Market Commentary

  • Capitalogix Commentary 06/28/09

    Rolling Stone is not where I typically read insightful Market commentary.  Nonetheless, Matt Taibbi wrote a piece for them you should read.  The article is called "The Great American Bubble Machine", and it details Goldman Sachs' role in engineering every major market manipulation since the Great Depression.  Take a look.

    0906028 Goldman Sachs Bubble Machine Article Link

    Also, here is a link to the text of the article.

    Other Asset Classes.

    This chart caught my eye.  It shows the top-ten residential real-estate markets, and let's just say none of them are around here.  Click the picture to go to Reiden's site for more data.

    0906028 Most Expensive Real Estate 

    I guess Goldman Sachs isn't the only one who can create Bubbles. 

    Also, I'm hearing a lot more rumblings from experienced traders about buying a little gold.  Richard Russell, of Dow Theory fame, says: “The way the world is going, ‘gold will be the last man standing’. Gold will be wanted because unlike everything else, gold can not go bankrupt. Gold has no debt against it, gold is not the product of some nation’s central bank. Gold is pure intrinsic wealth. It needs no nation to guarantee it. Gold is outside the paper system.”

    Confidence In the U.S. Equity Markets.

    The VIX closed at 25.93 today, down more than 16% from Monday’s close of 31.17 to the lowest closing level since September 12, 2008 – the last trading day before the Lehman Brothers bankruptcy was announced.  A rise in volatility from these levels would likely be bearish.

    0906028 VIX At Recent Lows

    Bespoke notes that the Michigan Confidence joins the growing number of indicators that are now at or better than Pre-Lehman levels.  It is currently at its highest level since January 2008.  This month's reading is also the fourth consecutive month-over-month increase in confidence.  

    Market Metaphor?

    This NYC hotel claims that one of its rooms is not only a tourist attraction, but is “art”. Art that starts to smell bad in warm weather.

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

    • Why Isn't The Stimulus Stimulating? Seems Like Speed Will Matter. (Forbes)
    • World Economy Tracking or Doing Worse than the Great Depression. (VoxEU)
    • Morgan Stanley Topples Goldman as M&A Leader this Year. (NYPost)
    • List of Banks with the Biggest Profits and Losses Last Year. (Economist)
    • Tech Sector Strength May Be Weaker than Claimed. (Barrons)
    • Why Computers Can't – Yet – Consistently Beat the Market. (Forbes)
    • Michael Jakson's Debt, Private Equity & His Hedge Fund Backer. (FinAlternatives)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • What Is Your Favorite Michael Jackson Song? Interactive Retrospective. (NYTimes)
    • Windows 7 at Half Price: Why is Microsoft Offering Discounts? (InformationWeek)
    • New Defense Industry Niche: Researchers Developing Tiny Flying Spies. (Forbes)
    • New Book on the Secret History of the National Security Agency. (USNews)
    • Super-Intelligence: When Will Computers Be Smarter Than Us? (Forbes)
    • Google Voice: Smarter Phone Calls for Your Smart Phones. (NewScientist)
    • Can You Get Fit in Six Minutes a Week? The Research is Promising. (NYTimes)
    • More Posts with Lighter Ideas and Fun Links.

  • Capitalogix Commentary 06/28/09

    Rolling Stone is not where I typically read insightful Market commentary.  Nonetheless, Matt Taibbi wrote a piece for them you should read.  The article is called "The Great American Bubble Machine", and it details Goldman Sachs' role in engineering every major market manipulation since the Great Depression.  Take a look.

    0906028 Goldman Sachs Bubble Machine Article Link

    Also, here is a link to the text of the article.

    Other Asset Classes.

    This chart caught my eye.  It shows the top-ten residential real-estate markets, and let's just say none of them are around here.  Click the picture to go to Reiden's site for more data.

    0906028 Most Expensive Real Estate 

    I guess Goldman Sachs isn't the only one who can create Bubbles. 

