Capitalogix

Some Interesting Links for Your Weekend Reading

As I'm sure you've heard, the Mayan Calendar ends this coming December.  While some believe this foretells something - others argue that it doesn't mean anything.

 

Bad news if you were going to base your trading plan on a December Apocalypse.

With that out of the way, now you'll have more time to plan for the upcoming Chinese New Year ... Prepare to Enter the "Year of the Dragon".

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

 

Lighter Links:

• 10 Mega Business Trends to Watch For In 2012. (Forbes)
• Goal Obsession: The Flaw That Creates More Flaws. (FastCompany)
• Outsourcing Resolutions: How to Make Your New Year's Resolutions Stick. (WSJ)
• Go 'Semi-Vegan' for a Better Diet. Dropping meat once a week helps. (Newser)
• First Siri, Now Threat Detection. Inside SRI’s Amazing R&D Laboratory. (Wired)

 

Trading Links:

• The Wisdom of Crowd Dynamics: Why Care How Pedestrians Behave? (Economist)
• M&A Market: Cash-Rich Firms Sit Tight, Fearing Government Meddling. (CNBC)
• What Will Happen in Europe in 2012? (RealMoney)
• Indonesia Regains Investment Grade after 14 Years. (BBC)
• Do Hedge Funds Have Less to Fear in 2012? (Opalesque)

Is the S&P 500 Index About to Flash a Major Buy Signal?

The S&P 500 Index is flirting with a move above a key resistance zone. 

This chart shows the Index for the past year.  Note that Price is sitting just under major overhead resistance (both horizontal and from the downward sloping trend line).

A move higher here, would flash a buy signal that could trigger a lot of buying.

 

In addition, It seems that each time that stochastics and RSI hit 90 and 60, respectively, the bulls have recently run into trouble extending the rally.  Currently, that's where both of those momentum oscillators sit.  Add to that the negative divergence in MACD and weak buying volume ... In other words, many secondary indicators hint at the burden faced in moving higher. 

Nonetheless, a sustained move above these levels would give Bulls fresh fuel.  With the strong start to an election year, many traders are planning what to do during the next move higher.

As We Enter 2012, We Stand Together at a Financial Crossroad.

As we enter 2012, we stand together at a financial crossroad.

America is the wealthiest nation on earth. Yet, the majority of American Families are failing to manage their own personal finances. More citizens (since the Great Depression) are in debt, default, or financial despair.

Americans overspend. Undersave. Overborrow. Most are undereducated about managing their personal finances. Our future generations will suffer today’s mismanagement. Statistics are alarming. The consequences are grim.

Here is a video that lays-it-out simply and quickly.

 

 

 

 

Responsible management of our personal finances is the foundation to a healthy national economy. The better our citizens effectively manage their personal savings, expense budgeting and financial planning, the stronger we grow as a culture, and as a country.

Learn more about the Financial Truth campaign, download the PDF.

 

Here Are Some Interesting Links for Your Review

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

Lighter Links:

• Strategy Essentials: Ignore at Your Peril. (HarvardBusinessReview)
• The Global Creativity Index. (TheAtlantic)
• M.I.T. Expands Free Online Courses. (NYTimes)
• IBM's Top 12 Tech Trends for 2012 Include Cloud, Analytics, Mobile. (eWeek)
• What If Employees Used A "Viral Pay" System to Determine Each Other’s Bonuses? (Fastcompany)

 

Trading Links:

• Fed Strengthens Its Tools for Preventing Collapse of Large Financial Firms. (Bloomberg)
• Real Estate Developers Take Advantage of Financing-for-Visas Program. (NYTimes)
• Global Funds Positioned Defensively Against Market & Sovereign Challenges. (W.A.)
• 50 Economic Numbers from 2011 That Are Almost Too Crazy To Believe. (BizInsider)
• SEC Stepping Up Aberrational Performance Fund Inquiries. Looking for fund performance inconsistent with fund strategies and/or benchmarks. (LexisNexis)

Jim Rogers Says the Fed Is “Ruining an Entire Class of Investors” - Do You Agree?

No matter what you've heard to the contrary, "there is QE3, the Fed is pumping money into the system," says legendary investor Jim Rogers, disregarding most every Federal Reserve statement over the last six months.

In the video, below, Rogers explains his lack of trust for the Federal Reserve and Fed Chairman Ben Bernanke.

 

 

 

Rogers has been a critic of the Fed's quantitative easing programs and artificially low interest rates, pointing to the latter as something akin to "QE3 in drag".

"They're lying to us," he says of the Fed. "One reason the markets are holding up so well is that they are printing money as fast as they can."

