Capitalogix

Bezos' Video About the Zappos Acquisition

Amazon acquired Zappos this week.  What follows is a terrific video where Jeff Bezos says he shares "Everything I Know" about business, and offers a peek inside the entrepreneurial spirit and culture of Amazon.

The four main points are:

Obsess Over Customers. While they pay attention to the competitive marketplace, they don't let competitors determine what they do. Instead, it is the customer that drives their strategy.

Invent. A critical part of what Amazon does is to invent solutions for, and on behalf of, their customers.

Think Long-Term. Amazon strategists take a long-term perspective. They are willing to take actions that quickly offer benefits to customers, even if those actions don't offer a pay-off for the company or its investors for five to seven years.

It's Always Day One. There is always a bigger future and more opportunities to invent for customers. It's never over, or too late.

Yes, it is a simple list.  Still, it is worth watching. 

It gave me a sense that Amazon not only preaches these principles, but practices them as well.

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View the full AMZN chart at Wikinvest

Also, here is a link to Zappos' CEO, Tony Hsieh's letter about the acquisition.

And here is a link to Four Questions About the Acquisition.

Capitalogix Commentary 07/19/09

Goldman Sachs announced massive profits of almost $3.5 Billion this Quarter.  On one hand that is great.  On the other, does it make you wonder where and how they made that money? 

On a related note, Bespoke notes that, in the first half of the year, Goldman set-aside over $11 Billion to compensate its employees.  Nice work if you can get it.

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View the full GS chart at Wikinvest

The Stimulus Plan.

The economy, and the mood about the economy, seem to be doing a little better. I give credit for the effort.  Though, I am watching spending and employment numbers to tell me more of the story.

Some Market Charts.

For the past few weeks, many people have been watching the potential head and shoulders pattern. Its failure to trigger caused many people to cover their short positions. This was probably the primary catalyst for the "Oops" trade that took the market back near its recent highs.

Those recent highs are interesting to me for several reasons. First, they've held since early June. Second, and potentially more importantly, they may be part of a much bigger pattern forming on the major U.S. equity indices. 

Here is a picture of the S&P 500 Index. Notice the potential inverse head and shoulders bottom pattern (marked in orange).  If it triggers (shown by the green neckline of resistance), and if it hits the measured target (shown by the purple arrows), then it is certainly worth watching.  Of course, that is a lot of "ifs".

Some Things to Watch.

So, the upside is clear, take out the June highs and see if we get some buying volume. However, I can't get excited, yet.  There are a number of things holding back my enthusiasm. Right off the top-of-my-head: jobs, spending, lack of volume, and the failure to trade above recent highs.

However, another thing I'm watching is that recent moves up in the market were met with an increase in the VIX (instead of the expected inverse relationship).  Here is a picture from Marty Chenard's chart service called StockTiming.com.

Recently, it bothered me that the VIX failed to show a spike of fear when the market was going down. And now, the VIX is bothering me because it's going up when the market goes up. So, either this is not a good time to follow the VIX for trading guidance, or the VIX is indicating that something unusual is happening in the markets.  Either way, it makes me cautious.  What about you?

While I expected a short-term rally, I still believe that the markets are due for an intermediate-term move downwards. However, neither logic, intuition, nor economics are primary indicators. Price is the primary indicator; and it has been moving upwards.

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

• Wall Street 2015: Has It Changed Forever? (Forbes)
• Goldman Had Huge Profits - Why are Executives Selling? (Dealbook)
• Intel Gives Upbeat Outlook as Sales Revive. (WSJ)
• Dell Shares Dive as PC Market Still Looks Rough. (Technology Review)
• McGraw-Hill's Seeking a Buyer for BusinessWeek. (WSJ)
• Ways Apple Is Extending Its Lead Via 3rd-Party iPhone Apps. (WSJ)
• Help Is On the Way for Credit-Starved Small Businesses. (Forbes)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• If The Jetsons Had Email, What Would it Look Like? (MediaPost)
• Building a Biologically Accurate Artificial Brain. (WSJ)
• Why Some People Sneeze When the Sun Comes Out? (New Scientist)
• Even the Homeless Use Facebook to Stay Wired. (WSJ)
• Can Companies Profit By Giving Away Digital Products & Services? (NYTimes)
• Microsoft Office 2010 Preview in Pictures (eWeek)
• Get Your Wisdom: Well Done Summaries of Big Ideas. (Philosopher's Notes)
• More Posts with Lighter Ideas and Fun Links.