    Also, I'm hearing a lot more rumblings from experienced traders about buying a little gold.  Richard Russell, of Dow Theory fame, says: “The way the world is going, ‘gold will be the last man standing’. Gold will be wanted because unlike everything else, gold can not go bankrupt. Gold has no debt against it, gold is not the product of some nation’s central bank. Gold is pure intrinsic wealth. It needs no nation to guarantee it. Gold is outside the paper system.”

    Confidence In the U.S. Equity Markets.

    The VIX closed at 25.93 today, down more than 16% from Monday’s close of 31.17 to the lowest closing level since September 12, 2008 – the last trading day before the Lehman Brothers bankruptcy was announced.  A rise in volatility from these levels would likely be bearish.

    0906028 VIX At Recent Lows

    Bespoke notes that the Michigan Confidence joins the growing number of indicators that are now at or better than Pre-Lehman levels.  It is currently at its highest level since January 2008.  This month's reading is also the fourth consecutive month-over-month increase in confidence.  

    Market Metaphor?

    This NYC hotel claims that one of its rooms is not only a tourist attraction, but is “art”. Art that starts to smell bad in warm weather.

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

    • Why Isn't The Stimulus Stimulating? Seems Like Speed Will Matter. (Forbes)
    • World Economy Tracking or Doing Worse than the Great Depression. (VoxEU)
    • Morgan Stanley Topples Goldman as M&A Leader this Year. (NYPost)
    • List of Banks with the Biggest Profits and Losses Last Year. (Economist)
    • Tech Sector Strength May Be Weaker than Claimed. (Barrons)
    • Why Computers Can't – Yet – Consistently Beat the Market. (Forbes)
    • Michael Jakson's Debt, Private Equity & His Hedge Fund Backer. (FinAlternatives)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • What Is Your Favorite Michael Jackson Song? Interactive Retrospective. (NYTimes)
    • Windows 7 at Half Price: Why is Microsoft Offering Discounts? (InformationWeek)
    • New Defense Industry Niche: Researchers Developing Tiny Flying Spies. (Forbes)
    • New Book on the Secret History of the National Security Agency. (USNews)
    • Super-Intelligence: When Will Computers Be Smarter Than Us? (Forbes)
    • Google Voice: Smarter Phone Calls for Your Smart Phones. (NewScientist)
    • Can You Get Fit in Six Minutes a Week? The Research is Promising. (NYTimes)
    • More Posts with Lighter Ideas and Fun Links.

  • Capitalogix Commentary 06/21/09

    Time flies when you are having fun.  We're almost halfway through the year, and the markets have rallied now for three-plus months. That sounds positive … So why are so many people focused on the  Federal Reserve's two-day meeting that ends Wednesday?  My guess is that many investors will be watching for any changes in the long-term economic outlook.

    So we are at a Tipping Point, once again.  There is cash on the sidelines waiting for a sign that it's safe to get back in the game; and there are investors who are looking to protect their rally profits, or are afraid of the next leg down.

    This daily chart of the Dow Jones Industrial Average Index highlights what bulls and bears see.  We'll soon know which is more committed.

    090621 Dow Analysis 600p

    From my perspective, I understand why discretionary traders might want to try to buy this pull-back.  There is a clear Risk-Reward; and it's easy to set your stop.  However, experience warns me to be wary of set-ups like this where market breadth is weakening.  My wife doesn't like charts that have too many marks on them … she says they are confusing.  So I tried to find a different image that conveys what this chart may be whispering to the little bird.

    I Feel Good

    Finally, I was reading Paul Kedrosky's blog when I ran across this chart showing the price of crude oil from 1861 through 2208.  It comes from BP.  It provides an interesting perspective.

    090621 Crude Oil Prices Since 1861

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

    Lighter Ideas and Fun Links that I Found Interesting This Week

  • Capitalogix Commentary 06/21/09

    Time flies when you are having fun.  We're almost halfway through the year, and the markets have rallied now for three-plus months. That sounds positive … So why are so many people focused on the  Federal Reserve's two-day meeting that ends Wednesday?  My guess is that many investors will be watching for any changes in the long-term economic outlook.

