Current Affairs

  • Capitalogix Commentary for the Week of 04/19/10

    At the end of the week, the markets were pretty much where they started.  So nothing happened, right?

    Sometimes weeks like this are important.  The Japanese candlestick chart pattern this type of action produces is called a Doji.  After a long up-trend, this pattern often marks a turning-point.

    Here, there is a Doji resting on the recent up-trend line (drawn with the red arrow) and the support-resistance level (noted with the orange dashed line).  This creates an easy decision-zone to watch.

    100419 Dow Decision Zone

    From my perspective, a little pull-back would be welcome here.

    Earnings Season Is Here.

    During the past few quarters, companies have shown that they can cut-back and save money.  Now may be the time investors want to see some sales growth. 

    The results are not as important to me as the market's response.  Are people going to keep buying, or start selling the news?  Here are a few items that caught my eye this past week.

    • JPMorgan Earns $3.3 Billion in 1st Quarter, a 55% increase of Profits. (DealBook)
    • GM Posts $4.3 billion Loss, Says 2010 Profit Possible. (Reuters)
    • Intel Profits and Outlook Blow Past Expectations   (DailyFinance) 

    Goldman_Sachs_logo Of course, the news that the government was suing Goldman Sachs also moved the market.  How it ultimately moves Goldman is still to be seen.  Again, though, what I'll be watching is whether this will become a buying opportunity or a trigger for further selling.  That will likely tell us how healthy the rally remains.

    Banks Were Masking Risk Levels From the Public.

    On a related topic, according to the WSJ, major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public.  Here is an interactive graphic to illustrate what happened.

    100419 Banks Masked Risk From Public

    More Banks Are Closing.

    Also, Regulators shut down eight more banks last week; that makes 50 so far this year. Last year saw 140 bank failures, the highest annual number since the 1992 Savings & Loan crisis.  In comparison, only twenty-five banks failed in 2007 or 2008. Another chart to put this in perspective is here.

    100419 Bank Failures Continue

    Expect to
    Hear A Lot More About the Need For More Regulation.

    100419 Irrational Exuberance Cartoon

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

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    that I Found Interesting This Week

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  • Capitalogix Commentary for the Week of 04/19/10

    At the end of the week, the markets were pretty much where they started.  So nothing happened, right?

    Sometimes weeks like this are important.  The Japanese candlestick chart pattern this type of action produces is called a Doji.  After a long up-trend, this pattern often marks a turning-point.

    Here, there is a Doji resting on the recent up-trend line (drawn with the red arrow) and the support-resistance level (noted with the orange dashed line).  This creates an easy decision-zone to watch.

    100419 Dow Decision Zone

    From my perspective, a little pull-back would be welcome here.

    Earnings Season Is Here.

    During the past few quarters, companies have shown that they can cut-back and save money.  Now may be the time investors want to see some sales growth. 

    The results are not as important to me as the market's response.  Are people going to keep buying, or start selling the news?  Here are a few items that caught my eye this past week.

    • JPMorgan Earns $3.3 Billion in 1st Quarter, a 55% increase of Profits. (DealBook)
    • GM Posts $4.3 billion Loss, Says 2010 Profit Possible. (Reuters)
    • Intel Profits and Outlook Blow Past Expectations   (DailyFinance) 

    Goldman_Sachs_logo Of course, the news that the government was suing Goldman Sachs also moved the market.  How it ultimately moves Goldman is still to be seen.  Again, though, what I'll be watching is whether this will become a buying opportunity or a trigger for further selling.  That will likely tell us how healthy the rally remains.

    Banks Were Masking Risk Levels From the Public.

    On a related topic, according to the WSJ, major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public.  Here is an interactive graphic to illustrate what happened.

    100419 Banks Masked Risk From Public

    More Banks Are Closing.

    Also, Regulators shut down eight more banks last week; that makes 50 so far this year. Last year saw 140 bank failures, the highest annual number since the 1992 Savings & Loan crisis.  In comparison, only twenty-five banks failed in 2007 or 2008. Another chart to put this in perspective is here.

    100419 Bank Failures Continue

    Expect to
    Hear A Lot More About the Need For More Regulation.

