This was funny.
Even if you think you know what QE2 means, or don't believe that "'The printing money' is the last refuge of failed economic empires and banana republics, and the Fed doesn't want to admit this is their only idea" … Watch this humorous take on what the Federal Reserve is up to, and how we got here.
Like much humor, there is more than a grain of truth in it.
It was made with the Xtranormal text to movie engine.
The Markets are at recovery highs.
Traders should remember this important phrase: "Don't Fight the Fed". It applies here.
Think of Bernanke as the manager of the world's largest long-only fund. Further, imagine that his goal was to push prices higher. By the way, you don't have to imagine; he said so. To make sure you get the point, he even announced $600 billion of purchases to be made in the next 8-months – that's $75 billion a month. Regardless of whether you think it will work (or if it will be good for the market or the economy), when money is being pumped into the system at this rate, it is difficult to bet against stocks.
In addition, the market tends to do well after the mid-term elections, and going along with that, the 3rd year of a president’s term is historically the strongest.
With all that, it shouldn't surprise you that the stock market continued its bullish ways as investors seemed to applaud the election results, the Fed's second round of quantitative easing, and a decent jobs report.
Let's Look At Some Charts.
The S&P 500 Index broke out above the April high and closed at its highest level in two years. The breakout is significant – if it can hold. Double tops can produce strong pullbacks, but if the breakout holds, the rallies tend to do well. At point “A” below you can see that breakout in March of this year went on to several more weeks of positive gains until the peak in April.
An Influential Market Sector Is Perking Up.
Many traders believe the financial sector is the most influential group in terms of leading the market. Financials underperformed miserably in 2007 and 2008 and overall market performance followed suit. In 2009, financials outperformed and the market recovered a lot of its prior losses. So, where are they now?
The financials broke above key resistance. The Dow Jones US Financial Index finally broke above its key resistance level (marked by the red horizontal line at 271). With Bernanke's announcement of increased liquidity, as if on cue, the financials led on a relative basis last week and pulled the major indices higher with it. That 271 level now becomes excellent support.
Until the bears can tear down support on the financials at that level, it seems pretty solidly bullish. Expect some of the money that rotates out of other sectors to find a home in financials. That should spell solid outperformance in the near-term.
What is Really Out-Performing Year-To-Date?
The following chart illustrates the dominance of commodities so far this year. Check the numbers on the following YTD graphic from Finviz .
Puts things in perspective, and makes me think about inflation.
Business Posts Moving the Markets that I Found Interesting This Week:
Lighter Ideas and Fun Links that I Found Interesting This Week
The Markets are at recovery highs.
Traders should remember this important phrase: "Don't Fight the Fed". It applies here.
Think of Bernanke as the manager of the world's largest long-only fund. Further, imagine that his goal was to push prices higher. By the way, you don't have to imagine; he said so. To make sure you get the point, he even announced $600 billion of purchases to be made in the next 8-months – that's $75 billion a month. Regardless of whether you think it will work (or if it will be good for the market or the economy), when money is being pumped into the system at this rate, it is difficult to bet against stocks.
In addition, the market tends to do well after the mid-term elections, and going along with that, the 3rd year of a president’s term is historically the strongest.
With all that, it shouldn't surprise you that the stock market continued its bullish ways as investors seemed to applaud the election results, the Fed's second round of quantitative easing, and a decent jobs report.
Let's Look At Some Charts.
The S&P 500 Index broke out above the April high and closed at its highest level in two years. The breakout is significant – if it can hold. Double tops can produce strong pullbacks, but if the breakout holds, the rallies tend to do well. At point “A” below you can see that breakout in March of this year went on to several more weeks of positive gains until the peak in April.
An Influential Market Sector Is Perking Up.
Many traders believe the financial sector is the most influential group in terms of leading the market. Financials underperformed miserably in 2007 and 2008 and overall market performance followed suit. In 2009, financials outperformed and the market recovered a lot of its prior losses. So, where are they now?