    So we are at a Tipping Point, once again.  There is cash on the sidelines waiting for a sign that it's safe to get back in the game; and there are investors who are looking to protect their rally profits, or are afraid of the next leg down.

    This daily chart of the Dow Jones Industrial Average Index highlights what bulls and bears see.  We'll soon know which is more committed.

    090621 Dow Analysis 600p

    From my perspective, I understand why discretionary traders might want to try to buy this pull-back.  There is a clear Risk-Reward; and it's easy to set your stop.  However, experience warns me to be wary of set-ups like this where market breadth is weakening.  My wife doesn't like charts that have too many marks on them … she says they are confusing.  So I tried to find a different image that conveys what this chart may be whispering to the little bird.

    I Feel Good

    Finally, I was reading Paul Kedrosky's blog when I ran across this chart showing the price of crude oil from 1861 through 2208.  It comes from BP.  It provides an interesting perspective.

    090621 Crude Oil Prices Since 1861

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

    Lighter Ideas and Fun Links that I Found Interesting This Week

  • Capitalogix Commentary 05/14/09

    Swine Flu Symptoms

    The Swine Flu made headlines again.  Apparently, no one cares that the the U.N.'s World Health Organization officially declared the outbreak to be a "pandemic" this week.  If you don't know what to look for,  this picture illustrates some symptoms.

    If the Markets' continued rally is taken as evidence, then it also appears that people don't care about the threats weighing down the economy.  The Major U.S. Index Averages are holding above their 200-Day declining moving averages and overhead resistance.  Also, Bespoke notes that eighty-four percent of the stocks in the S&P 500 are trading above their 50-day moving averages.  With that said, momentum is waning … three months into the rally. 

    Of course, the length and staying power of the rally says something about how crowds work, and why the majority of traders are often wrong at turning points in the market.  The following video makes the same point, a different way.  On the surface, it starts with a lone male, dancing at a music festival.  It is fascinating to watch what happens when other people feel the urge to get in on the fun. It takes about one-minute for people to start joining in.  By two-minutes, there's a crowd.  And by three, it's a mob.

    Here is the direct link to the video on YouTube.  This says something about human nature, doesn't it?

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

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • The Top Twelve Funny Indicators That The Economy Is Bad. (Big Picture)
    • Why Microsoft Windows 7 XP Mode is a Major Advancement. (eWeek)
    • Making Fat Disappear with a Genetic Strategy from Bacteria. (Tech Review)
    • When Sleep Leaves You Tired: It's the Quality, Not Quantity. (WSJ)
    • When a 'Chosen' Tibetan Lama Says "No Thanks". (Time)
    • How Twitter Will Change the Way We Live. (Time)
    • More Posts with Lighter Ideas and Fun Links.

  • Capitalogix Commentary 05/14/09

    Swine Flu Symptoms

    The Swine Flu made headlines again.  Apparently, no one cares that the the U.N.'s World Health Organization officially declared the outbreak to be a "pandemic" this week.  If you don't know what to look for,  this picture illustrates some symptoms.

    If the Markets' continued rally is taken as evidence, then it also appears that people don't care about the threats weighing down the economy.  The Major U.S. Index Averages are holding above their 200-Day declining moving averages and overhead resistance.  Also, Bespoke notes that eighty-four percent of the stocks in the S&P 500 are trading above their 50-day moving averages.  With that said, momentum is waning … three months into the rally. 

    Of course, the length and staying power of the rally says something about how crowds work, and why the majority of traders are often wrong at turning points in the market.  The following video makes the same point, a different way.  On the surface, it starts with a lone male, dancing at a music festival.  It is fascinating to watch what happens when other people feel the urge to get in on the fun. It takes about one-minute for people to start joining in.  By two-minutes, there's a crowd.  And by three, it's a mob.

    Here is the direct link to the video on YouTube.  This says something about human nature, doesn't it?

