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Watching $BID for a market top

Sotheby’s Holding (BID) has so often been a market bellwether.

And at tops at that!  A rare thing in the world of calling market direction. Bottoms are easier to see and sometimes obvious but tops…”calling” tops has killed many a market prognosticator and killed many a bear.

So let me say right off I’m not calling a top here.  Just trying to pay attention…

And when BID quits rallying and/or diverges with general market, it is time to pay attention.  BID was down a bit on its monthly chart in September.  That is a lower high for the stock while the S&P 500 and Nasdaq drifted higher.

What’s it mean?  Maybe nothing.  Yet.  But take a look at the chart action showing BID with the SPX on the chart below in 2000 and 2007.  One might say, as BID goes so goes everything else.

And this time, so far, BID has not even crawled up to the top of its long-term price range, which is rather ominous going forward.

(click on the chart for a larger view)

bid_2016-10-03_0749

 

This market could scream higher…

Call this a perspective on my Nifty-Fifty stock list.

Yesterday, there were 44 of the 50 stocks on sell signals.  That usually marks either the beginning of a bottom or the bottom itself.

On the up day today (however small) one has to lean to the idea this is the bottom itself.

Ask me, this is hard to believe since the market virtually has not gone down at all. So it seems this is a sideways move that will vault (scream) to new highs again soon. Maybe tomorrow.

Note on the chart below the past instances of 40 or more sells on the Nifty-Fifty.  Hard to believe but pretty plain to see.

(right click on the chart for a larger view)

NFTY50_2016-08-18_1435

#Greed top could lead to #SPY stumble

CNN Money’s “Fear and Greed Index”, a calculation of seven key market indicators in order to gauge the primary emotions underlying the stock market, appears to have put in a double top at an extreme greed level.

Historically, this pattern has led to significant sell-offs in the general market as investors’ and traders’ greed, fueled by the market’s recent rally, cycle down once again to a prevalent fear level.

There is really no way to tell how far the S&P 500 index (SPX, also the SPY ETF) will fall but the last time this down cycle took place the SPY fell from a high of 211 to a low of 185 (about 250 SPX points, a 10% or so correction). There is no guarantee it will stop there.

Regardless, this is an excellent shorting opportunity across the face of the stock market, just as it will eventually lead to an fine buying opportunity later on.

Market timing.  They say it can’t be done but a study of the chart below should make it rather obvious “they” don’t know what they are talking about.

(right click on the chart to view a larger image)

FEAR_AND_GREED_2016-04-11_1609

#NYSE Margin Debt

This may be too simplistic but every time I look at this Doug Short chart, I think at least 800 SPX points down before this finishes unraveling. It takes time, of course, but this time that would put the S&P 500 somewhere in the 1400s.

These numbers from the NYSE are a month old so the current record rally is not in them yet but I suspect when it is, it’ll look similar to that little blip up in 2008 just before the real tumble continued.

For Doug Short’s article GO HERE.

(click on chart for a larger view)

Nyse Margin Debt 2016-04-02_1114

 

#Banks – Someone said there’s a rally?

Since February 12th the stock market has been rallying strongly.

So what’s with these guys?

And to top it off, Bloomberg had an article this morning on CEO compensation at the biggest banks.  Now we know where all the QE went.

(click on image for a larger view)

Banks_2016-03-17_0844

 

When in doubt buy solar…

Said it before but bears repeating: when in doubt buy renewable energy…

Simple as that.  Solar stocks will fluctuate with the market and with fossil fuel stocks but one day on some market swing (maybe this one) they will leave the fossil fuels companies withering in the sun, so to speak.

Recently oversold, here are a selection of solar stocks today:

(right click on chart for a larger view)

solars_2016-02-16_1216

 

 

$XLF – Deja vu all over again

Not to make too much of this but…

(Reuters) – Wells Fargo & Co, the biggest U.S. residential mortgage lender and a major lender to the energy industry, reported a slight dip in quarterly profit on Friday as it set aside more money to cover bad loans to oil and gas companies.

Walls Fargo – whose latest balance sheet showed it had replaced Citigroup Inc as the third-largest U.S. bank – managed to increase revenue from mortgage banking for the first time in three quarters in the three months ended Dec. 31.

But its exposure to energy loans meant provisions for credit losses jumped by about $346 million from a year earlier to $831 million. Of the increase, about $159 million was mainly for oil and gas loans.

