Market Commentary

  • 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.

    100506 Tough Day in the Markets
    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.

    100509 SP500 Decision Zone

    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.

    100509 VIX Shows Fear Entered the Market

    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

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    Reblog this post [with Zemanta]

  • 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.

    100506 Tough Day in the Markets
    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.

    100509 SP500 Decision Zone

    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.

    100509 VIX Shows Fear Entered the Market

    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

    Related articles by Zemanta
    Reblog this post [with Zemanta]

  • 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.

    SmartyHe 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.

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  • 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.

    SmartyHe 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
    Reblog this post [with Zemanta]

  • 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?

    100503 Dow Under Its Trend-Line
    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.

    100502 China Shanghai Index Break Down

    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.

    100503 Investors Intelligence 042810

    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.

    100503 Uncle Sam the Day-Trader

    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 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?

    100503 Dow Under Its Trend-Line
    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.

    100502 China Shanghai Index Break Down

    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.

    100503 Investors Intelligence 042810

    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.

    100503 Uncle Sam the Day-Trader

    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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    Reblog this post [with Zemanta]

  • Capitalogix Commentary for the Week of 04/26/10

    The rally has been strong. With the Dow Jones Industrial Average above 11,200, some are calling for an extended Bull market.

    100425 Happy Days Are Here Again Cartoon

    How Strong Has Breadth Been?  The Answer is “Pretty Strong“.

    With the advance over the past two months, the percentage of stocks above their 50-day moving average surged back towards prior highs. This chart shows that indicator is above 85% for the first time since January.

    100425 Percent of NYSE Stocks Above 50 Day Averages

    Some commentators take this as a strong bullish sign.  It helps to think of this indicator like a momentum oscillator. As such, it can become overbought and remain overbought during a strong uptrend. While relatively high readings may be considered overbought, it is also a sign of strength as long as this indicator remains at high levels. However, as the chart shows, a sharp decline below this level would increase the odds of a correction unfolding.

    What is the State of the Current Economy?

    Russell Investments publishes a nice summary of Market indicators.  In general, it shows that interest rates are high, and mortgage
    delinquencies are nearly off-the-chart, while most other indicators are
    at
    the low ends of their typical ranges.

    100425 State of the Economy

    Also worth noting, here, the VIX
    decreased to its lowest month-end level in over 33 months.

    Volatility is Coming Back to the Markets, Though.

    When the SEC announced civil fraud charges against Goldman Sachs, its shareholders proceeded to lose $12 billion.

    100416 Goldman Sachs' Bloodbath

    Here is what their stock is doing now.

    If you are interested, the lawsuit stems from Goldman’s 2007 Abacus
    deal.  Here
    is the presentation document they used to sell that deal    . 

    Here are some of the news items about this that caught my eye:

    • Why The SEC’s Theory Against Goldman Will Fail. (Forbes)
    • Goldman
      Sachs & the SEC – Greedy Until Proven Guilty. (Economist)
    • Goldman
      Sachs and America’s Regulation & Supervision Paradox. (Globalist)
    • Financial
      Reform? Obama to Wall St.: ‘Join Us, Instead of Fighting Us’. (NYTimes)

    The Lighter Side of the Issue.

    100420 Punished-For-Success

     Did you hear that
    Goldman Sachs made the Iceland volcano erupt? It did pretty well
    shorting airlines. 

    The Goldman Sachs lawsuit and financial reform are becoming common topics of every-day humor.

    It’s one thing when the business press writes about a topic, it’s another when it is the subject of a David Letterman Top-10 List, an on-going discussion on Jon Stewart, and the opening segment of Saturday Night Live.  What do you think it means that this issue is now in the mass media?

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

    • Intel Profits and Outlook Blow Past Expectations (DailyFinance)
    • IBM Q1 Earnings Beat Street: Growth May Be Returning To The Tech
      Sector. (InfoWeek)
    • Data Shows U.S. Service Sector is Expanding. (Time)
    • Speculators Predict A 20% Collapse In
      The NASDAQ. (BusinessInsider)
    • Louis
      Navellier on Why the Market’s Rally Will End Next Week.
      (Forbes)
    • More Posts
      Moving the Markets      .

