Capitalogix

Weekly Commentary Charts through August 29, 2008

Another week of big swings in thinly-traded markets.  There is a trading range in the S&P 500 where the bears defend the top (1295) and the bulls defend the bottom (1260). So far, no one is winning. Let's see which way things break; though a short-term move down here wouldn't surprise me.

Historical patterns show a year-end rally typically starts in late September or early October. The 4-year Presidential cycle pattern also favors a year-end rally.

Here are a few of the posts I found interesting this week:

• Lehman in urgent talks to secure a capital injection before earnings call (UK Telegraph)
• Worker Confidence sinks to levels of last recession (WSJ)
• Nightmare on Wall Street: Why the Credit Crisis has lasted so long? (Economist)
• Candidates on the Credit Crisis (Dash of Insight)
• Does history favor Democrats' economic plan? (NYTimes)
• Victor Niederhoffer on why the Markets continue to surprise him (Daily Speculations)
• A positive sign for markets: 64% of stocks above their 50-day averages (Bespoke)
• Is the "Bearish Crescendo" a contrarian sign of a market Bottom? (Shaeffers)
• Ten factors that contribute to Market Mood Swings (Seeking Alpha)
• To make a stock "pop" - Innovate (NYTimes)

And, a little bit extra:

• Great Photos from Beijing Olympics (Boston Globe, LA Times, Time, FT,The Star, S.I.)
• The Business of College Football is probably Bigger than you think (Forbes)
• Does it Matter that Internet Traffic is beginning to bypass the US? (NYTimes)
• Interesting comparison of housing market price declines in various cities (Bespoke)
• Obama's acceptance speech for Democratic Presidential Nomination (Politico, Many Eyes)
• Air-Ball: Game Ball Delivered by Parachute; Skydivers land in Wrong Stadium (Inquirer)
• Microsoft releases beta of a major new version of Internet Explorer (WSJ, Microsoft)

Weekly Commentary through August 22, 2008

The bullish arguments are that we still have a series of higher lows off the July bottom; and that the market is performing relatively well in the face of negative news.  The bearish arguments are still almost everything else. 

On Friday, Oil was down 5 percent -- great news? Not quite, it was still up on the week.  The Dow was up 200 points -- yet still managed to close down for the week.  Also, the NASDAQ closed just below its 200-day moving average.

Here are a few of the posts I found interesting this week:

• With new lows in sight, is Lehman a takeover candidate? (BloggingStocks, Mish, NYTimes)
• Boone Pickens' Strategy is Water-Tight; form your own town and issue govt bonds (DealBreaker)
• Supermodels out-perform the Dow (TheStreet.com)
• Hewlett-Packard's profit climbed 14% to $2.03 billion (WSJ, MarketWatch)
• Corporate Insider Buying is strong (Hulbert in MarketWatch)
• Comparison of Bernanke's 2007 and 2008 speeches at Jackson Hole (Infectious Greed)
• Producer Prices jumped 10% this year, most since 1981 (NYTimes)
• Goldman Sach's warns of recession fears for half the Globe (UK Telegraph)
• Barry Ritholtz asks whether we are in a "Psychological Recession"? (Big Picture)
• Jittery investors redeemed $27 Billion in mutual funds this July (Investment News)
• Mortgage applications drop to lowest level in eight years (Bizjournals.com)

And, a little bit extra:

• Apple planning to make 40 Million iPhones in 2009 (BusinessWeek via MacRumors)
• Microsoft hires Jerry Seinfeld to tout Vista; but is he still "cool"? (Silicon Alley Insider)
• The dawn of intelligent machines; surpassing human intelligence by 2050? (BBC)
• Obama's social networking strategy, and who's behind it (MIT Technology Review)
• Educators urge lowering of drinking age to curb binge drinking (Washington Post)
• EBay undergoing Amazonification; moving to fixed price sales (BusinessWeek)
• Great graphic comparing Usain Bolt's record-setting run to history (NYTimes)
• Crumbling archives of texts get a new lease on life from an anti-spam tool (BBC)

Weekly Market Commentary for 8/15/08

From last week's wild swings - to a narrowing range, poised for a breakout.  The market has something for everyone.

The mystery of where the markets are heading continues, reminding me of physicist Niels Bohr’s quotation: “Tomorrow is going to be wonderful, because tonight I do not understand anything.” Echoing that is 84-year old Richard Russell, “Very frankly, I can’t come to a firm conclusion as to whether we’re dealing with a bull or a bear market. Sometimes you just have to wait and allow the market to tell its story. Remember, we may be in a hurry, but the market never is.” (Hat tip: Prieur du Plessis)

Small-Cap and Tech are showing some leadership.  As it hits its June highs, the Russell 2000 Index is performing better than the other US Equity Indices.  The NASDAQ Index is performing well also, though it is sitting just under its June highs.  In contrast, the S&P 500 and Dow Jones are still lagging.

Here is a chart of the Dow.  Notice that price sits right at the resistance line and the 50-Day Moving Average.

Here are a few of the posts I found interesting this week:

• S&P Languishing, but less than these previously high fliers (Infectious Greed)
• What Does Obama imply for the markets and the economy? (Kudlow)
• Ten Market Rules to Remember (Big Picture)
• Thoughts on Trading Stress and Emotion (TraderFeed)
• Short-Selling Restriction Experiment Set to End (NYTimes)
• The Dilemma facing Thoughtful Investors (A Dash of Insight)
• What is a Recession - and why we may not get there? (NBER)
• Down 97%: Tax Trouble Coming For States & Cities (Big Picture)
• Wall Street hiring again -- but in India (ClusterStock)
• Starbucks needs a jolt (Covel)
• What happens if you list your house for $1? (Zillow, Big Picture)

And, a little bit extra:

• Hot Gadget: Amazon's electronic book viewer, Kindle, gaining in popularity (ZDnet, Bloomberg)
• Amazon Kindle version 2.0 due out in October, in time for holiday sales (InfoWorld)

Resilience

Watching the Olympics has been an uplifting reminder for me.  The sport of it is fun to watch.  Yet, the deeper story is even better.