    100419 Irrational Exuberance Cartoon

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

    Lighter Ideas and
    Fun Links
    that I Found Interesting This Week

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  • The Internet Is Apparently for Porn

    My Internet provider recently doubled the speed of service in our area.  Seemingly everyone I tell makes a joke about quicker access to porn.  In that spirit, here are two videos poking fun at that.

    First, the Onion jokes that Congress passed the Pornographic Media Concealment Act, to hide this generation's porn habit from future generations. 


    Congress Announces Plan To Hide Nation's Porn From Future Generations

    And here is "The Internet Is For Porn", a number from Avenue Q. Here are the lyrics.

    That was a funny show, and worth seeing if you get the chance.

    image from www.avenueq.com

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  • The Internet Is Apparently for Porn

    My Internet provider recently doubled the speed of service in our area.  Seemingly everyone I tell makes a joke about quicker access to porn.  In that spirit, here are two videos poking fun at that.

    First, the Onion jokes that Congress passed the Pornographic Media Concealment Act, to hide this generation's porn habit from future generations. 


    Congress Announces Plan To Hide Nation's Porn From Future Generations

    And here is "The Internet Is For Porn", a number from Avenue Q. Here are the lyrics.

    That was a funny show, and worth seeing if you get the chance.

    image from www.avenueq.com

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  • Capitalogix Commentary for the Week of 04/12/10

    The Dow Jones Industrial Average traded above 11,000 for the first time since 2008. The real question is whether that is a sign of continued strength or that the rally has climbed too far, too fast?

    Smart Money – Dumb
    Money Confidence Index    .

    The chart, below, compares the bets made by small traders (a.k.a. the "Dumb
    Money"), to those of large commercial hedgers (a.k.a. the "Smart
    Money").

    In practice, Confidence Index readings rarely get below
    30% or above 70% (they usually stay between 40% and 60%). When they
    move outside of those bands, it's time to pay attention.

    Even
    more noteworthy is when there is a wide confidence spread with bullish bets by the Dumb Money and bearish bets by the Smart Money. This type of
    sentiment
    spread only happens a few times a year. We
    often get substantial bullish reversals when that happens.

    100411 Smart Money Dumb Money Confidence Index

    Conventional trading wisdom says that Crowds are
    usually wrong at turning-points.  That doesn't mean they are wrong all
    the time (yet I take special notice when the Smart Money clearly disagrees).

    Consumer Credit Woes Adding Fuel to the Doubt Fires.

    Here is a chart from BusinessInsider showing the Fed's latest consumer credit reading. After starting to recover, total outstanding consumer credit had a massive month-over-month decline.

    100411 Monthly Change in Consumer Credit Outstanding

    It is tough to stage a lasting recovery without consumers. 

    So Where Is the Money Coming From?

    U.S. Federal debt has increased rapidly.

    100411 Federal Debt Estimate

    In a related chart, Doug Short created an
    inflation-adjusted view of the debt and an overlay of the tax brackets.  With the 2001 and 2003 tax cuts expiring this year, the question is whether the gross
    federal debt will be a factor in determining the direction of future tax
    rates? Perhaps, like a young household with good jobs buying a home, the
    US can afford the rising level of debt?  What do you think?

    Speaking of Debt-Laden Countries.

    European governments on Sunday offered debt-laden Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates as they try to end Greece's fiscal crisis and restore confidence in the euro.

    100411 Greece Gets Loan

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

    Lighter Ideas and
    Fun Links
    that I Found Interesting This Week

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  • Capitalogix Commentary for the Week of 04/12/10

    The Dow Jones Industrial Average traded above 11,000 for the first time since 2008. The real question is whether that is a sign of continued strength or that the rally has climbed too far, too fast?

    Smart Money – Dumb
    Money Confidence Index    .

    The chart, below, compares the bets made by small traders (a.k.a. the "Dumb
    Money"), to those of large commercial hedgers (a.k.a. the "Smart
    Money").

    In practice, Confidence Index readings rarely get below
    30% or above 70% (they usually stay between 40% and 60%). When they
    move outside of those bands, it's time to pay attention.