"What the Federal Reserve is doing now is ruining an entire class of investors," says Rogers. By forcing rates down and keeping the economy on a flatline, he believes the Fed could cause another lost generation of investments.

Rogers isn't simply a disgruntled American , he's an investor with a legendary record of success. So, where Rogers is putting his money now?

"I'm long commodities and currencies; I'm short emerging market stocks, U.S. technology stocks, and I'm short European stocks," Rogers discloses. His logic is that he wins if the economy turns up due to commodity scarcity. And if the economy remains weak, Rogers' short positions will more than offset his long positions.

Related articles

• Sorry Folks, QE 3 Ain't Coming... (Phoenix Capital Research)
• Face to face with Jim Rogers on commodities and more (investmentpostcards.com)
• Why the Performance Differential Between Treasury Bonds and the S&P Matters (zerohedge.com)

Explaining The U.S. Federal Budget Deficit [GRAPHIC]

Here is a picture of our Federal Budget as we close out 2011.

Since last August, it's been clear that the United States federal deficit would top $1 trillion in 2011 for the third year in a row. At 8.7 percent of the nation's Gross Domestic Product, the debt-to-GDP ratio is one of the worst in the past 40 years, according to the Congressional Budget Office.

Government spending far outweighs, government revenues by a difference of nine percentage points in favor of spending, according to a CBO infographic .

The graphic also shows that individual's debt has grown especially large in recent years; debt held by the public accounted for 67 percent of U.S. GDP in 2011, the highest level in four decades.

Here is the U.S. federal budget infographic from the Congressional Budget Office.

 

via Huffington Post.

Related articles

• Rick Santelli Balances U.S. Federal Budget (wallstreetpit.com)
• Temporary Deal Averts Government Shutdown - NYTimes.com (policyabcs.wordpress.com)
• Where Do Your Tax Dollars Go? (omnivoracious.com)

Interesting Links for Your Weekend Reading

Don't get into a fight you can't win.

 

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

Lighter Links:

• 8 Dangers of Collaboration. (Yes & Know)
• Brad Feld’s New List of Books for Entrepreneurship. (Feld)
• A List of the Articles Most-Shared on Facebook in 2011. (Facebook)
• Bionic Contact Lens 'To Project Emails Before Eyes'. Just what you need. (BBC)
• A New Trend? Tech Firm Outlaws Email Because It Wastes Too Much Time. (Newser)

Trading Links:

• Goldman’s Top Investing Picks for 2012. (FinancialPost) 
• Stock & Pony Show: The Toothless Ban On Congressional Insider Trading. (TheDaily) 
• Can Facebook Raise $10 Billion at a $100 Billion Valuation in Its IPO? (WSJ)
• CEO Outlook: 15 Predictions about 2012. (Chief Executive Magazine)
• Speculation or Trepidation? Fear is More Powerful than Greed. (Economist)

Diversification Ideas for this Market

David Stendahl sent me some stats that point to some diversification opportunities. 

Does the following chart look like a bunch of scribbles?  Good; it shows the diversified returns of the S&P 500 Index, Gold, Euro, 10-Year Note, Corn and Crude.

 

 

Keep these markets in mind as trading options that often offer performance not highly correlated with the S&P 500 Index.

What follows are a similar set of comments for various markets.

 

Gold

Over the past 14 yrs, the top 20 winning mos. in Gold produced an avg return of 8.3% … The same mos for the S&P 500 returned 0.6%.

Since 1997 Gold generated a total return of 165.3% based on its top 20 grossing mos. … The S&P 500 index returned 12.5% for the same mos.

Gold generated an avg return of 8.3%/mo based on its top 20 grossing mos. since 1997 … Returns the next month were up on avg 1.3%.

FYI: Gold generated an avg return of 0.6%/mo based on its top 20 grossing mos. since 1997 … Returns the next month were up on avg 1.3%.

14 year perspective … top 3 monthly returns for Gold 13.4%, 13.2% & 12.3% vs. those for the S&P 500 index 11%, 10.1% & 9.3%.

The short advantage ... top 3 negative monthly returns for Gold -17.9%, -11.4% & -9.2% vs. those for the S&P 500 index -18.1%, -12.2% & -11.5%.

 

Crude Oil

Over the past 14 yrs, the top 20 winning mos. in Crude Oil produced an avg return of 9% … The same mos for the S&P 500 returned 1.8%.

Since 1997 Crude Oil generated a total return of 179.2% based on its top 20 grossing mos. … The S&P 500 index returned 35.3% for the same mos.

Crude Oil generated an avg return of 9%/mo based on its top 20 grossing mos. since 1997 … Returns the next month were up on avg 1.6%.

FYI: Crude Oil generated an avg return of 1.8%/mo based on its top 20 grossing mos. since 1997 … Returns the next month were up on avg 1.6%.