For example, Michael Phelps was expected to break Mark Spitz's record in Athens four-years ago.  While he was dominating, it just didn't happen, then. 

Can you imagine setting world records, winning gold medals, and still feeling like you came up short?

Can you imagine how many times he replayed the missing hundredths of a second that separated him from his dream?
So how did he do it this time?

Somehow the great ones are resilient and durable in distressing situations.  They adapt and cope; and ultimately gain strength from adversity -- often converting it into a gift.  They find a way to transform what seemed like setbacks into the fuel they need to get to the next level.

Nietzsche said "that which does not kill me, makes me stronger."  And that statement applies to trading and funds management as well.   Trading often seems like it is not fair - and that can be very good for us. 

Pilobolus: Things Aren't Always What They Seem

In trading, recognizing that things aren't always what they seem is a big part of the game. 

Here is a clever video that plays on that concept. It is from Pilobolus, a talented dance and performance art troupe.

Here is the direct link.

And this one has an unexpected ending.

Here is the direct link

Also, here is a link to their performance at the TED conference. (TED)

And here is an article about the "magic" of Pilobolus worth looking at. (CBS)

Weekly Commentary through August 8th 2008

The Markets are up, but relatively trendless.  Yes the recent lows have held, and I'm seeing higher lows (and that is a bullish sign).  However, recently, the thing to note has been the markets' volatility.  For the Dow, there have been seven 200-point up or down days and two 300-point up days ... but in that time, the Dow is only up 36 points. It is tough to hold trades overnight in this type of trading environment.  Going home bullish or bearish hasn't led to peaceful sleep lately.

Here are some other stats to ponder.  First, 300-point rallies are pretty normal during bear markets (and in the beginning of new bull markets).  Also, It is quite normal to have intermediate term rallies in bear markets that last 2-3 months. The last one lasted 2 months; but only had narrow leadership in the Commodities.  This time the leadership is much broader (most everything, except Commodities).

Also this week, the Fed held rates steady, and the US Dollar Index now trades above its 50-day and 200-day moving averages, signaling a breakout from its five-month trading range.

Here are a few of the posts I found interesting this week:

• IPOs at 5-Year Low, Worldwide (WSJ)
• Wharton Finance Professor, Jeremy Siegel Calls a Market Bottom (Morningstar)
• Rackspace IPO loses 20% on first day of trading (WSJ)
• President Bush: "Wall Street got drunk"..."and now it's got a hangover" (Wall $t. Folly)
• Does the 4-Year Presidential Cycle have predictive power in the markets? (CXO Advisory)
• Too many ETFs, too little volume; the weakest are closing (Bespoke)
• Crisis Averted: Improvisation is one thing, Policy is another (NYTimes)
• Foreign money buying US properties at deep discounts (NYPost)

And, a little bit extra:

• Big Brother is watching: Apple shuts down "I Am Rich" Application for iPhones (Download Squad)
• Innovations show how water-starved countries could solve their food crises (NYTimes)
• At $6BB spent, Olympic Security is No Game; but they do ride Segways (BusinessWeek)
• Twitter's micro-blogging success suggests I'm old, because I still don't get it (Fortune)
• Caffeine Myths De-Bunked; go get a cup of coffee (NYTimes)

Cool Chart Showing Olympic Medals Won

Technical traders use a lot of data visualization tools.  So it isn't surprising that this tendency spills over into other areas of my life.  Consequently, I enjoy chart porn like this map showing which countries won Olympic medals.  It is interactive, and fun to play with for a minute or two.

(NYTimes)

Olympic Extra

In China, "8" is believed to be a most powerful, and lucky, number.

So it is not surprising that Chinese began the Olympics on 08-08-08 at 8:08 PM.

Here is a link to Wikipedia's info page  and NBC's covering these Olympic games.

And here is a link to Wired's coverage of the tech behind the games.

An Olympic Attempt At Humor

As the Olympics begin, I saw this and thought it was worth sharing.

The artist/author has a blog called "Indexed" here, and a book here.

By the way, the Court threw out fine against CBS for airing the wardrobe malfunction. (DMN)

Let's just say she captured a few eyeballs; in most replayed moment in Tivo history. (CNet)

Market Commentary from August 1, 2008

Three out of the four trading days this week experienced 200-point daily moves in the Dow.  Some were up, some were down.  Still the recent low has held.

The following picture shows charts of the S&P 500 Index on two timeframes: daily and 5-minute bars.

There are clearly a series of higher lows (on both charts).  Nonetheless, the market has been fragile lately.  A move up from here would be a big confidence booster.

Here are a few of the posts I found interesting this week:

• Hulbert Says The Stars Have Yet to Align to End the Bear Market (NYTimes)
• Big Mac Index: currencies are expensive in Europe, cheap in Asia (The Economist)
• Real Estate is down; so flip a website instead (NYTimes)

And, a little bit extra:

• Nassim Nicholas Taleb auther of Fooled by Randomness & Black Swan profiled (TimesOnline)
• Randy Pausch Gave His Last Lecture (Big Picture)
• Can you use technical analysis on baseball? (Daily Options Report)
• How Are They Doing Now? From "Good to Great" to not-so-hot (NYTimes Freakonomics Blog)