    Even
    more noteworthy is when there is a wide confidence spread with bullish bets by the Dumb Money and bearish bets by the Smart Money. This type of
    sentiment
    spread only happens a few times a year. We
    often get substantial bullish reversals when that happens.

    100411 Smart Money Dumb Money Confidence Index

    Conventional trading wisdom says that Crowds are
    usually wrong at turning-points.  That doesn't mean they are wrong all
    the time (yet I take special notice when the Smart Money clearly disagrees).

    Consumer Credit Woes Adding Fuel to the Doubt Fires.

    Here is a chart from BusinessInsider showing the Fed's latest consumer credit reading. After starting to recover, total outstanding consumer credit had a massive month-over-month decline.

    100411 Monthly Change in Consumer Credit Outstanding

    It is tough to stage a lasting recovery without consumers. 

    So Where Is the Money Coming From?

    U.S. Federal debt has increased rapidly.

    100411 Federal Debt Estimate

    In a related chart, Doug Short created an
    inflation-adjusted view of the debt and an overlay of the tax brackets.  With the 2001 and 2003 tax cuts expiring this year, the question is whether the gross
    federal debt will be a factor in determining the direction of future tax
    rates? Perhaps, like a young household with good jobs buying a home, the
    US can afford the rising level of debt?  What do you think?

    Speaking of Debt-Laden Countries.

    European governments on Sunday offered debt-laden Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates as they try to end Greece's fiscal crisis and restore confidence in the euro.

    100411 Greece Gets Loan

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

    Lighter Ideas and
    Fun Links
    that I Found Interesting This Week

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  • Jobs Delivers the iPad to the Multitudes

    Hopefully you had a nice Easter weekend, or Passover weekend, or Final Four weekend … or if you were lucky, an iPad weekend.

    100405 Jobs Delivers the iPad to the multitudes

    As a staunch early-adopter, it surprises me to report that I do not (yet) have an iPad.  Miracles do happen.

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  • Jobs Delivers the iPad to the Multitudes

    Hopefully you had a nice Easter weekend, or Passover weekend, or Final Four weekend … or if you were lucky, an iPad weekend.

    100405 Jobs Delivers the iPad to the multitudes

    As a staunch early-adopter, it surprises me to report that I do not (yet) have an iPad.  Miracles do happen.

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  • Capitalogix Commentary for the Week of 04/5/10

    The rally continues, and the S&P 500 has gotten back to new highs for the past year.  Pretty
    impressive on many fronts.  How does it compare to other markets
    though?  This chart shows how several other world markets have done in the past twelve months.

    100405 World Market Similarities

    This quick glance around the globe shows remarkably similar performance across the markets. Note how closely the price patterns and peaks and valleys are to each other.

    100405 global-markets related It brings up two questions:

    1. Are these countries each really doing the same things right and
      wrong?
    2. Are world-wide expectations and responses really this similar?

    To get a closer look for yourself, here is a link to the charts.

    Perhaps more importantly, it brings up a
    third question:
    What's really causing the markets to behave so
    similarly?

    Recognizing What Is Happening, Is the First Step to Profiting From It.

    To profit in trading, it's more important to recognize what's happening,
    rather than to understand what's happening.

    The strength of the rallies don't make sense to me based on logic.  However, trends don't depend on logic. So, I dusted-off my copy of Trend Following and will simply ride the bucking
    bronco.

    But I Still Want to Know Why … Don't You?

    Occam's Razor suggests that the simplest explanation is most likely to be correct. So, when markets move in a virtual lockstep (despite many unsettling global variables), let's look for simple explanations.

    Here are a few ideas (ranging from silly to plausible).

    •  After watching the movie 2012, world leaders decided the one who dies
      with the most toys wins.
    • Human nature is consistent across cultures.
    • The recession is over, and we have begun a new global bull market.
    • Something unusual is happening, and we just don't know what it is.
    • Who Controls the MarketsWith consumers mostly out of the market, institutions figured-out how to buy and sell from each other, making relatively easy profits with minimal risk.
    • Governments agreed to temporarily suspend speculating in each other's
      markets, other than in the normal course of business.
    • Governments and central banks agreed to cooperate. Don't fight the Fed, especially when it's a cartel of Feds.