14 year perspective … top 3 monthly returns for Crude Oil 19.2%, 17.3% & 11.6% vs. those for the S&P 500 index 11%, 10.1% & 9.3%.

The short advantage ... top 3 negative monthly returns for Crude Oil -23.3%, -15.1% & -13.6% vs. those for the S&P 500 index -18.1%, -12.2% & -11.5%.

 

Corn

Over the past 14 yrs, the top 20 winning mos. in Corn produced an avg return of 10.7% … the same mos for the S&P 500 returned 1.9%.

Since 1997 Corn generated a total return of 214.7% based on its top 20 grossing mos. … the S&P 500 index returned 37.7% for the same mos.

 

Euro

Over the past 14 yrs, the top 20 winning mos. in Euro produced an avg return of 5.5% … The same mos for the S&P 500 returned 2.4%.

Since 1997 Euro generated a total return of 109.2% based on its top 20 grossing mos. … The S&P 500 index returned 49% for the same mos.

 

Ten Year

Over the past 14 yrs, the top 20 winning mos. in 10 Yr. T-Note produced an avg return of 2.1% … The same mos for the S&P 500 returned -1.5%.

Since 1997 10 Yr. T-Note generated a total return of 42.3% based on its top 20 grossing mos. … The S&P 500 index returned -29.8% for the same mos.

10 Yr. T-Note generated an avg return of 2.1%/mo based on its top 20 grossing mos. since 1997 … Returns the next month were up on avg 0.1%.

FYI: 10 Yr. T-Note generated an avg return of -1.5%/mo based on its top 20 grossing mos. Since 1997 … returns the next month were up on avg 0.1%.

14 year perspective … top 3 monthly returns for 10 Yr. T-Note 5%, 2.7% & 2.4% vs. those for the S&P 500 index 11%, 10.1% & 9.3%.

The short advantage ... top 3 negative monthly returns for 10 Yr. T-Note -3.7%, -2.6% & -2.5% vs. those for the S&P 500 index -18.1%, -12.2% & -11.5%.

 

Are You Expecting a Santa Claus Rally or a Dumb-Money Mugging?

That was quite a move in the markets last week.  Was it 'real', or wishful thinking?

Kind of like the jobs number?  Does it show an improving economy (with some seasonal hiring), or was the jobs number smoke, mirrors, tomfoolery and skulduggery?

Back to the market, a quick look at a daily chart of the S&P 500 Index shows that the recent rally stalled the resistance. Price is still below the 200 day moving average, and it closed below the recent downtrend line. An impressive rally, to be sure ... However, it was the lack of volume on the big push higher that caught my attention.

 

 
When a market makes a 7% move (especially without a volume spike), traders are going to notice.

So, while some pros looked to take profits into the push higher - it looks like something finally caught the eye of retail traders.

While not statistacally significant, these examples  seemed worth sharing.

While I was getting a haircut this week, I listened as my barber debated the merits of buying Netflix with the barber standing next to him. Likewise, a trainer at the gym wanted to talk about several stock ideas he's considering buying.  Meanwhile, several people called to talk about whether to buy American Airlines while it was priced less than a happy meal toy.

We can talk about "smart-money" versus "dumb-money"; but until this, I hadn't seen recent interest in the markets from normal investors.

Perhaps something is stirring the 'animals spirits'.

Without selling pressure, it doesn't take much to push markets higher.  So, are you expecting a Santa Claus Rally or a Dumb-Money Mugging?

Time will tell.
 

Related articles

• AMR Files for Bankruptcy (crossingwallstreet.com)
• How Quickly the Mighty Can Fall: Netflix (NFLX) (bespokeinvest.com)

Some Interesting Links for Your Weekend Reading

Government popularity has taken a hit lately.

 

 

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

Lighter Links:

• Why Peter Drucker Distrusted Facts. (Harvard Business Review)
• 9 Metrics to Help You Make Wise Decisions About Your Company. (KM)
• Steve Jobs Told Team Not to Ask "What Would Steve Do?" (AppleInsider)
• What Will Happen When the Average Lifespan Tops 100? (BigThink)
• The Rise of The Megacity. Jakarta, Lagos, and Sao Paolo are changing the way we think about cities. (Slate)

Trading Links:

• A Behind the Scenes Look at MF Global's Last Days. (SeattleTimes)
• Here Are the World's 29 'Too Big to Fail' Banks. (TheAtlantic)
• Paying for Safety: Older Investors Voting With Their Wallets. (WSJ)
• We Had a Good Week; But Wall Street Had Its Worst Quarter Since the Crisis. (Bloomberg)
• Obama to China: Behave Like a 'Grown Up' Economy. (CNBC)