Capitalogix Commentary 07/12/09

Obama told the G8 that the "World has Staved Off Economic Disaster." So, it's all good now.  You are safe to jump back in the pool.  If there was still risk, he couldn't have said that in front of world leaders, right?

Is This the New Normal ... Or Just the Calm Before the Storm?

Here is a chart that shows how volatility has reduced recently.  Putting on my curmudgeon hat for a moment, I remember the old trader's adage that lack of volatility begets volatility.

That chart whispers "beware the calm before the storm" to me.  Others may see a return to normal.  What do you think?

A Look At the Markets.

The markets have given back close to 25% of their recent gains in the last four weeks. In many respects that was a healthy move. The news has been bad enough that I expected a bigger and steeper downswing.

Also, there's been a lot of talk about the potential of a head and shoulders top. But when you look at a composite of the five U.S. Equity Indices (shown in the bottom-half of the chart, below), we haven't broken the neckline, yet.

In addition, the 200-day moving average (red line) continues to provide support. If we don't have a sustained break beneath this level, the 200-day moving average will act as support.  Click the chart to see a full-size image.

With that said, sentiment is getting more bearish, and the move down has not created a spike in the VIX. So, again, there are clues that lead me to suspect that we might be witnessing the calm before the storm.  Earnings Season is starting; and a move down would trigger the head-and-shoulders topping pattern and the 200-day moving average would become overhead resistance.  And fear would increase ... you get the picture.

Sometimes, the right picture can be worth a thousand words.

So short-term, a bounce wouldn't surprise me. Nonetheless, a bigger correction still seems likely.

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

• Businessman Pays $2.1 million for Lunch with Buffet; Banks More (DigitalJournal)
• 11 Places With a Worse Economy Than Ours. (USNews)
• Currency Funds Crushed on Dearth of Market Trends. (Bloomberg)
• The Dollar's role in the global economy is Safe From the Yuan, for Now (WSJ)
• Ex-Goldman Sachs Employee Arrested Stealing Secret Trading Codes. (StreetInsider)
• Citadel Sues Firm Linked to Alleged Goldman Software Theft. (FinAlternatives)
• Mark Cuban on Business Models: Succeed with Free, Die by Free. (BlogMaverick)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Stephen Hawking: Humans Have Entered a New Stage of Evolution. (Daily Galaxy)
• China Embraces the 24-Hour News Cycle; Will They Soon Regret It? (Forbes)
• Amazon Patents Detail Kindle Advertising Model. (MediaPost)
• Twitter Not Happy With The Name Tweet In Third-Party Applications. (DigitalJournal)
• Emotional Robots: Will We Love Them Or Hate Them? (NewScientist)
• Coaching Tip - Applying the Art of Sprinting to Life. (GeniusCatalyst)
• Social Security Number Code Cracked, Study Claims. (Federal News)
• More Posts with Lighter Ideas and Fun Links.

Capitalogix Commentary 07/05/09

Another grim report on unemployment casts doubt on the likelihood of a quick economic recovery. 

The unemployment rate edged up to 9.5 percent in June, to its highest level in 26 years. The bigger problem is that many analysts expect joblessness to get worse in the coming months.

A Different Perspective on the Job Market:

Here is a chart that caught my eye on Barry Ritholtz's blog.  It shows the increased competition for jobs.  There are now close to six unemployed people for each available position.

The point is that as fewer jobs become available, it will get harder for normal citizens to obtain them.  The cycle continues because loss of jobs means reduced spending ... which means tighter margins. 

So, this next chart doesn't surprise me.  It shows that in addition to an increase in unemployment, there was also a decrease in hours worked.  Simply counting the number of people who lost their jobs misses something important. Lots of people have lost part of their jobs through a variety of techniques like furloughs and thirty-hour work weeks.

Notice how consistent the decline in aggregate hours worked (purple line) has been over recent months. It is something to watch.

For a longer perspective, here is a chart comparing the monthly national unemployment rates since 1948.  Click the chart to see the interactive version on WSJ.com.