    Lighter Ideas and
    Fun Links
    that I Found Interesting This Week

    • Third of U.S. Teens With Phones Text 100 Times a Day. (Reuters)
    • Arizona ‘Birther Bill’ Requires Obama to Show Birth Certificate.
      (Newser)
    • Next Generation iPhone Found in a Bar. Here Are the Details. (YNews)
    • Cirque du Soleil Plans Michael Jackson Shows. (WSJ)
    • Does Brain Training Work? Doing Anything is Better
      than Nothing. (NewScientist)
    • More
      Posts with Lighter Ideas and Fun Links      .

    Related articles by Zemanta
    Reblog this post [with Zemanta]

  • Capitalogix Commentary for the Week of 04/26/10

    The rally has been strong. With the Dow Jones Industrial Average above 11,200, some are calling for an extended Bull market.

    100425 Happy Days Are Here Again Cartoon

    How Strong Has Breadth Been?  The Answer is “Pretty Strong“.

    With the advance over the past two months, the percentage of stocks above their 50-day moving average surged back towards prior highs. This chart shows that indicator is above 85% for the first time since January.

    100425 Percent of NYSE Stocks Above 50 Day Averages

    Some commentators take this as a strong bullish sign.  It helps to think of this indicator like a momentum oscillator. As such, it can become overbought and remain overbought during a strong uptrend. While relatively high readings may be considered overbought, it is also a sign of strength as long as this indicator remains at high levels. However, as the chart shows, a sharp decline below this level would increase the odds of a correction unfolding.

    What is the State of the Current Economy?

    Russell Investments publishes a nice summary of Market indicators.  In general, it shows that interest rates are high, and mortgage
    delinquencies are nearly off-the-chart, while most other indicators are
    at
    the low ends of their typical ranges.

    100425 State of the Economy

    Also worth noting, here, the VIX
    decreased to its lowest month-end level in over 33 months.

    Volatility is Coming Back to the Markets, Though.

    When the SEC announced civil fraud charges against Goldman Sachs, its shareholders proceeded to lose $12 billion.

    100416 Goldman Sachs' Bloodbath

    Here is what their stock is doing now.

    If you are interested, the lawsuit stems from Goldman’s 2007 Abacus
    deal.  Here
    is the presentation document they used to sell that deal    . 

    Here are some of the news items about this that caught my eye:

    • Why The SEC’s Theory Against Goldman Will Fail. (Forbes)
    • Goldman
      Sachs & the SEC – Greedy Until Proven Guilty. (Economist)
    • Goldman
      Sachs and America’s Regulation & Supervision Paradox. (Globalist)
    • Financial
      Reform? Obama to Wall St.: ‘Join Us, Instead of Fighting Us’. (NYTimes)

    The Lighter Side of the Issue.

    100420 Punished-For-Success

     Did you hear that
    Goldman Sachs made the Iceland volcano erupt? It did pretty well
    shorting airlines. 

    The Goldman Sachs lawsuit and financial reform are becoming common topics of every-day humor.

    It’s one thing when the business press writes about a topic, it’s another when it is the subject of a David Letterman Top-10 List, an on-going discussion on Jon Stewart, and the opening segment of Saturday Night Live.  What do you think it means that this issue is now in the mass media?

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

    • Intel Profits and Outlook Blow Past Expectations (DailyFinance)
    • IBM Q1 Earnings Beat Street: Growth May Be Returning To The Tech
      Sector. (InfoWeek)
    • Data Shows U.S. Service Sector is Expanding. (Time)
    • Speculators Predict A 20% Collapse In
      The NASDAQ. (BusinessInsider)
    • Louis
      Navellier on Why the Market’s Rally Will End Next Week.
      (Forbes)
    • More Posts
      Moving the Markets      .

    Lighter Ideas and
    Fun Links
    that I Found Interesting This Week

    • Third of U.S. Teens With Phones Text 100 Times a Day. (Reuters)
    • Arizona ‘Birther Bill’ Requires Obama to Show Birth Certificate.
      (Newser)
    • Next Generation iPhone Found in a Bar. Here Are the Details. (YNews)
    • Cirque du Soleil Plans Michael Jackson Shows. (WSJ)
    • Does Brain Training Work? Doing Anything is Better
      than Nothing. (NewScientist)
    • More
      Posts with Lighter Ideas and Fun Links      .

    Related articles by Zemanta
    Reblog this post [with Zemanta]

  • 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

    Related articles by Zemanta
    Reblog this post [with Zemanta]

  • 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

    Related articles by Zemanta
    Reblog this post [with Zemanta]