Capitalogix

Market Commentary from July 25th, 2008

Last week's rebound off the lows held-up, and still might prove to be an important turning point for the Markets.  The internals contiune to look better; and from a technical perspective there are nice positive divergences forming. 

One big down day spoiled the party for the Bulls this week.  However, seasonally, this is about the time to start looking for a rally.

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

• Exchanges (like the CME, which is down 43%) were hit hard by credit crisis (WSJ)
• Amazon's Profit Doubles with rise in web services business (Seattle Post)
• Apple and Google are down; is this a buying opportunity? (WSJ)
• Trading Places: Long Energy and Short Financials - or the other way around?(Bespoke)
• CFTC study finds oil prices pushed up by supply/demand - not speculators (MarketWatch)
• The Garage Sale Indicator - Listings up 100% in May from a year ago (Bespoke)
• The Fundamentals of Market Bottoms (Aleph Blog)

And, a little bit extra:

• Is Facebook your next Portal? - They think so (BusinessWeek)

Word Cloud Text Toy

The image on the left is a Word Cloud of Bernanke's speech from last week. I used it in the prior Weekly Commentary.

The Word Cloud is more than just a text toy.  It is a data visualization tool that gives emphasis to frequently used words.

I used one from Wordle (and yes, you can make your own there).

Click the image to see the full version on the website.

I liked the result on Bernanke's speech.  So, I tried it on my list of goals and plans.  Here is the result.

 

Weekly Commentary through July 18th 2008

This was a very interesting week.  Tuesday saw the markets hitting new lows at levels we first saw in 1998.  Investors Intelligence says bearish sentiment is now higher than it has been since then too.

Batman opened this week, just in time to see the warning signs over Gotham.
The SEC intervened by prohibiting "naked short" positions against certain financial sector stocks. 

And apparently, Bernanke and Paulson had fun talking with Congress.

On a lighter note, here is a clip from "The Daily Show".  President Bush and Fed Chairman Bernanke both spoke at the same time.  John Stewart used this to highlight the similarity (OK, the differences) in their talking points.  It was pretty funny.

Here are a few of the news items and blog posts I found interesting this week:

• Following Fleeting Fear - Yes the VIX did get over 30 for a brief moment (WSJ MarketBeat)
• Easy Money?  Interesting commentary by Jeff Miller (Dash of Insight)
• SEC blatantly intervenes - Banning Naked Shorts of key Financials (Naked Shorts & Phil)
• Kudlow questions whether Failure is still an option (Kudlow)
• Investors Intelligence reports Bearish Sentiment highest since 1998 (Bespoke)
• S&P500 - Back to where we were Ten Years ago (Crossing Wall Street)
• Victor Niederhoffer on the buying opportunity in "Economics of Worry" (Daily Speculations)
• Prudent Bear fund sold; interesting business cycle indicator? (Pittsburgh Business Times)
• Fully One-Third of all NYSE Stocks hit 52-Week Lows on Tuesday (Quantifiable Edges)
• Putting Citi and BofA losses into perspective; check-out the chart (Kedrosky's Infectious Greed)
• Have Banks Bottomed; and if so, for how long? (The Big Picture)
• Interesting thoughts on "non-bottom-callers" (The Financial Philosopher)
• Nice summary contemplating whether we just witnessed The Bottom (Humble Student)

And, a little bit extra:

• Apes to Get "Human Rights"? (BBC and Slate)
• iPhone Apps for Investors (Infectious Greed)
• Debunk the Funk - getting your mojo back (Tickerville)

Market Commentary from July 4th, 2008

As we moved into the July 4th long weekend, the bears remained in control.  This chart comes from Breakpoint Trades.  It is a long-term chart of the S&P500 Index with a 20-Month moving average. 

Yes, we are deeply oversold and sentiment is sufficiently fearful that a rally is likely soon. On the other hand, we haven't really seen capitulation, and earlier market bottoms this year had some help from the Fed. 

It is certainly possible that we get a bottom without getting the "easy trade."  Lots of traders are looking for the big volume reversal and the VIX spike.  But how often does the market give people clear signals?

Here is a follow-up to last week's chart showing how correlated and poorly most global markets have performed recently.  This table is from an article called "Nowhere to Hide" by Prieur du Plessis.

Finally, here are a few of the posts I found interesting this week:

• That Was Ugly: The Worst First Half of a Year Since 1970 (Bespoke)
• Hot Wheels and Matchbox Cars Don't Need Gas: Mattel's value beats GM  (Bloomberg)
• Bearish Battalions: economic growth & profits down, interest rates & inflation up (Economist)
• What Really Killed Bear Stearns? (NYTimes and Vanity Fair)
• Traders Dump Lehman (Minyanville)
• A contrarian considers whether it's possible that we've seen the low for this year (Street.com)
• Financial Down 53% from Their Highs - the easier path might now be up (VIX and More)
• Former NYSE Head, Grasso, Keeps the Money in Dispute Over $187MM Pay (InvestmentNews)
• Trading volume down at CME - interest rate product volume off 17% (Financial News)
• Doug Kass Says America is in Debt and Decline, and it is Time for a Change (Street.com)
• Jobs Decline Again, for 6th Consecutive Month (Global Economic Trend Analysis)

And, a little bit extra:

• A New Middle Name: Obama Supporters Take His Name as Their Own (NYTimes)
• Woman Offers Chance to Marry Her ... If You Buy Her House (MSNBC)
• Not Dead, Can't Quit: No Limit Thinking with Ex-Navy Seal Trading Coach (TradingMarkets.com)
• Who Runs the World - wrestling for a seat at the "Grown-ups Table" (Economist)
• Adobe Makes Flash Content Searchable (BusinessWeek)
• New Flexible Electronic Paper May Change the Way You Read (NYTimes)

Is It Bush, Or the Recession?