Market Chart:

How will all that play-out in the Markets?  So far, the markets have held-up nicely.  I've been seeing more negative divergences and selling on down days ... and less positive momentum and market breadth. But price is the primary indicator, and it has stayed above support.

Here is a daily chart of the Dow Jones Industrial Average Index.  I marked a head and shoulders pattern that many traders are watching.  Click the chart to see a full-size image.

Short-term, a bounce still wouldn't surprise me. Nonetheless, a bigger correction seems likely.

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

• Investors are Now Racing Toward Volatile Areas of the Market. (NYTimes)
• Another Indicator Predicts Economic Recovery is Near. What do you think? (MJPerry)
• A China Stock Bubble: IPO Mania Dangerous in Recession. (Time and Economist)
• Why China Hates the U.S. and What It Means for Your Portfolio. (Motley Fool)
• A Run on an Amish Bank Teaches the Risks of Modernity. (WSJ)
• The Fed's Delicate Balancing Act On the Complex & Slow Road to Recovery. (SmartMoney)
• How GE Reaped Bailout Dollars Even Though It Wasn't a Bank. (TDB)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Michael Jackson Insider on What Really Killed Him. (TDB)
• Monkey 'Stock Market' Prone to Fluctuations Too. (NewScientist)
• Calculating Consumer Happiness at Any Price. (NYTimes)
• A Glimpse at the Future: Domestic Robots With A Taste For Flesh. (NewScientist)
• Scientists Create First Electronic Quantum Processor. (PhysOrg)
• Tomato Pill's new form of Lycopene Beats Heart Disease. (BBC)
• Is an Ugly Baby Harder to Love? (Time)
• 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.

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.

 

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.

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.

Room Covered In Melted Cheese

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.

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.

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.

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

• This Recession Tracks the Great Depression, Can We Avert the Worst? (FT)
• Charts of the Recession In Historical Context. (Investment Postcards)
• The Importance of "Being Right" vs Making Money.  (Dash of Insight)
• Economic Recovery: Are Happy Days Here Again? (Wharton)
• The Myth of the Rational Market. (Slate)
• MF Global Preps Managed Futures Offerings. (FinAlternatives)
• Key Ideas from Forbes CEO Conference. (Forbes)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Microsoft Readies Free PC Security Software. (Technology Review)
• Ten Commandments from Entrepreneurial 'Evangelist' Guy Kawasaki. (Wharton)
• Plan To Teach Military Robots the Rules of War and Let Them Loose. (NewScientist)
• Amazon Acquires Two iPhone App Software Makers. (WSJ)
• Google Searches for Ways to Keep Big Ideas at Home. (WSJ)
• New Research Shows That Fat Can Be Good For You. (Ode Magazine)
• MoneyB-ball 2.0 - Quantifying Basketball’s Intangibles. (NYTimes)
• More Posts with Lighter Ideas and Fun Links.

Capitalogix Commentary 05/14/09

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:

• Ritholtz's Graphic: 7 Factors that Led to Crisis. (Big Picture)
• Sentiment Overview: Bulls Rushing in at Alarming Rate. (Seeking Alpha)
• Optimistic Unemployment & Housing Forecasts Looking Silly. (Global Economic Analysis)
• Poking Holes in Efficient Markets Theory. (NYTimes)
• If Volume Is Rally’s Fuel, We’re Running On Fumes. (Traders Narrative)
• Ranks Of Active VCs Dwindling By Any Measure. (WSJ)
• More Posts Moving the Markets.

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.

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.

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.

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.

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. 

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.

Seth Godin: Why Tribes, Not Money Or Factories, Will Change The World

Terrific video from the TED series.

Seth Godin argues the Internet has ended mass marketing and revived a human social unit from the distant past: tribes. Founded on shared ideas and values, tribes give ordinary people the power to lead and make big change. He urges us to do so.

Direct link to the Seth Godin's Tribe Talk at TED.

I'm seeing more examples of Tribes. For example, Facebook and Twitter have become an important part of my day and business process.  I am pleasantly surprised by how many people have offered ideas, opinions and insights that make a difference and move things forward.

Everything old is new again.  Welcome to the tribe.