Capitalogix

Technology Makes Holiday Shopping Easier This Year

Shopping is crazy during the holiday season.  Here is a picture of someone who drove their car into a Walmart because the line was too long. 

image from People of Walmart.

If you are looking for a good deal and want to avoid crowds, try the Camel Farm.

It's a strange name ... and a great site. They provide historical price charts for Amazon and other retailers -- so you know you are getting a great deal.  Here is an example, but you can choose any product.  It works great.

They also will send you price drop alerts via email, and have an intuititve system to help you find deals.

 

Another service I like is Bountii.

You can look here for other shopping tools and services.

Keep shopping.  The economy needs you.  

Related articles

• Don't Start Your Holiday Shopping Without This Amazon iPhone App (businessinsider.com)
• A two-tiered Black Friday (ftalphaville.ft.com)
• 10 iPhone Apps That Make Holiday Shopping Easier (businessinsider.com)

Some New TSA Slogans to Brighten Your Holiday Travel

Holiday travel can pose challenges, and the new security requirements add to them.  The TSA is just doing their job.  Here are some humorous ways to look at it.

For more, click here.

Related articles

• TSA Skit: SNL's Parody of the Airport Security (VIDEO) (rightcelebrity.com)
• TSA Chief Asks Holiday Travelers for Patience - ABC News (news.google.com)
• Economics versus the TSA (blogs.forbes.com)

Capitalogix Commentary 11/22/10 - Smart versus Dumb Money

Market Commentary

A flat market doesn't mean that nothing happened.  Last week may have started and ended in about the same place; however, the market showed a lot of resilience.

Where Did The Fear Go?

The lack of fear and the lack of selling pressure is surprising to me.  On one hand, that is a bullish sign.  On the other hand, sentiment is often a contrary indicator.

One well known measure is the Chicago Board Options Exchange Volatility Index (commonly referred to as the VIX), a measure of fear and how much investors are willing to pay for options as protection against declines in their portfolios, has drifted down to levels that were coincident with short-term market tops in April 2010 and a series of tops in 2007 and 2008.

In addition, the latest report by Investors Intelligence measuring the sentiment of investment newsletters, shows 56.2% are bullish, while only 20.2% are bearish.  This is the highest level of bullishness since December, 2007 (which was just a couple of months after the severe 2007-2009 bear market began).

Likewise, the weekly poll of its members by the American Association of Individual Investors, showed sentiment had reached 57.6% bullish last week, its highest level in a number of years, higher than just before the 2007 bull market top (54.6% bullish), higher than just before the top in January of this year (49.2%) and higher than just before the April top (48.5% bullish).

It plunged to only 40.0% bullish this week, which had some pundits saying, "Ah, that removes the risk from the investor sentiment side."  But, according to Sy Harding, unfortunately that's not how it usually works.

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.

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).

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

• U.S. Pursues Sweeping Insider-Trading Probe. Seems Like a Big One. (WSJ)
• G.M.'s Return to Stock Market Brings In Over $23 Billion. (Dealbook & YFinance)
• Why Our Economy Can’t Afford More G.M. “Success” Stories. (HF)
• 24 Statistics About the U.S. Economy Almost Too Embarrassing to Admit. (BizInsider)
• Where Economics, Psychology & Statistics Intersect. (SFO-Mag)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Are You a Multiplier or Diminisher - a Genius or Genius-Maker? (Coach & YouTube)
• Did China 'Hijack' the Internet? The Pentagon Says They Did. (TheWeek & Reuters)
• Google Offers Staff Engineer $3.5 Million To Turn Down Facebook Offer. (TechCrunch)
• List of the Most Expensive University Prices. The Expanding 50K Club. (Chronicle)
• Visit Oxford's Word Graveyard. (SaveTheWords)
• More Posts with Lighter Ideas and Fun Links.

Related articles

• Smart Money Is "Selling the News" (minyanville.com)
• NDR Crowd Sentiment Poll At April 2010 Highs (tradersnarrative.com)
• Are Investors All In? (bespokeinvest.com)

Capitalogix Commentary 11/16/10 - Reality Check

This latest round of quantitative easing is pretty straight forward. Bernanke isn't even pretending that that QE will actually benefit the real economy.  His lack of pretense is almost brazen.  For example, he posted this in an Op-Ed piece in the Washington Post: 

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action.

Does it surprise you that Bernanke's evidence of success is that the market moved higher? Does it matter if the progress is tangible economic progress (or is improving against expectations enough)?

Of course, Bernanke hopes the wealth effect from stocks will be a catalyst to real economic gain; but to many analysts, it still reeks of manipulation and intentional bubble-blowing.

Taleb Is Saying That Ben Bernanke is a Serial Plane Crasher.

On one hand, Taleb is entitled to his opinions (even if he takes a few liberties with the facts).  On the other hand, what I'm watching is how people (read, "the market") react.  Here is a video of a recent Taleb media appearance.

 

So, what do you think the smart money is going to do?

Corporate Insiders Dumping Stock at a Record Pace.

Quantitative Easing is supposed to drive stocks up, creating a wealth effect that restores confidence to the economy and spurs more business activity. However, insider selling is way up since the QE2 announcement.

Cisco had a big earnings miss, which sent its shares down 15%.  Meanwhile, Cisco insiders had been selling stuck for the past six month.  During that period, the scorecard shows 6.6M shares sold - and 0 shares bought; well played.

In fact, insider selling hit an all-time record last week. And it isn't over; Steve Ballmer disclosed that he will try to sell $75 million of his Microsoft stock this year.

A Note For Contrarians.

While insiders are selling and global markets are reversing, bullish sentiment soars. Small investor bullishness is back to 2007 levels! Traders will be watching for signs of weakness because this is what happens around a top.

Watch for Bear Droppings.