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

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • The Top Twelve Funny Indicators That The Economy Is Bad. (Big Picture)
    • Why Microsoft Windows 7 XP Mode is a Major Advancement. (eWeek)
    • Making Fat Disappear with a Genetic Strategy from Bacteria. (Tech Review)
    • When Sleep Leaves You Tired: It's the Quality, Not Quantity. (WSJ)
    • When a 'Chosen' Tibetan Lama Says "No Thanks". (Time)
    • How Twitter Will Change the Way We Live. (Time)
    • More Posts with Lighter Ideas and Fun Links.

  • Capitalogix Commentary 06/07/09

    Last week, as the Markets approached their 200-Day declining moving averages and overhead resistance, I said that a sustained break-out to the upside would be significant here. 

    Well, the Markets gapped higher last Monday, and held their ground.  From most logical and technical perspectives the action has seemed relatively healthy considering the circumstances … three months into the rally. 

    It is somewhat funny that unemployment continues to go up, but people focus on how the increase is slowing.  This seems to be happening on several fronts.

    Stantis-DecayingSlower-RGB

    Frankly, from a trading perspective, a bullish response to bad news is a bullish sign.  And I don't want to look a gift horse in the mouth, either.  This Market is quite well-behaved, and has acted as if "Bull-Rules" apply.  So, trade what the market gives you. Still, from another standpoint, I'd like to see a pull-back. 

    Money Shot: A Commentary On Investing.

    What is so funny about this video is that the people being interviewed don't know they are a satire of the investment market as a whole.  It is worth watching.  Hope you enjoy it.

    The Daily Show With Jon Stewart M – Th 11p / 10c
    Money Shot
    thedailyshow.com
    Daily Show
    Full Episodes    		 Political Humor Economic Crisis

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

    • Jim Rogers 100% Long For The First Time Since '87. (Street Insider)
    • New Bull: Does Rare Coppock Curve Pattern Signal the Next Move? (CNBC)
    • Was 2008 an Outlier? Not as Much as You Might Think. (SeekingAlpha)
    • Is Microsoft Repeating GM's Mistakes? (Infoworld)
    • What Does Tivo's Patent Win Mean For Investors? (WSJ)
    • Banks Raising Billions to Repay Government. (DealBook)
    • Taleb's ‘Black Swan’ Hedge Fund Bets On Hyperinflation. (FinAlternatives)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Becoming a Savant: How To Unleash Your Brain's Inner Genius. (New Scientist)
    • Why Meetings Suck: The Four Quadrants of Communication. (Integral Life)
    • Will Google Wave Transform How You Communicate And Collaborate? (ZDNet)
    • It Just Got Easier to Port Virtual Apps into the Cloud. (Tech Review)
    • Microsoft Readies Incentives For You To Adopt Windows 7. (ZDNet)
    • Personalized Medicine Could Be The Next Big Thing. (Forbes)
    • How Casinos Find and Target Their Favorite Customers. (Wharton)
    • More Posts with Lighter Ideas and Fun Links.

    TXT

  • Capitalogix Commentary 05/31/09

    A Different Form of Rescue for G.M., Through Bankruptcy.Auto Industry Natural Selection

    President Obama will push General Motors into bankruptcy protection on Monday, making a risky economic and political bet that by nationalizing the onetime icon of American capitalism, he can save the company as a much smaller automaker that is competitive.

    Still, The Market's Rally Persists.

    The Markets continue to hold-up well three months into the rally.  From my standpoint, I'd like to see a pull-back.  However, the action has seemed relatively healthy considering the circumstances. 

    The chart below shows a daily view of the S&P 500 since its March lows.  I marked the obvious Bull and Bear cases for your review.  A sustained break-out to the upside would be significant here.

    090531 SP500 Consolidation

    I don't normally post intra-day charts; however, Friday was interesting.  We spent the day bouncing within a tight range … then somebody started buying.  I hear people reference the "Boys" or the "Plunge Protection Team", or explain the push as "End-of-Month Window Dressing" or "Short-Covering."  Here is an hourly chart showing Wednesday, Thursday, and Friday.

