Cause Continental-Size Problems for American Airlines. (WSJ)
• What Comes After Exhausting 99 Weeks of Unemployment Benefits. (LATimes)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Coming Soon to Your Home, a Personal Cell-Phone Tower. (TechnologyReview)
• YouTube is 5-Years Old: Here are 50 of the Best Videos. (Time)
• Military Planning: We Have Met the Enemy & It Is PowerPoint. (NYTimes)
• Stephen Hawking Warns - "Don’t Talk To Aliens". (TimesOnline)
• Naps Boost Memory, But Only If You Dream. (CNN)
• More Posts with Lighter Ideas and Fun Links.

Related articles by Zemanta

• Volatile stock trades nixed (cnn.com)
• Citigroup: Don't buy this dip (ftalphaville.ft.com)
• Here's How NASDAQ CEO Bob Greifield Slammed The NYSE (businessinsider.com)
• Can Someone Explain The HUGE Volume Spike In Accenture An Hour Before It Hit $.01? (ACN) (businessinsider.com)
• NYSE Explains Accenture's $.01 Trade (ACN) (businessinsider.com)
• NYSE And NASDAQ Going To War Over "The Glitch" (businessinsider.com)

Iron Man 2 is Good Mindless Fun

Have you seen it yet?  It is certainly generating some "buzz" and box-office traffic.

My recommendation: let go of your expectations and simply enjoy the spectacle.

Even Freud has to agree, sometimes a cigar is just a cigar ... and sometimes, a movie is just a movie.

Iron Man 2 was a fun and action-packed movie that I'm glad I watched on a big screen.

Does It Live-Up to Its Hype?

Before its release, there were a number of very negative reviews and predictions that it would be "unwatchable". Nonetheless, audiences are watching and, according to Rotten Tomatoes, enjoying the movie.

I had fun seeing it with my son this weekend. It was good enough in virtually every way.

The story held together well enough that I didn't think much about the plot (not that there was much of a plot to think about).

The graphics didn't "wow" me, the way that Avatar's did; but they were good enough that I didn't think about them (even though many of the special effects had to have been computer-generated). 

Here is a Trailer so you can see it for yourself.

Here are more videos.

Related articles by Zemanta

• 'Iron Man 2' Has $52.4 Million in Sales as Summer Season Opens (businessweek.com)
• Cameron: Don't Watch Avatar on Your iPhone. Or Laptop. (mashable.com)
• Flixster Users Name Iron Man 2 and Inception the Summer's Most-Anticipated Movies (eon.businesswire.com)

The President, as Comedian-In-Chief

President Obama was a hit at the annual White House Correspondents’ Dinner last week.

Jay Leno was the headliner at the dinner, and Obama called him "the only person whose ratings fell more than mine."

Leno observed that Obama was less aloof than he appears ... "He loves to socialize ... health care, car companies," naming industries where the Obama administration has intervened.

The President got more laughs than Leno.  Perhaps part of that was in deference to positional power; however, give Obama some credit - he hired staff writers from The Daily Show to come up with his material.

Related articles by Zemanta

• Jay Leno BOMBS At White House Correspondents Dinner (VIDEO) (huffingtonpost.com)
• Obama Asked Daily Show Writers To Make White House Correspondent's Dinner Speech Funny (businessinsider.com)
• White House Correspondents' Dinner: Obama on "Socialized Media" [VIDEO] (mashable.com)
• Video: White House Correspondents' Dinner (bilerico.com)

This Sign of the Times May Say a Lot about the State of the Markets

A friend was driving me to his office last week. A flashy car pulls up beside us at a stoplight, and motions for us to roll-down the window. Without even saying hello, this well-dressed man in his late-40s starts bragging about day-trades he made recently.

He asked my friend whether he bought the bank stock they talked about, and then went on to gloat about a few of his other successes, including buying Palm just before HP bought it.

When the light turned, he said "you should have listened" and drove away.

Little things can say a lot.  What do you think this implies about the state of the markets?

I hadn't seen "that" type of behavior in several years.

