Capitalogix

Seasons of the Economic Cycle

Just re-looked at this chart depicting the four seasons of our basic economic cycle. 

 

Pretty clear where we are. 

 

 

LPL Mid-Year Outlook via Josh Brown.

 

I like maps (like this one) because they help you anticipate, rather than simply react to what happens. 

Are You Expecting More Selling - Or a Buying Opportunity

"Insider Selling Mounts as Markets Hit All-Time Highs" screamed the headline.

A glance at the charts showed that the S&P 500 Index tested below its 50-Day Moving Average for the first time in a long time.

Meanwhile, the Russell 2000 index experienced what technical analysts call a “Death Cross” ... where the near-term 50-day moving average dips below its long-term 200-day moving average.

 

 

What does it mean?

The "worry" is that this move is the beginning of a new bearish trend ... and the long-term moving average is seen as the new resistance level.

So far this year, small-cap stocks have underperformed their larger counterparts. Year-to-date, the Russell 2000 is down almost 3% while the S&P 500 has gained over 7%.

Moreover, the small-cap index has been weakening and is off almost 7% from its all-time high set at the start of July, while the large companies in the S&P 500 and the Dow Jones Industrial Average have been hitting new highs.

The main issue is that small caps are under-performing and traders wonder what that says about the strength and breadth of the recent rally.

Nevertheless, the last time the Russell 2000 formed a death cross in July 2012, no significant sell-off followed as the index recovered and continued an uptrend.  My guess is that this pattern would get far less media attention if it was named "Phlarg" or a "50/200 Crossover".

These are the types of "early warning signs" you should watch.  However, they are just early warning signs ... until they prove themselves to be more.

Four of the world's most valuable internet companies are now based in China.

Four of the world's most valuable internet companies are based in China. 

 

 

 

$BIDU $JD $TENCENT $BABA -  via StockTwits

Related articles

Alibaba IPO will make it biggest internet company in China and third biggest in the world

Alibaba IPO is wake-up call for Silicon Valley

Here Are Some Links For Your Weekend Reading

The U.S. is supposed to be the model for free market economics.  So, why do we have the highest corporate tax rate in the world?

 

Here are ten posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• These Are Some of Best Time-Saving Hacks for A Productive Day. (AlltopStartups)
• There are Now 50 Colleges that Charge More Than $60,000 Per Year [List]. (Insider)
• If Logos Had Honest Slogans ... (TwistedSifter)
• Amazon Tests Kindle Unlimited, Its Own E-book Subscription Service. (FastCompany)
• Dad Claims Kingdom So 7-Year-Old Can Be Real Princess. (HuffingtonPost)

 

Trading Links:

• The Moneyball of Quality Investing. (ResearchAffiliates)
• The Difference Between a Good and a Bad Trader: What Brain Imaging Reveals. (ZH)
• Central Bank Exec Says Stocks Are 'Irrational'; China Poised To Crash. (BizInsider)
• A Cheat Sheet for Understanding the Different Schools of Economics. (Pragcap)
• 5 Everyday Products Whose Prices Are Hitting All-Time Highs. (Fool)

"Humans Need Not Apply" - Video about Automation and Humanity

Here is an interesting video about automation and what it will do to jobs and humanity.

 

 

via YouTube.

The point is to anticipate (and be prepared) for what is coming.

The Dow Has Given Back All Its 2014 Gains - Do You Care?

All trades result from a disagreement.  Someone wants to buy, while someone else wants to sell.

The Dow Jones Industrial Average has given back all 2014 gains.

 

 

So, is that a major trend-line break to sell?  Or, is it a buying opportunity?

 

 

It is a matter of perspective.  What matters is what happens next.

Half the Word's Population Lives in 6 Countries

As of this month, the world’s population is now 7.2 billion.

According to U.N. data, half of the people around the globe (3.6 billion) live in just a half-dozen countries. China has the world’s largest population (1.4 billion), followed by India (1.3 billion). The next most-populous nations – the United States, Indonesia, Brazil and Pakistan – combined have less than 1 billion people.

 

via Pew Research.

 

The demographic future for the U.S. and the world looks very different than the recent past.

For example, the U.N. projects that during this century, the number of people living to at least age 100 will increase more than 100-fold, from 181,000 in the year 2000 to over 20 million in the year 2100.

Related articles

Global Population Estimates by Age, 1950-2050 | Pew Global Attitudes Project

Which Markets Did Best In the First Half of the Year?

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

For example, take a look at Coffee's rise.

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

Click the image to jump to the full chart.

 

  

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

So, how does that compare to other markets around the world? Here is an interactive chart to answer that question.

More S&P 500 Stocks Above Their 50-Day Averages than NASDAQ Stocks

As shown below, 75% of the stocks in the S&P 500 are currently trading above their 50-day moving averages. 

 

via Bespoke.

This indicator has been trending slightly downward for about a month now, but it hasn't fallen below the 75% mark for quite some time.  Generally, whenever this breadth reading gets above the 80% level, the market is due for a breather.

In contrast, less than 50% of NASDAQ stocks are above their 200-day moving averages.

According to Martin Pring, that means that relatively few stocks are participating in the rally, and an even lower number are registering new highs. Moreover, there are currently slightly more stocks at new 52-week lows than highs, even though the NASDAQ is very close to its bull market high

What's The Biggest Business In Your State?

Obviously, business effects the economy of states. But, as the Washington Post notes,  businesses are not created equally - bigger businesses naturally have outsized influence, generating more revenue, paying more taxes and employing more people.

The following chart shows the largest company, by revenue, in each state.  Some of these seem like easy guesses.  For example: GM in Michigan, ExxonMobil in Texas, Berkshire Hathaway in  Nebraska, Nike in Oregon, Walmart in Arkansas, and FedEx in Tennesse.

via Washington Post.

But some of the others were surprising.  For  example, in Washington (home of Microsoft and Amazon), it is CostCo. Equally surprising, to me, was Verizon in New York, and Chevron in California.