Market Commentary

  • Americans Starting to Feel Gas Pains

    Stratfor reports that car-loving Americans drove 11 billion fewer miles in March than they
    did a year earlier. The 4.3 percent decline is the first year-on-year decline since the
    1979 oil shock, and the sharpest decline ever. From: A Record-Setting Change in Driving Habits.  Zogby says behavior is changing because of demand elasticity (big words for drive less if it costs more).

    Oil prices have hit new highs and other commodity prices remain high. Obviously this is having an economic impact; but we should start seeing political and geopolitical impact. The first signs will be internal unrest and serious economic dislocations. The second will be interstate competition for resources.

    From a trader's perspective, it is important to determine whether oil is topping in price. One aspect of that is the amount of oil at sea in tankers. Stratfor reports that tanker rates surged recently, but not consumption. Oil holders, at highs, put their cargo on ships to try to time their sale on the spot market. When a lot of people do that there is a hidden overhang of supply. Something to think about.

    From a consumer's perspective, I'm amazed how often I hear people talk about the price of gas.  Here is an interesting way to compare prices.

    GasBuddy Price Heatmap
    GasBuddy has other features as well.  For example, here is a link to the lowest price found in Dallas.

  • What Do Bancruptcies Tell Us?

    Bankruptcy lawyers in Texas have been busy recently.  Past cycles have shown a surge of Chapter 11 Bankruptcy Reorganizations as early indicator of the end of tough economic times. 

    Makes sense though; Reorganization happens when someone wants to preserve an asset, but credit is tight.

    So, it is just a data point, but if it was a football game, my guess is that we'd be in the third quarter.  What do you think?

  • Weekly Market Commentary from 5/16/08

    2008_bear_on_bull_payback_time
    Is The Bear Still Lurking?

    Great market action for bulls recently.  If this has been a head-fake, it certainly was a convincing one.

    The major US Equity Indices are all moving up to their 2008 highs – into their 200-day moving averages.

    There has been a prolonged rally off the March lows, so you are going to hear lots of bearish predictors. It makes sense from the standpoint of price, time and logic.

    Right?

    For example:

    1. We are now "overbought" and the rally is approaching the 61.8% Fibonacci Retracement level;
    2. A re-test of the 50-Day moving average is a likely next move;
    3. That the Put/Call ratio is too bullish, and so is dumb-money confidence levels;
    4. The VIX is simply too low, and readings at these levels often precede big drops;
    5. Consumer confidence levels are at dangerously low levels (add inflation, housing, and gas …); and
    6. We are still in that range-bound congestion area, and the longer we stay here the more we spend upside momentum.

    But, you have to trade what the market brings you.  And the market has digested bad news well recently. More importantly, we know that markets don’t have to trade logically.  So keep your eyes open and respond intelligently.

    Here are some of the things I read this week.

  • Weekly Market Commentary from 5/16/08

    2008_bear_on_bull_payback_time
    Is The Bear Still Lurking?

    Great market action for bulls recently.  If this has been a head-fake, it certainly was a convincing one.

    The major US Equity Indices are all moving up to their 2008 highs – into their 200-day moving averages.

    There has been a prolonged rally off the March lows, so you are going to hear lots of bearish predictors. It makes sense from the standpoint of price, time and logic.

    Right?

    For example:

    1. We are now "overbought" and the rally is approaching the 61.8% Fibonacci Retracement level;
    2. A re-test of the 50-Day moving average is a likely next move;
    3. That the Put/Call ratio is too bullish, and so is dumb-money confidence levels;
    4. The VIX is simply too low, and readings at these levels often precede big drops;
    5. Consumer confidence levels are at dangerously low levels (add inflation, housing, and gas …); and
    6. We are still in that range-bound congestion area, and the longer we stay here the more we spend upside momentum.

    But, you have to trade what the market brings you.  And the market has digested bad news well recently. More importantly, we know that markets don’t have to trade logically.  So keep your eyes open and respond intelligently.

    Here are some of the things I read this week.

  • Weekly Market Commentary from 5/09/08

    While the market did pull back, as expected, it was orderly and relatively mild.