It reminded me of cocktail parties in the late 90s (up until about 2001). You know, where stock-picking gurus wearing black faux-turtlenecks and blazers drank expensive wine and talked about Internet stocks.

Related articles by Zemanta

• Biggest Bull Market Sign Yet: The Dumbest Job Ever, Day Trading, Is Cool Again (businessinsider.com)
• Ten Guidelines for Enjoying The Stock Market (howardlindzon.com)

Capitalogix Commentary for the Week of 05/03/10

The rally finally ran into some resistance.  Still, the Dow Jones Industrial Average remains above 11,000.  However, the thing that caught my eye last week was that the Dow broke below its recent trend-line.  By itself, not a cause for major concern, just a key to notice.  The question is whether it can get back above that level, or will this be the start of a more meaningful correction?

It is also worth noting that the MACD indicator is showing more downside momentum than it did at the same price level earlier in April.

A Peek Over the Wall.

Is China's Shanghai Index sending a warning about the world economy or just their economy?

Unless things change in a hurry, China's Shanghai Composite could drop significantly.  This chart shows the triangle pattern that played-out over the past nine months.

You can think of the Triangle as a well-contested battle between the bulls and the bears.  Inside the pattern, neither side gives-up much ground.  However, when one side loses conviction, the market  surges in the direction the winners push it. 

Triangles are often continuation patterns.  So, be wary that this move is a head-fake down to trigger a big rally.  Otherwise, the target is pretty far below.

Sentiment Here in the United States is Still Very Bullish.

While stocks have certainly become more volatile in the last two weeks, newsletter writers seem to be taking it in stride.  According to Bespoke, the latest Investors Intelligence survey of newsletter writers  found that 54% of those surveyed are now bullish on the market.  The last time bullish sentiment was this high was back in December 2007, before the crash.

Another important to measure of the crowd’s extreme bullish sentiment is that fewer than 20% of advisors are currently bearish. According to Prieur du Plessis, these are first indications of a market top.

Another Sign of a Potential Top?

The U.S. Treasury Department plans to sell “up to” 1.5 billion shares of Citigroup in the government’s biggest step yet to exit the 27 percent ownership of the bank it rescued during the financial crisis. Bloomberg quotes Geithner as saying: "We’re putting TARP out of its misery," and "the government is withdrawing from the financial industry after forcing lenders to recapitalize with private money."

If you think that is funny, then so is this cartoon.

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

• Hussman: Rally Has Ignored Fundamentals & Will Be Corrected Painfully. (BizInsider)
• Earnings Growth: Are the Gains Too Good to Last? -  (BusinessWeek)
• The Looming De-Leveraging Challenge. (McKinsey Quarterly)
• UBS to Retail Clients: Stock Boom Is Over. (InvestmentNews)
• Worried about the PIIGs: Was Greece's Rescue Futile & is Portugal Next? (WikInvest)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Microsoft Won 10 Times More Patents Than Apple In 2009. (BusinessInsider)
• Peek at Tomorrow: Ten Technology Incubators Changing The World. (Forbes)
• Computer Science Loses to Math in New Hiring Formulas. (WSJ)
• Bacterial Colonies Show Intelligence Coping with a Hostile Environment. (Seed)
• World Air Traffic Time-Lapse Video Over a 24-Hour Period. (HuffingtonPost)
• More Posts with Lighter Ideas and Fun Links.

Related articles by Zemanta

• U.S. Treasury to Sell 1.5 Billion Shares of Citigroup Stock (businessweek.com)
• China's Market Selloff Spells More Than Just Trouble For US Stocks (businessinsider.com)
• Asian Shares Rise as Shanghai Expo Attracts Millions (dailyfinance.com)
• Excess Bullish Sentiment Waning (ritholtz.com)
• An Apple bull sounds a warning for May (tech.fortune.cnn.com)

The Truths Told By International Flags

"Meet the World" uses national flags to represent relevant social or political issues and real data specific to the particular country.

It comes from an award-winning ad series created for a Portuguese news magazine, Grande Reportagem, known for its photo-journalism and investigative reporting. 

Here are a few examples.

Interesting and thought provoking.