Capitalogix

After a Quick Rally, The Dow Jones Industrial Average is at Resistance

Impressive rally ... Now what?

Here is a weekly chart of the DJIA.  Price has rallied to the overhead support/resistance level and its 40-week moving average (which is also its 200-day moving average).

 

via StockCharts.

 

Meanwhile, according to StockCharts, the percent of NYSE stocks trading above their 50- and 200-day moving averages is soaring. Currently, 73% are above their 50-day lines (which is close to the level hit during the November peak) ... and 34% are above their 50-day lines. That reflects the short-term improvement gained during the last month in major stock indexes.

What happens here, at the resistance barrier, will help determine if the short-term rally has more staying power.

Here Are Some Links for Your Weekend Reading

A reminder ... Every morning you have two choices: continue to sleep with your dreams, or wake up and chase them.

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• Michael Bloomberg Could Make Donald Trump President. (Slate)
• Why People Are Confused About What Experts Really Think. (NYTimes)
• "Memory Hackers" Shows The Future Of Memory Manipulation. (FastCo)
• Malcolm Gladwell: This Is How You Develop True Expertise. (Inc)
• Artificial Intelligence. Computers are being taught to learn, reason and recognize emotions. In these talks, look for insights -- as well as warnings. (TED Playlist)

Trading Links:

• VC Expects that Most Companies Will Eventually Pay an Amazon 'Tax'. (Insider)
• The Hottest A.I. Companies Making Waves Across Industries. (LTP)
• U.S. Budget Deficit Falls to Lowest Level Since August 2008. (WSJ)
• How Soon We Forget: Investors Lost $1.78 Trillion In Year's First Six Weeks. (Time)
• A Financial Road Map For 2016: "The Potential For Chaotic Fluctuations Is Greater Than Ever". (ZeroHedge)

Trading After Groundhog Day

On Groundhog Day, Bespoke put out these charts and comments (with minor edits).

 

When Punxsutawney Phil Speaks, People Listen

 

Forget about EF Hutton, or for that matter Warren Buffett.  If you really want to know where stock prices are going and can’t wait until the Super Bowl, look no further than the Oracle of Punxsutawney, Phil the groundhog!  Given his ‘perfect’ record at predicting the weather, we wanted to check up on the groundhog’s ability to predict the direction of the stock market.

Going back to 1944, when Groundhog Day resumed following a brief pause during World War II, Punxsutawney Phil has seen his shadow on the morning of February 2nd 59 times and seen no shadow just 13 times.  The table and chart below summarize the performance of the S&P 500 from Groundhog Day through the first day of Spring in each year based on whether or not Phil sees his shadow or not. (Disclaimer: If you are reading and still think this post is meant in any way to be taken seriously, it is not.)

  

 

 

On years when Phil sees his shadow, it not only means we are in for a longer winter but also sub-par stock returns.  In the 59 years where Phil has seen his shadow, indicating a long winter is in store, the S&P 500’s median return from that day up until the first day of spring has been a gain of 0.54% with gains 54% of the time.  Those returns don’t sound so bad, but they are actually below average.  That’s because in the thirteen years where Phil did not see his shadow the S&P 500 saw a median gain of 3.01% with positive returns more than three-quarters of the time.  

As shown in the lower chart, there are only three years (1997, 2007, and 2011) since 1944 than Punxsutawney Phil did not see his shadow and the S&P 500 declined from Groundhog Day through the first day of spring.  Of those three years, the worst decline was 2.17%.  With the S&P 500 already down 1.6% today, the S&P 500 has some digging out to do if it is going to continue its trend of winning ways following those days when the groundhog doesn’t see his shadow.  It’s so easy a groundhog can do it!

 

Right ... so, you know that was poo poo de moo moo. Punxsutawney Phill doesn't predict markets.

This year started with an 11 % drop.  While that is the steepest drop to start a year,  I'm pretty sure that doesn't mean much either.  With similar numbers, the market ultimately went down 32 % in 2008 -- and up 33 % in 2009.

Markets go up - and markets go down.  It's not what happens, it's what you do that matters.

What Knee Surgery Reminded Me About Technology

This week, my son had knee surgery.  It made me remember my knee surgery from three years ago ... And, it reminded me about what technology makes possible.

Before my knee surgery, I wasn't enjoying the prospect of the needles, the knock-out drugs, the cutting, or the recovery process.  Frankly, I was scared.

 

 

History is littered with tales of once-rare resources made plentiful by innovation. The reason is pretty straightforward ... scarcity is often contextual.

Imagine a giant orange tree packed with fruit. If you pluck all the oranges from the lower branches, you are effectively out of accessible fruit. From that limited perspective, oranges are now scarce. But once someone invents a piece of technology called a ladder, the problem is solved.

Here is a picture from inside my knee (unlike years ago, they didn't have to rip me open to gain access for the picture or the repair). Less damage, less time, less drugs, less recovery.

 

 

Bottom-Line: I walked over 2,500 steps the day after the surgery.  This time, my son and I had a burger on the way home from his surgery.

Whether it is minimally invasive surgical instruments, or linking big data and elastic computing ... Technology is a resource-liberating mechanism. It can make the 'once scarce' the 'now abundant' (or 'readily accessible') ... and a lot less painful.