The financials broke above key resistance. The Dow Jones US Financial Index finally broke above its key resistance level (marked by the red horizontal line at 271). With Bernanke's announcement of increased liquidity, as if on cue, the financials led on a relative basis last week and pulled the major indices higher with it. That 271 level now becomes excellent support.
Until the bears can tear down support on the financials at that level, it seems pretty solidly bullish. Expect some of the money that rotates out of other sectors to find a home in financials. That should spell solid outperformance in the near-term.
What is Really Out-Performing Year-To-Date?
The following chart illustrates the dominance of commodities so far this year. Check the numbers on the following YTD graphic from Finviz .
Puts things in perspective, and makes me think about inflation.
Business Posts Moving the Markets that I Found Interesting This Week:
Lighter Ideas and Fun Links that I Found Interesting This Week
They say a country gets the politicians it deserves or perhaps it deserves the politicians it gets.
Rather than write a commentary on the politics of an angry electorate, I'll let pictures do the talking.
Here is the cover from this week's Economist.
Here is a chart from the NYTimes showing the historic shift away from Democrats.
Here is a political cartoon showing the pendulum swinging.
And here is a faux Sesame Street reminder of why it is important to play nicely with the other children.
They say a country gets the politicians it deserves or perhaps it deserves the politicians it gets.
Rather than write a commentary on the politics of an angry electorate, I'll let pictures do the talking.
Here is the cover from this week's Economist.
Here is a chart from the NYTimes showing the historic shift away from Democrats.
Here is a political cartoon showing the pendulum swinging.
And here is a faux Sesame Street reminder of why it is important to play nicely with the other children.
Usually, bookmarks are static links. Diphur alerts you when content changes occur on the sites you choose. For example, with Diphur you can?
Here is an example of a message it sent alerting me when a web conference (I was waiting for) went live.
Similarly, here is a sample link showing how Diphur ChangeUps work; click here to see content changes occurring at Yahoo News right now.
Diphur gives you a lot of control about how you specify what you want and when you want it. You can:
There is even a browser bookmarklet that lets you add a bookmark to the page you are viewing without visiting Diphur.
Usually, bookmarks are static links. Diphur alerts you when content changes occur on the sites you choose. For example, with Diphur you can?
Here is an example of a message it sent alerting me when a web conference (I was waiting for) went live.
Similarly, here is a sample link showing how Diphur ChangeUps work; click here to see content changes occurring at Yahoo News right now.
Diphur gives you a lot of control about how you specify what you want and when you want it. You can:
There is even a browser bookmarklet that lets you add a bookmark to the page you are viewing without visiting Diphur.
Next week will tell us a lot about where this market is headed. Three big events will give us a sense of how the market reacts to news from its perch near recent highs.
It starts Tuesday, when we get election results. Many believe the market has been waiting for republicans to gain seats. If that takes place, and appears that it will, the market, you would think, will like it. However, some wonder if the news is already priced in to the markets. Here is a chart from Intrade showing how likely people believe it is that republicans gain seats.
The Rally Continues.
The Dow Jones Industrial Average is sitting in a decision zone with overhead resistance from the April recovery highs. This is notable because we are overbought, with negative divergences … yet almost no selling pressure.
A sustained move above the resistance zone, shown in pink, would be a bullish sign.
Down Volume Is Rising … And That Means So Is Risk.
Have you looked at what the New York Stock Exchange's "Down Volume" (DVOL) is showing lately? Marty Chenard, from StockTiming.com did and here is what he found.
Normal behavior in a rally is for the Down Volume to be trending lower.
That means, that as the market goes higher, less selling is occurring. However, rallies always reach a point where profits start to be captured. Since investors cannot take profits without selling, the Down Volume increases as profit taking activity increases.
Such a Down Volume-to-Market relationship pattern can be seen on today's chart.
Notice the rising red lines on the DVOL part of the chart. Those lines show that the Down Volume was increasing as the NYA Index continued to rise. That represented a negative divergence, and sign that investors were taking profits and selling into the rally.