    From a Traders Perspective …

    There are still many things to watch, from a trader's perspective, despite the strong correlation among markets. For example: divergence patterns can provide early indications of moves in either direction; relative strength comparisons can show which markets are more likely to over or under-perform; and volume spikes can indicate something unusual happening. Nonetheless, the simple observation is that markets are trending higher, so the safest assumption is that the trend continues until evidence proves otherwise.

    My grandfather used to say: "you can fool some people, some of the time; but you can't fool all of the people, all of the time." He was not an exceptionally well-educated man, but he was a professional wrestler … so he knew something about stagecraft.  My guess is that one of the actors breaks character soon.  That tends to happen in most cartels.

    Focus on the Global Economy as Debt Worries Rise.

    Greece continues to stay in the news because a sustainable debt solution has not been agreed to and implemented. There are reports that smart-money is starting to bet against Greece.

    100405 Greece Still Needs a Handout

    America is not the next Greece, says Simon Johnson, MIT professor and former director of research for the IMF.

    Have a good week.

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

    Lighter Ideas and
    Fun Links
    that I Found Interesting This Week

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  • Capitalogix Commentary for the Week of 04/5/10

    The rally continues, and the S&P 500 has gotten back to new highs for the past year.  Pretty
    impressive on many fronts.  How does it compare to other markets
    though?  This chart shows how several other world markets have done in the past twelve months.

    100405 World Market Similarities

    This quick glance around the globe shows remarkably similar performance across the markets. Note how closely the price patterns and peaks and valleys are to each other.

    100405 global-markets related It brings up two questions:

    1. Are these countries each really doing the same things right and
      wrong?
    2. Are world-wide expectations and responses really this similar?

    To get a closer look for yourself, here is a link to the charts.

    Perhaps more importantly, it brings up a
    third question:
    What's really causing the markets to behave so
    similarly?

    Recognizing What Is Happening, Is the First Step to Profiting From It.

    To profit in trading, it's more important to recognize what's happening,
    rather than to understand what's happening.

    The strength of the rallies don't make sense to me based on logic.  However, trends don't depend on logic. So, I dusted-off my copy of Trend Following and will simply ride the bucking
    bronco.

    But I Still Want to Know Why … Don't You?

    Occam's Razor suggests that the simplest explanation is most likely to be correct. So, when markets move in a virtual lockstep (despite many unsettling global variables), let's look for simple explanations.

    Here are a few ideas (ranging from silly to plausible).

    •  After watching the movie 2012, world leaders decided the one who dies
      with the most toys wins.
    • Human nature is consistent across cultures.
    • The recession is over, and we have begun a new global bull market.
    • Something unusual is happening, and we just don't know what it is.
    • Who Controls the MarketsWith consumers mostly out of the market, institutions figured-out how to buy and sell from each other, making relatively easy profits with minimal risk.
    • Governments agreed to temporarily suspend speculating in each other's
      markets, other than in the normal course of business.
    • Governments and central banks agreed to cooperate. Don't fight the Fed, especially when it's a cartel of Feds.

    From a Traders Perspective …

    There are still many things to watch, from a trader's perspective, despite the strong correlation among markets. For example: divergence patterns can provide early indications of moves in either direction; relative strength comparisons can show which markets are more likely to over or under-perform; and volume spikes can indicate something unusual happening. Nonetheless, the simple observation is that markets are trending higher, so the safest assumption is that the trend continues until evidence proves otherwise.

    My grandfather used to say: "you can fool some people, some of the time; but you can't fool all of the people, all of the time." He was not an exceptionally well-educated man, but he was a professional wrestler … so he knew something about stagecraft.  My guess is that one of the actors breaks character soon.  That tends to happen in most cartels.

    Focus on the Global Economy as Debt Worries Rise.

    Greece continues to stay in the news because a sustainable debt solution has not been agreed to and implemented. There are reports that smart-money is starting to bet against Greece.

    100405 Greece Still Needs a Handout

    America is not the next Greece, says Simon Johnson, MIT professor and former director of research for the IMF.

    Have a good week.

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

    Lighter Ideas and
    Fun Links
    that I Found Interesting This Week

    Related articles by Zemanta
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