Blogs

  • Rally now six weeks young...

    In This Issue:

    Rally six weeks old...
    Leaders down... no there back up again...
    Earnings, still not real signs of improvement
    Treasury sales still falling, so are housing permits and starts


    Quote of the week
    "Anyone who is doing anything sensible right now is either losing money or is out of the market entirely," Quant trader "who is seeing something scary in the capital markets" in article by Tyler Durham.

    Rally now six weeks young...
    This rally marked its sixth-week birthday this week. Since hitting its low in the first week of March, the S&P500 is up 28% with Financials leading the pack. But that being said, this and most other major indexes are getting really stretched (overbought) and 89% of the stocks in the SPX index are above their 50-day moving averages (DMA), which is the highest level since mid-2006 according to Bespoke. Last week we mentioned that the index was 8% above its 50-DMA and that extended to 9.6% this week. Another challenge that faces stocks this week is that major indexes are getting close to bumping up against key resistance areas that taken together with how overbought stocks are across the board, increases the chances for a correction....
  • Rally takes a breather?

    In This Issue

    Rally takes a breather?
    Leaders bounce back again...
    Earnings forecasts show signs of hope
    Existing and new home sales fall
    Waiting for Case-Shiller
    Treasury demand surges as spending soars


    Quote of the week
    'Tax receipts are just collapsing. [The need to sell more debt] is a big issue in the Treasury market and it is ongoing. The surging budget deficit is the primary cause.' Head Stamford UBS Securities interest-rate strategist Chris Ahrens.

    Rally takes a break?
    It has now been seven weeks since this rally began and this week stocks took a break. Since hitting its low in the first week of March, the S&P500 is up nearly 28%. Last week we mentioned that the S&P500 index was 9.6% above its 50-DMA and that is about where it stayed this week (9.5%) so stocks remain overbought. But indexes are also still banging up against key resistance areas that taken together with how overbought stocks are across the board, increases the chances for a correction. And now this rally is losing momentum. If prices hold up it will show that investor demand and interest in stocks is increasing despite the technicals pointing to a drop. But that must be considered a long shot....
  • Standing In Front Of A Train

    In This Issue:

    Rally blasts up...
    Leaders fall behind...
    An earnings-deficient recovery?
    Construction spending, ISM and jobs improve
    Last hurrah, then seven lean years?
    Elliott Wave SPX Perspective

    Quote of the week
    "In the U.S., the total market value of housing, commercial real estate, and stocks was about $50 trillion at the peak and fell below $30 trillion at the low.  The original $50 trillion of perceived wealth supported $25 trillion of debt.  This loss of $20-$23 trillion of perceived wealth in the U.S. alone is still enough to deliver a life-changing shock for hundreds of millions of people." 
    - Jeremy Grantham in the GMO Quarterly Newsletter May 2009

    Rally blasts up...
    This rally re-ignited to finish its ninth week of gains pushing the S&P500 up 36% from its March 6 low. More interesting perhaps is the fact that the SPX is showing its first gains for 2009. And stocks are even more overbought than there were last week....
  • Leaders languish...

    In This Issue:

    Rally backs off...
    Leaders languish
    Earnings continue to weaken
    Trade deficit rises, Treasury sales inch higher
    Market Yin and Yang
    Elliott Wave SPX Perspective


    Quote of the week
    "Even though economics is a very old subject, it has not truly come to grips with the main difficulty, which is the inordinate practical importance of a few extreme events." Benoit Mandelbrot (1983)

    Rally backs off...
    After nine weeks of gains, the rally finally came to an end this week with all-red across the board for the major indexes. Up 36% from its March 6 low last week, the S&P500 gave back 5% this week but the index is still nearly 6% above its 50-day moving average. And as we see below, earnings continue to decline...

    ...
  • Consolidation continues

    In This Issue:

    Rally on hold...
    Leaders move up
    Earnings still weakening
    Builders get more optimistic but no support from data
    Elliott Wave SPX Perspective


    Quote of the week
    "I used to take $300 for the week -- that was walking- around money. Now I take $100 for the week. Forget about ordering sushi for lunch." Former Bear Stearns trader Guy Irace.

    Rally on hold...
    Now ten-weeks old, the rally spent a second consecutive week consolidating, with the standout exception of the emerging market ETF which moved more than 5% higher. Up more than 30% from its March 6 low, the S&P500 index is still 4% above its 50-day moving average....
  • Rally off and running again...

    In This Issue:

    Rally off and running again...
    Leaders on hold
    Earnings still in the tank
    Home prices still falling but sales off the lows
    Next weekly newsletter June 14...