In the fourth quarter alone, the bank’s wholesale division set aside $90 million more for bad loans than in the third quarter, primarily for loans to energy companies.

And it has been reported the bank has as much as $17 billion in outstanding loans to energy companies.  Wells Fargo is already admitting bad loans to energy but what about the rest of the big banks? Given the tumble in energy and its various companies (especially frackers) one has to wonder how much the sector is running on credit from the major banks (one suspects a lot), and how many of those loans are in jeopardy of default.

For the “deja vu all over again” (as Yogi would put it) see charts below:

Back in 2007, prior to the free fall of the financial sector into the crisis of 2008, the housing sector (ITB), so important in bank lending, was falling apart for a full five months while the financial sector continued to make new highs, until both sectors crashed in lockstep.

(right click on chart for a larger image)

housing_20072016-01-15_1750

This time around the energy sector (XLE) has been falling for 10 months while stocks in the banking sector continued to make new highs.   Both sectors are now both in sync…and going down…

How far?  No telling, but there is some historical precedent for sector divergences such as these.

(right click on chart for a larger image)

Energy_2016_2016-01-15_1750

 

 

 

$COMPQ – chop, chop, finally plop!

December’s Nasdaq composite ($COMPQ $COMPX) closed lower than November on higher volume.

In the past that was as simple and elegant a longer-term sell signal for the general market as there was (see red vertical lines on the chart below).

In the past two years, however, it gave way to chopping up and down with alternating buy signals (closing higher on higher monthly volume, the green lines on the chart below)…it seemed almost monthly.  Not quite sure, but I suspect that was because of the Fed Reserve QE efforts in the market making it hard to get any traditional bull-market correction against cheap credit constantly infusing the market (also suspect we may be paying dearly for that Fed manipulation now).

But it appears the simplicity and elegance of the sell is back, and compelling.  If so, the market’s general indexes  (DOW. SPX, NDX, RUT) are going down until further notice, a bear-market trading and investing environment of “sell the bounces” (one is coming up soon) instead of the bull-market dictum to “buy the dips.”

P.S. I first learned the value of this from a poster named “SemiBizz” on Traders-Talk.Com. when he ended up calling the top prior to the 2008 bear market (see the blue oval in the middle of the chart).  He deserves all the credit for his contribution to that most difficult of market tasks — calling tops.

(right click on the chart for a larger image)

NASDAQ_PLOP

$AAPL analysts – the wrong advice and still getting paid for it

This, again, is what I love about Wall-Street Stock analysts.  They are so often more wrong than right that one wonders why they are getting paid anything to do what they do.

Take Apple Computer (AAPL) as the latest example.  Note the chart below from Finviz documenting recommendations for the last quarter – all except one being on the buy side with price targets ranging from a new high ground around 130 to as high as 179.  And only one downgrade in the bunch.  One.

AAPL closed today at 97.  All these analysts’ “Buys”, “Overweights” and “Reiterateds” came before now, higher up.

I suppose these guys have all sorts of fundamental reasons why AAPL should go up.  The company has tons of cash, many fine products, avoids  a lot of taxes, had a reputation for industry-disruptive innovations.

But the thing about fundamentals is, in the end, none of them matter if the price of the stock no longer agrees with them.

When everyone who loves AAPL, and buys its story, already owns it, one wonders if the analysts ever wonder who are they going to be able to sell it to;  when a company achieves a market cap north of $500 billion (let alone the $700 billion Apple bought for itself), one wonders is any of these analysts might wonder if history repeats – with the exception of Exxon-Mobil – every company reaching that lofty number has eventually had its stock cut in half.

A lot of these mistakes could be cured, or at least alleviated, by adding market timing to their analysis but I’d bet they would join the rest of the Wall-Street chorus harping that no one can time the market. No one. Fact is, it is they who can’t time the market.  One glance at a stock chart would not have hinted the stock was going down, it would have flat out said it was going down.

But since they keep getting paid despite being consistently wrong for whatever reasons, why should it matter to them?

Well…hard to believe, but maybe one day these guys’ clients might take note.

By the way none of this should be construed as investment advice.  As a solitary trader when I’m right only the market pays me, and when I’m wrong it takes it back.

P.S. AAPL is going to be a buy soon…for a bounce to $106 or so, maybe $111, but longer-term…mentioned above something about being cut in half so enough said.

(right click the image for a larger view)

AAPL_ANALYSSIS2016-01-08_1148