    090531 SP500 Consolidation Spike

    From my perspective, all it means was there was a lack of sellers.  Let's see if they come back in June.

    What Goes Up, Must Come Down:  Or Does It?

    The rally did not just happen here in America.  This chart, from Bespoke, shows how far the fast growing developing countries have come this year. 

    BRIC Country Equity Index Performance YTD 2009

    When I see charts like this, one part of me thinks, "look how far they've come"; and another part of me thinks, "look how far they are likely to fall."

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

    • Sell In May? Not This Time … as the Rally Continued. (Seeking Alpha)
    • Many Hedge Funds Caught Short by the Rally, Still Have Not Fully Bought-In. (WSJ)
    • Will Money Flow Back Into The Markets, Or Will The Sidelines Stay Crowded? (WSJ)
    • Economists Disagree Whether A Sustainable Recovery Has Begun. (Market Oracle)
    • Hulbert's Contrarian Take On Consumer Confidence. (MarketWatch)
    • Tivo Posts Loss As Its Growth Slows. (NYTimes)
    • Dell Warns PC Market Hasn't Hit Bottom; Suffers 63% Drop In Quarterly Profit. (WSJ)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Susan Boyle's Final Performance on the "Britain's Got Talent" Final. (YouTube)
    • The Science of Voodoo – How Mind Attacks Body. (New
      Scientist      )

    • Shark Tank: New Reality Show Where Entrepreneurs Pitch To VCs. (WSJ Blogs)
    • Is Cloud-Computing a Myth or a Worthy Goal? (Forbes)
    • New Form of Warfare? Mysterious Computer Virus Strikes FBI. (ZDNet)
    • Thought Provoking Article about Author-Strategist, Jim Collins. (NYTimes)
    • How IBM Plans To Win Jeopardy! With
      Natural-Language Processing. (Tech Review)
    • More Posts with Lighter Ideas and Fun Links.

  • Capitalogix Commentary 05/31/09

    A Different Form of Rescue for G.M., Through Bankruptcy.Auto Industry Natural Selection

    President Obama will push General Motors into bankruptcy protection on Monday, making a risky economic and political bet that by nationalizing the onetime icon of American capitalism, he can save the company as a much smaller automaker that is competitive.

    Still, The Market's Rally Persists.

    The Markets continue to hold-up well three months into the rally.  From my standpoint, I'd like to see a pull-back.  However, the action has seemed relatively healthy considering the circumstances. 

    The chart below shows a daily view of the S&P 500 since its March lows.  I marked the obvious Bull and Bear cases for your review.  A sustained break-out to the upside would be significant here.

    090531 SP500 Consolidation

    I don't normally post intra-day charts; however, Friday was interesting.  We spent the day bouncing within a tight range … then somebody started buying.  I hear people reference the "Boys" or the "Plunge Protection Team", or explain the push as "End-of-Month Window Dressing" or "Short-Covering."  Here is an hourly chart showing Wednesday, Thursday, and Friday.

    090531 SP500 Consolidation Spike

    From my perspective, all it means was there was a lack of sellers.  Let's see if they come back in June.

    What Goes Up, Must Come Down:  Or Does It?

    The rally did not just happen here in America.  This chart, from Bespoke, shows how far the fast growing developing countries have come this year. 

    BRIC Country Equity Index Performance YTD 2009

    When I see charts like this, one part of me thinks, "look how far they've come"; and another part of me thinks, "look how far they are likely to fall."