    Quote of the week
    "There's consternation in the stock market. If we see a pick-up in long-term yields, an economic recovery will be much more difficult. That concern could be enough to halt the recent stock rally."
    - Russ Koesterich Barclays Global Investors, San Francisco

    Rally off and running again...
    Stocks rallied strongly on Tuesday following the Memorial Day holiday based on a strong showing in the Conference Board's consumer confidence indicator which is interesting - we have found this metric to be of little trading value. However, investors chose to ignore the most recent Case-Shiller home price index that showed home prices continue falling at an accelerating rate....
  • Rally on hold...

    In This Issue:

    Rally on hold...
    Leaders not heading higher
    'Earnings-less' recovery continues
    Builder optimism stutters, starts surge and Treasury sales fall
    Wall of Worry climb takes a break or...?
    Elliott Wave SPX Perspective


    Quote of the week
    - Randy Johnson, president Independence Mortgage Co., California.

    Rally on hold...
    Stocks took a break this week and volumes were noticeably lower as many traders began their summer vacations. But investors remain bullish and continue to ignore or at least discount bad news for the most part and that alone speaks volumes about this market....
  • Trading in a very tight range

    In This Issue:

    Stocks stuck in a trading range...
    Leaders head down
    PEs still showing 'earnings-less' recovery
    New home sales down, re-sales up and final GDP number in
    Uptrend still alive but...
    Elliott Wave SPX Perspective

    Quote of the week
    'Stocks are the worst inflation hedge ever invented.' - John Brynjolfson, CIO Armored Wolf in a Bloomberg interview this week.

    Stocks stuck in a trading range...
    Stocks ended basically flat on the week with some sectors higher, and some lower as the consolidation continued. On a daily basis, stocks are now oversold which is positive short-term but remain overbought on a weekly basis.

    But are investors who are betting on higher prices being overly optimistic? As we said last week, the fundamentals and especially earnings are weak but both generally lag in a recovery. But at some point, both need to show steady improvement if a recovery is to grow legs....
  • Leaders also look bearish

    In This Issue:
    Bearish head & shoulder patterns abound...
    Leaders also look bearish
    Are earnings finally showing signs of life?
    Manufacturing and service sectors improve, trade gap narrows
    Pollyannas caught on tape

    Quote of the week
    "Everyone is trying to jump on that bandwagon. There are projects in emerging markets in which I can make more money than I can in the West at the moment." - Nicholas Field of Schroders Plc, London, manager of approximately $11 billion in emerging-market stocks (see article below - Emerging Market Take Record Share of World Equity).

    Head & shoulders patterns abound...
    The benefit of using technical analysis to make investing and trading decisions is that it removes emotion and the necessity to interpret reams of fundamental and economic data from the decision-making process. The downside of using a technical only approach is that it often provides only short-term insight. As a result, investor and traders with longer-term horizons should use both but as readers of this newsletter witness first-hand each week, the workload and time required to do this type of analysis can be greatly streamlined by relying on charts. Fundamental and technical charts quickly provide an overall snapshot of trends in both stock prices and in fundamentals like earnings and key economic indicators which is far more useful information than single data points....
  • US Stocks Sinking - Where Investors Should Turn Next

    The current global financial collapse has been heralded as the worst since the Great Depression. It has wiped out 40% or more of many investor’s entire portfolios since September. Major banks which have stood the test of time have collapsed. Consumer...
  • How to Trade in 2009 - Part II

    Welcome back to part 2 of How to Trade in 2009. After discussing some macro economic scenarios in part 1, it’s time to look at how to take advantage of those trends. China is perhaps the best emerging market play for 2009. After dropping 60% in...
  • Returns Are in the Emerging Markets: Look to China and Brazil

    Five months after the global economic meltdown, world markets are still unstable as a seemingly continuous stream of negative economic data continues to emerge. Even after September when most world markets lost 40-60% of their value, developed markets...
  • International Firms Get Hit Hard

    In the midst of the global economic crisis, four major international firms had their stock fall sharply after they announced their quarterly reports. ArcelorMittal, the world’s largest steel producer based in Luxembourg, Banking giant UBS based...
  • The Fall of Japan as a Safe-Haven: Fastest Contracting GDP in 35 Years

    Japan has been seen since September as one of the few bastions of relative stability in the global economic climate. It "only" fell approximately 30% during the September crash, compared to the approx. 40-60% of the US and China respectively...
    Posted to Global Emerging Markets (GEMs) by EmergInvest on 02-18-2009
  • Investing Strategies with the Baltic Dry Index

    Investors are continuously searching for a leading indicator that would give good entry and exit signals and prevent investors from losing money. Today, it would be foolish for someone to claim that a reliable indicator exists. Even the famous Merton...