    The chart below shows daily view of a composite of the 5 markets we currently trade. 

    080509_composite_index_above_suppor
    The Markets are above the red support line and the yellow down-trend;
    both of those are bullish indicators.  Though not on the chart by itself, last week the S&P 500 index could not hold above the 1400 level that we’ve been following.  That is
    worth watching this week.

    Also note that this chart shows that
    the rally from March 10 through last week retraced just over 50% of the
    loss from the October highs. 

    The graphic below is a market heat map from FinViz that shows that last week was good for the Oil & Gas sector (because it shows up as mostly green) and bad for the Financials (shown mostly in bright red).

    080509_finviz_heatmapThis free site has a simple yet powerful stock screener, maps that allow you to see sector and stock rotation, and insider trading info.  It is worth checking-out.

  • Weekly Market Commentary from 5/09/08

    While the market did pull back, as expected, it was orderly and relatively mild.

    The chart below shows daily view of a composite of the 5 markets we currently trade. 

    080509_composite_index_above_suppor
    The Markets are above the red support line and the yellow down-trend;
    both of those are bullish indicators.  Though not on the chart by itself, last week the S&P 500 index could not hold above the 1400 level that we’ve been following.  That is
    worth watching this week.

    Also note that this chart shows that
    the rally from March 10 through last week retraced just over 50% of the
    loss from the October highs. 

    The graphic below is a market heat map from FinViz that shows that last week was good for the Oil & Gas sector (because it shows up as mostly green) and bad for the Financials (shown mostly in bright red).

    080509_finviz_heatmapThis free site has a simple yet powerful stock screener, maps that allow you to see sector and stock rotation, and insider trading info.  It is worth checking-out.

  • Market Commentary as of May 2, 2008

    The Bad News:

    The Good News:

    Somehow the market is finding a way to rise.  It is often tough to remember, yet price is the primary indicator; and it is going up.  That is a good sign, especially during periods of apparent bad news.

    This was another solid week for the major Indices, with virtually every index taking out their respective downtrend-lines for the week. Barron’s called it the best finish of 2008.

    The S&P 500 finally closed above the 1400 level for the first time since early January. If it holds, that upside breakout moved the S&P 500 out of a three-month trading range into an intermediate recovery.  The next major test likely will take place at its 200-day moving average and a trendline drawn over its October/December highs.

    Here is a similar chart of the NASDAQ.

    080502_nasdaq_resistance

    Please answer the poll below.

  • Market Commentary as of May 2, 2008

    The Bad News:

    The Good News:

    Somehow the market is finding a way to rise.  It is often tough to remember, yet price is the primary indicator; and it is going up.  That is a good sign, especially during periods of apparent bad news.

    This was another solid week for the major Indices, with virtually every index taking out their respective downtrend-lines for the week. Barron’s called it the best finish of 2008.

    The S&P 500 finally closed above the 1400 level for the first time since early January. If it holds, that upside breakout moved the S&P 500 out of a three-month trading range into an intermediate recovery.  The next major test likely will take place at its 200-day moving average and a trendline drawn over its October/December highs.

    Here is a similar chart of the NASDAQ.

    080502_nasdaq_resistance

    Please answer the poll below.

  • Loonie Commentary on the Dollar

    Canada_cocky_loonie Funny thing happened to me in Canada this week as I got off the plane and exchanged some money. I gave them $140 US – and they gave me $126 Canadian. Huh? That’s Loonie.

    As the Fed hints it may stop easing and the dollar may be bottoming,  an article on Bloomberg notes that "futures traders are betting for the first time since December 2005 that the dollar will gain against the euro."

  • Loonie Commentary on the Dollar

    Canada_cocky_loonie Funny thing happened to me in Canada this week as I got off the plane and exchanged some money. I gave them $140 US – and they gave me $126 Canadian. Huh? That’s Loonie.

    As the Fed hints it may stop easing and the dollar may be bottoming,  an article on Bloomberg notes that "futures traders are betting for the first time since December 2005 that the dollar will gain against the euro."