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

    • Sell In May? Not This Time … as the Rally Continued. (Seeking Alpha)
    • Many Hedge Funds Caught Short by the Rally, Still Have Not Fully Bought-In. (WSJ)
    • Will Money Flow Back Into The Markets, Or Will The Sidelines Stay Crowded? (WSJ)
    • Economists Disagree Whether A Sustainable Recovery Has Begun. (Market Oracle)
    • Hulbert's Contrarian Take On Consumer Confidence. (MarketWatch)
    • Tivo Posts Loss As Its Growth Slows. (NYTimes)
    • Dell Warns PC Market Hasn't Hit Bottom; Suffers 63% Drop In Quarterly Profit. (WSJ)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Susan Boyle's Final Performance on the "Britain's Got Talent" Final. (YouTube)
    • The Science of Voodoo – How Mind Attacks Body. (New
      Scientist      )

    • Shark Tank: New Reality Show Where Entrepreneurs Pitch To VCs. (WSJ Blogs)
    • Is Cloud-Computing a Myth or a Worthy Goal? (Forbes)
    • New Form of Warfare? Mysterious Computer Virus Strikes FBI. (ZDNet)
    • Thought Provoking Article about Author-Strategist, Jim Collins. (NYTimes)
    • How IBM Plans To Win Jeopardy! With
      Natural-Language Processing. (Tech Review)
    • More Posts with Lighter Ideas and Fun Links.

  • Capitalogix Commentary 05/24/09

    090523 Magician A good magician misdirects your focus with clever patter, distracting gestures and a pretty assistant.  Why does that remind me about the current state of market perception and the economy? 

    Perhaps in part because of the rosy picture the recent rally paints, while few notice the plunge in S&P 500 earnings.  That means the great bargain you think you are buying isn't such a bargain.

    Stocks Are Expensive Again.

    The chart below, from Chart of the Day, illustrates how this plunge in earnings has impacted the current valuation of the stock market as measured by the price to earnings ratio (PE ratio).

    Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s).

    As a result of the current plunge in earnings and the recent 2.5 month stock market rally, the PE ratio has spiked to the low 120s – a record high.

    090523 Stocks High PE Ratio

    Click here for a different perspective on this chart. 

    Precious Metals Are Performing Well.

    At the same time, there is another trend worth watching.  Money is moving to gold.

    090522 Gold is Hot Banks and Retail Are Not

    The chart displays the relative performance of several market sectors over the past few weeks.  The chart below shows the same data, but compared to Gold as the baseline.  It highlights how dramatically the other markets have under-performed recently.

    090522 Gold Performing Better

    The recent financial crisis has clearly re-ignited investor interest in precious metals.  Many believe that gold and silver are good bets during tough times – and a hedge against inflation.  So it doesn't surprise me that I'm hearing more investors using Warehouse Depositary Receipts to actually take delivery of the asset rather than just speculating.

    What To Expect.

    A short-term bounce wouldn't surprise me here.  The markets have held-up fairly well after the big rally.  So another test higher makes sense.  However, based on the weakening internals, the intermediate-term outlook is looking more bearish to me.

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

    • Will the Fed's Medicine have Inflationary Side-Effects? (WSJ)
    • Treasury's Next Phase Of Bank Rescue: Buying Toxic Assets. (Dealbook NYTimes)
    • Two Tech IPOs This Week: Is The Dry Spell Over? (NYTimes)
    • Financiers In China Are Getting Leery Of Dollars & Are Accumulating Gold. (Forbes)
    • Russians Offers to Invest $200 Million in Facebook at $10 Billion valuation. (WSJ)
    • Despite Russia's Struggling Economy, Its Market Surges. (NYTimes)
    • Is A Low VIX Good? Not In My Experience. Who's Afraid Of the Bear? (Money)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • How Well Can You Live In India On $2 Per Day? (Slate)
    • Verne Harnish Insights & Best Practices for Growing Leaders and Companies. (Blog)
    • In Praise of Dullness: the CEO Traits That Most Help Them Thrive. (NYTimes)
    • When Will Computer Intelligence Surpass Our Own? (NYTimes)
    • IBM Unveils Software to Find Trends in Vast Data Sets. (NYTimes)
    • Kindle Books Now Account for 35% of Sales When Available. (Business Insider)
    • Why Predictions Based On Search Were Wrong About 'Idol' Winner. (MediaPost)
    • More Posts with Lighter Ideas and Fun Links.