Pretty Cool!

Is a Leading Indicator of Economic Activity Drying-Up?

People are afraid abandoned 'zombie ships' are an early sign of global economic collapse.

 

 Image Credit: Sometimes Interesting. 

 

If you are looking for insight into global supply and demand trends, the Baltic Dry Index is one of the purest leading indicators of economic activity. It offers a real-time glimpse at global raw material and infrastructure demand, as well as the supply of ships available to move this type of cargo.

Unfortunately, it is sinking faster than a ship.

 

 via StockCharts.com

The low is troubling because this Index is often interpreted as a reliable indicator of demand.

The Index moved higher from 2003 to 2008. Since then, we have seen a series of lower highs and lower lows (in other words, it has been trending downwards since then).

 

The low is troubling because this Index is often interpreted as a reliable indicator of demand.

The Index moved higher from 2003 to 2008. Since then, we have seen a series of lower highs and lower lows (in other words, it has been trending downwards since then).

 

Which U.S. Markets Did Best In 2015?

There is always something working in the Markets.  It still surprises me how often it changes.

A look at the recent winners and losers (based on year-end performance) shows the volatility and varied nature of this list.

Who would have guessed the big winners this year would be the French and German markets, along with the U.S. Dollar. 

The chart below shows the top-and-bottom performing markets for the year.  The data is color coded based on sector. The first column shows 2015 performance, followed by six columns of the most recent prior yearly market performances.

Click the image to jump to the full chart.

 

Table Key:

 

Note: The S&P 500 Index is shown in black to highlight its performance vs other markets that offer an equity portfolio full diversification.

 

Click this link to view weekly, monthly, quarterly, and yearly views of this data.

 

So, how did the U.S market compare to other markets around the world? Here is an interactive chart showing how the S&P 500 out-performed this past year.

A look at the recent winners and losers (based on year-end performance) shows the volatility and varied nature of this list.

Who would have guessed the big winners this year would be the French and German markets, along with the U.S. Dollar. 

The chart below shows the top-and-bottom performing markets for the year.  The data is color coded based on sector. The first column shows 2015 performance, followed by six columns of the most recent prior yearly market performances.

Click the image to jump to the full chart.

 

Table Key:

 

Note: The S&P 500 Index is shown in black to highlight its performance vs other markets that offer an equity portfolio full diversification.

 

Click this link to view weekly, monthly, quarterly, and yearly views of this data.

 

So, how did the U.S market compare to other markets around the world? Here is an interactive chart showing how the S&P 500 out-performed this past year.

Your Portfolio Guide to Rising Interest Rates. [Infographic]

Here is an infographic on market environments during rising interest rates.

 

via RCM's Alternative Blog  - “Your Portfolio Guide to Rising Interest Rates.”

Here Are Some Links for Your Weekend Reading

Google is good for a lot of things.  Watching the auto-complete choices is often fun.  According to this, PDF might be the fourth most popular religion.

 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• How Machines Learn (And You Win). (HBR)
• How an F Student Became America’s Most Prolific Inventor. (Bloomberg)
• Forget Humans vs. Machines: It’s a Humans + Machines Future. (Singularity)
• The 5 Biggest Rip-Offs Consumers Face Today.  (Fortune)
• Why It Was Easier to Be Skinny in the 1980s. (The Atlantic)

 

Trading Links:

• Goldman Sachs Bought a $21 Million Stake in HFT Network Company. (Bloomberg)
• U.S. System Designed to Prevent Financial Crisis ‘Likely to Fail,’ Say Experts. (MarketWatch)
• Wall Street is Under Attack from Hackers. (Business Insider)
• Short Interest: Dispelling Another Market Myth. (See It Market)
• Stop Listening to These Clowns: Economists’ Bad Ideas Have Been Damaging Our Economy for Years. (Salon)

Here Are Some Links for Your Weekend Reading

Just like Ben Carson theorized ...

 

via Bizarro.com.

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• How to Scale Things That Don't Scale. (Buffer)
• Fifty years of Moore’s Law. (Timeline)
• Singularity or Civil War? The Future of Artificial Intelligence. (Breitbart)
• How to Never Get Angry: 3 New Secrets From Neuroscience. (Time)
• The Dark Side of Empathy. How caring for one person can foster baseless aggression towards another (The Atlantic)

 

Trading Links:

• The 40 Most Exciting Innovations of the Year - Tech Insider. (TechInsider)
• Skype Co-Founders Prep Self-Driving Robot Package Delivery. (USAToday)
• Google Says It Could Make Drone Deliveries Happen by 2017. (MarketWatch)
• The Psychology of Risk and Reward. (Farnam Street)
• The Stock Market is a 'Dangerous Casino' That's Disconnected from the Real Economy. (Business Insider)

Star Wars: The Fan’s Guide to Investing

We’re officially two weeks away from the premiere of “Star Wars: The Force Awakens”.

In keeping with the spirit, here is an infographic for Star War fans to navigate the galaxy of investments.  Click it to see a bigger version.

 

An infographic by the team at RCM Alternatives.

May the Force be with you.