Today is July 4th.  And as my son and I were driving into our neighborhood, we noticed how few flags we saw waving.

A few years ago, at least two-thirds of the houses had flags.  Today I would get estimate that number being 15% to 20% of the houses.

In our neighborhood, there is a $75 per year service that provides flags for patriotic holidays (like Independence Day, Memorial Day, etc.).

So, did the economy make the $75 outlay feel too extravagant?  Or did the collective level of patriotism drop significantly? 

My guess ... a little of both; but it probably has more to do with the economy.  What do you think?

The Only Constant is Change

Change is constant.  Learning to respond and adapt faster and better is one of the foundational keys to success.

One of the best illustrations of that in business has been the story of Bill Gates and Microsoft. 

This week, was Bill's last as a full-time Microsoft employee.  So, there was a lot of hoopla.

This video is interesting, and puts his contribution in perspective. 

It is worth watching.

Market Commentary from June 27th, 2008

The Dow lost almost 500 points in the last two days.  Longer term, the stock market has been down sharply since May 2; in fact, it has been down five of the last six weeks. Several commentators note that the Dow experienced its worst June since 1930. Moreover, with this decline, it has also given back all of the gains it made since September, 2006.

Also worth noting is that the Dow just made new lows for the year, entering "Bear Territory" by sinking more than 20% from its October peak.  However the MACD's downward momentum did not make new lows, even while the index price plummeted. 

Perhaps more important, though, is that the Index broke below its 28-Year Up-Trend line.

Also, Bespoke had an interesting chart comparing returns of various international indices.  Here it is:

Finally, here are a few of the posts I found interesting this week:

• Market Tumbles, But VIX Still Not Showing Signs of Panic.  (Big Picture & VIX and More)
• Consumer Sentiment Index Falls to lowest level in 28 years. (Bloomberg)
• Bearish Sentiment Rising, back near year highs (Bespoke)
• What should you do in the face of all the "doom and gloom"? (Kirk Report)
• How tenuous is the market? (Humble Student)
• In Canada no one knows Citibank is $17; they do know RIMM is down > 15%. (Howard Lindzon)
• The "Red Queen Trade:" all the running you can do, to keep in the same place.  (Daily Speculations)

And a little bit extra ...

• Trading Desks Turn to Video Game Technology to Speed Analytics. (Wall Street & Technology)
• Your Money and Your Brain (Phil's Favorites)
• The Petabyte Age: Because More Isn't Just More — More Is Different. (Wired)
• The New Name Game: Internet Naming Rules About to Change. (CNN)
• Will Brain Downloads will make lessons pointless? (Telegraph)
• The Philosophy of George Carlin (Financial Philosopher)

Conspicuous Consumption

According to the 2007 Wealth Report, there are more millionaires than ever. (WSJ).  The report also examines the growing concentration of wealth by the super-wealthy.  So, apparently, the rich are getting richer.

As the market worries about recessions, inflation, the strength of the Dollar, and the price of oil ... I noticed a strange focus on conspicuous consumption. Here are some of the articles that prompted this post:

• Lexus LF-A supercar priced from $200,000 to $265,000 (AutoBlog)
• Eton's "World’s Most Expensive Shirt” costs $44,740 (Trendhunter)
• Don't Get Wet; Davek's $149 Umbrella will protect you from the rain (Davek)
• Wall Street joint serves up a $175 Burger (CBS News)
• For $150,000 You Can Have a collection of 50 Visionaire Magazine issues. (WSJ)
• Flushing Money Away on the Million-Dollar Bathroom (Barron's)
• The first Billion-Dollar Home (Forbes)

Market Commentary from June 20th, 2008

The March lows are in sight, at least for the Dow (and the Financial Sector is already beneath that level).

Sentiment is getting more bearish.  And, the S&P 500 is set to have its fourth consecutive quarter of negative earnings growth.   Based on history, though, the market has typically outperformed its averages after earnings have been weak for this long.

For your reading pleasure, here are some of the items that caught my eye this week:

• Fed sending signals that rates aren’t going higher yet. (WSJ, FT, WP)
• AAII Bear Sentiment above 50%, for 11th time in past year. (Bespoke)
• Royal Bank of Scotland issues crash warning for stock and credit markets. (Telegraph)
• Ex-Bear Stearns Fund Managers Arrested. (Bloomberg)
• Short-Selling is tough, and good for the Markets. (The Economist)
• Is the S&P 500 Index a good benchmark to compare performance against? (Infectious Greed)
• "The Frozen Gaze" Op-Ed Column on Tiger Wood's Focus and Mental Toughness. (NYTimes)
• Obama 1st major party candidate to reject public financing and its spending limits. (NYTimes)
• IBM Roadrunner is the new world's fastest computer. (InformationWeek)
• Philadelphia to Fake-Out Drivers With 3D Speed Bump Images. (Gizmodo)
• Bad guys really do get the most girls. (New Scientist)

Cell Phone Popcorn Popper

Up till now, I've kept my cell phone in my front pants pocket.  After watching these videos I'm worried about fried eggs.  Pretty cool ... or hot ... depending on the perspective.

Here is the direct link.

Just in case one wasn't enough.

Here is the direct link.

So, what does Snopes say?