After a massive rally, it is natural to start looking for a correction. With the recent market action drifting lower - some are questioning whether this could be the start of a more sustained decline?

The answer is ... sure (it could be); but, probably not.

A trader reminds that the market "eats like a bird and poops like a bear". If the market is not "pooping" like a bear, then it is probably not ready to have a sustained correction.

Early indicators and theories are great because they remind you to pay attention.   However, price is the primary indicator.  As long as the market is going up, all we know is that it is going up (and to pay attention).

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

• Is Bernanke Engaging In The Monetary Equivalent Of Nuclear War? (BizInsider)
• Jim Rogers Says the Fed's Bernanke "Doesn't Understand" Economics. (Bloomberg)
• G-20 Summit Ends with an Agreement to Disagree. (LATimes & TDB)
• Could We See a Global Monetary System That Puts Gold in the Mix? (WSJ)
• Beware Blanket Statements: like "Don't Fight the Fed". (CapitalObserver)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Leadership Secrets of Winston Churchill (Forbes)
• The Next Shift: Social-Networking Services to Replace E-Mail. (TechCrunch & Gartner)
• Robot "Chatbot" Debates Climate Change Deniers via Twitter. (SmarterTech)
• Tracking Happiness: Is Daydreaming Linked to Bad Moods? (Newser)
• Twinkie Diet Helps Nutrition Professor Lose 27 Pounds. (CNN & TheWeek)
• More Posts with Lighter Ideas and Fun Links.

Related articles

• "The Most Ignorant Remarks Ever Made by a Central Banker" (pragcap.com)
• Sentiment Overview: Week Of November 12th, 2010 (tradersnarrative.com)
• Jeremy Grantham's Latest Is Out, And It Stars Bernanke As A Zombie Hellbent On Destroying The Economy (businessinsider.com)

An Explanation of Quantitative Easing You'll Enjoy Watching

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.

Capitalogix Commentary 11/08/10 - Don't Fight the Fed

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:

• How to Profit From the Fed's New Moves. (WSJ)
• Investors Betting on Inflation are Doing Strange Things to the Bond Market. (Slate)
• Quantitative Easing Is Unloved & Unappreciated - But It Is Working. (Economist)
• Bloomberg's road to the White House. (TheWeek)
• Verizon's CEO Opens Up About Steve Jobs and Negotiating with Apple. (BizInsider)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Tomorrow’s Internet: 1000 Times Faster. (KurzweilAI)
• Dawn of a New Day - Imagining A "Post-PC" World (Ray Ozzie & ZDNet)
• GOP Rout May Be Great News for Obama. (Newser)
• How Forethought (Not Intuition) Separates the Good from the Great. (HBR)
• Down Dog: Can Your Dog Be a Pessimist? A Bowl Half-Full or Half-Empty. (Reuters)
• More Posts with Lighter Ideas and Fun Links.

Related articles

• Is Recent Breakout the Real Deal? (minyanville.com)
• Bernanke Versus Pimco's Mohamed El-Erian on QE2 (nakedcapitalism.com)
• The Markets have spoken (humblestudentofthemarkets.blogspot.com)
• Bernanke: "What the Fed did and why" (calculatedriskblog.com)
• Thoughts on Liquidity Traps (ritholtz.com)

An Angry America Gets What it Deserves (in pictures)

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.

Ever Want to Monitor a Web-Page for Changes?

Usually, bookmarks are static links. Diphur alerts you when content changes occur on the sites you choose.  For example, with Diphur you can?

• Get real-time notification of specials, price-drops, or giveaways.
• Receive an e-mail when a new file or update is available on a site you track.
• Monitor breaking news or competitive information. 

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:

• Set Diphur to monitor the website – hourly, daily, weekly, or monthly.
• Filter changes by size.  Do you want all changes (or just about the big ones)?
• Use Keywords to further filter changes that do not have certain words in them.

There is even a browser bookmarklet that lets you add a bookmark to the page you are viewing without visiting Diphur.

Try it here.

Related articles

• 6 Awesomely Edgy Technologies You've Never Heard About Before. (customerthink.com)
• Social Bookmarking Benefits (myventurepad.com)

Capitalogix Commentary 11/01/10 - The Psychology of an Angry Electorate

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.

On Wednesday, the fed will disclose more about QE2. The market wants to know where Fed Chair Bernanke stands on the critical issue of flooding liquidity. Again, even if the market gets what it wants, will it matter ... or has the rally already priced-in the effects of QE2?

Finally, Friday is when we see what's going on in the world of job creation (or lack thereof). This report is potentially more important than the first two, and I'm interested in how the markets respond more than I care about the details of the report.

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:

• Goldman Sachs Admits "The Economy Is Not the Market & QE2 Is Not a Panacea". (ZeroHedge)
• Dangerous Economic Misconceptions and a Game Show Mentality. (EconoTwist)
• Paulson Justifies 'Terrible' Choices That Saved the Country from Economic Ruin. (OnWallSt)
• Arguing About Money - What is a Currency War, and How Do You Win One? (Slate)
• Hot Mutual Funds Are Often Great Contrary Indicators. (SmartMoney)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• 20 Global Trends Shaping The Next Decade. (TheNextSiliconValley)
• Can the Kremlin's Silicon Valley Succeed? (TechReview)
• Air Force Publishes Cyber-Warfare Manual.  Interesting That It's Public. (US Military)
• Kindle Sales Rocket; Ebooks Outsell Real Books 2:1 (SlashGear)
• Google Is Now Providing Servants to Its Employees (Gawker)
• More Posts with Lighter Ideas and Fun Links.

Related articles

• Sentiment Overview: Week Of October 29th, 2010 (tradersnarrative.com)

Yankees, Rangers payroll disparity largest in playoff history

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.