If you look at the first three instances this year, the market soon pulled back after each round of profit taking.
What about the fourth instance?
That is one of those "you are here now" events. Since early September, our DVOL model shows that it has made a higher/low and a higher/high. That is important because that is the definition of an "up trend".
A historical word of caution … if the Down Volume on the New York Stock Exchange index is rising, then risk levels are also rising.
Sentiment Is Approaching Extreme Levels.
The AAII Sentiment Survey shows a jump to a 2-to-1 ratio of Bulls-to-Bears. Readings above 2 tend to be bearish. We saw a reading like this about a month and a half ago and the market rally continued. Nonetheless, if you go back to the 2007-2008 bear market, it was a good early indicator of when to be a seller. Of course, some believe this is a bull market, so the indicator may behave differently. The circled area shows this ratio went much higher during more bullish times in 2005 and early 2006. Still, this bears watching.
Business Posts Moving the Markets that I Found Interesting This Week:
Lighter Ideas and Fun Links that I Found Interesting This Week
Next week will tell us a lot about where this market is headed. Three big events will give us a sense of how the market reacts to news from its perch near recent highs.
It starts Tuesday, when we get election results. Many believe the market has been waiting for republicans to gain seats. If that takes place, and appears that it will, the market, you would think, will like it. However, some wonder if the news is already priced in to the markets. Here is a chart from Intrade showing how likely people believe it is that republicans gain seats.
The Rally Continues.
The Dow Jones Industrial Average is sitting in a decision zone with overhead resistance from the April recovery highs. This is notable because we are overbought, with negative divergences … yet almost no selling pressure.
A sustained move above the resistance zone, shown in pink, would be a bullish sign.
Down Volume Is Rising … And That Means So Is Risk.
Have you looked at what the New York Stock Exchange's "Down Volume" (DVOL) is showing lately? Marty Chenard, from StockTiming.com did and here is what he found.
Normal behavior in a rally is for the Down Volume to be trending lower.
That means, that as the market goes higher, less selling is occurring. However, rallies always reach a point where profits start to be captured. Since investors cannot take profits without selling, the Down Volume increases as profit taking activity increases.
Such a Down Volume-to-Market relationship pattern can be seen on today's chart.
Notice the rising red lines on the DVOL part of the chart. Those lines show that the Down Volume was increasing as the NYA Index continued to rise. That represented a negative divergence, and sign that investors were taking profits and selling into the rally.
If you look at the first three instances this year, the market soon pulled back after each round of profit taking.
What about the fourth instance?
That is one of those "you are here now" events. Since early September, our DVOL model shows that it has made a higher/low and a higher/high. That is important because that is the definition of an "up trend".
A historical word of caution … if the Down Volume on the New York Stock Exchange index is rising, then risk levels are also rising.
Sentiment Is Approaching Extreme Levels.
The AAII Sentiment Survey shows a jump to a 2-to-1 ratio of Bulls-to-Bears. Readings above 2 tend to be bearish. We saw a reading like this about a month and a half ago and the market rally continued. Nonetheless, if you go back to the 2007-2008 bear market, it was a good early indicator of when to be a seller. Of course, some believe this is a bull market, so the indicator may behave differently. The circled area shows this ratio went much higher during more bullish times in 2005 and early 2006. Still, this bears watching.
Business Posts Moving the Markets that I Found Interesting This Week:
Lighter Ideas and Fun Links that I Found Interesting This Week
Even if you are not a baseball fan, here's a statistic that jumps out and demands attention.
When the Texas Rangers competed against the New York Yankees, it marked the greatest disparity in raw dollars between payrolls in the history of playoff baseball, at $152 million.
In case you don't get enough spreadsheets at work, here is a
comparison of the 2010 payrolls of both teams.
In addition, there are some fun facts for you to impress your friends. For example, the Rangers could triple every current player's salary, sign Mark Teixeira away from the Yankees, and still have a lower payroll.
Another reminder that money is not the best way to motivate better performance.
