If you are expecting global warming stuff, it’s here:
Canonical in reverse date order:
Intro page with favorites:
Input Data Issues:
This posting is about the other thing I do, looking at investment markets. Prior postings in this series are available here: https://chiefio.wordpress.com/category/wall-street-week/
Posts with some relevance to trades, but not in the format of a full WSW analysis, are available under this category:
The charts in this posting are live charts, so my comments will describe how it is now, but in a week it will be showing new data and a new week. Since I think it is more important to be in touch with what the market is doing NOW than to preserve the historical chart, this is, IMHO, a reasonable choice. Just don’t be surprised if the chart I describe is not the one you see a few weeks from now! If you would like to see the historical chart, you may enter custom date ranges on the charting tool at www.bigcharts.com
Wall Street Week – Monday, August 31, 2010
So what made money last week? The gold bugs moving some into Platinum and the gold MINERS as an alternative. Water utilities. And some nibbles at Real Estate Trusts. Looks like the “sky is falling” trade…
10 Best Performing Industries Industry Name Percent Change (over time selected) DJ US Platinum & Precious Metals In... 12.14% DJ US Gold Mining Index 4.10% DJ US Water Index 2.97% DJ US Diversified REITs Index 2.27% DJ US Retail REITs Index 1.94% DJ US Home Construction Index 1.92% DJ US Speciality REITs Index 1.42% DJ US Industrial & Office REITs Ind... 1.09% DJ US Residential REITs Index 1.09% DJ US Real Estate Investment Trusts... 1.08%
Some bets were major losers. Here’s the worst places to have been:
10 Worst Performing Industries Industry Name Percent Change (over time selected) DJ US Coal Index -7.35% DJ US Brewers Index -5.25% DJ US Medical Equipment Index -5.17% DJ US Clothing & Accessories Index -4.83% DJ US Investment Services Index -4.66% DJ US Food Retailers & Wholesalers... -4.15% DJ US Tires Index -3.91% DJ US Paper Index -3.91% DJ US Forestry & Paper Index -3.91% DJ US Food & Drug Retailers Index -3.87%
Broadly, anything that depends on a viable economy with a robust consumer. Jobs reports are still lousy, so what else is new?
Mostly I’d just point out that the down are ‘near 4% or more” and the ups are a lot less than that. The up / down ratio is very against you…
The Long Term Context
This is a very long duration chart (5 years) of NYSE and one of the S&P 500 (SPY). They will not change much from week to week (just one tick mark) so guides longer term attitude.
Same as last time:
Notice that we’ve slowly rounded over into a flat trend line. The moving averages are pointing sideways. We’re going nowhere, but with increased risk of a fall.
We’ve got the Slow Stochastic nearing the bottom now, so we would expect a bit of a positive short term (on a long term chart… so it’s a few days) of flat to up starting in a few days as we reach 20ish and cross over upside). The MACD indicator is sideways and below the zero line to the negative , so the investment trend is to the downside. DMI is ‘Red On Top’ too, so the major bias stays negative. We’re in a longer term flat to falling market. Our long term context is significantly risky. Even the potential short swing trade that Slow Stochastic says is coming could just be a ‘flat’. During a falling market it can be “flat – down -flat -down” with little to no “up”…
UPDATE: [ Well, the good news flow today on manufacturing accelerated the turn. Notice that Slow Stochastic is showing a bit of a ‘knot’ at the bottom as it turns early. This “trade” looks to be starting now rather than in a ‘day or two’. We do still have some potential bad news on Friday, so it still could ‘wiggle’ some, but I also expect a lot of shorts will ‘cover’ before the long weekend. Especially after todays action. Not a time to be short..]
In the next few days we get a lot of news and noise and with The Fed minutes released. Expect choppy. Given that The Fed said ‘prolonged easing’ I’d expect the minutes to have some bad news to support that. So we’re well on our way to a ‘flat / downish’ week followed by more dropping. Yeah, it could reverse, but the bet for now stays ‘long term down’.
Last week I said:
This argues for a multi-week downward trend to the markets. Figure September for a loser of a month, and perhaps October too. Bias to be ‘out or short’. Cash, bonds, and perhaps gold as ‘safe haven’ plays.
I just wish I’d noted that Silver and Platinum are in the safe haven playbook too.
Spiders (S&P 500) looks very similar. Sideways mostly with risk of down.
We continue to have ‘bear market be out or short’ indications. RSI is still ‘stair steps down’ from an approach to near 80. Williams %R and Rate Of Change both saying ‘be out’ as they are below the mid-line.
When we turn up, these long term charts will lag, but for now they remind us that it’s a generally lousy time to be on the positive side of this market.
UPDATE: [ Notice that Williams %R bounced off the middle line to resume a rise toward the top. When that happens it usually means a run has paused, and is resuming for a while. A fairly positive sign, even if low reliability. So watch for MACD crossover and DMI ‘blue on top’ to confirm any positive side trades. ]
What Is Our Asset Class Context?
Let’s look at the S&P 500 largest stocks in America compared with some other kinds of assets; a 20 year+ maturity bond fund, oil, gold, Yen.
SPY The S&P 500 ETF GLD Gold ETF USO Oil ETF FXY Japanese Yen currency fund TLT 20 Year U.S. Treasury Bond fund FXE Euro currency ETF SLV Silver fund BZF Brazilian currency ETF EWA Austria ETF WOOD A wood and paper products fund
Bonds, gold, silver, Japanese Yen. Same old panic play. Ride it if you like, but be ready to jump when it changed course. Brazilian Real is climbing… could be time to move back to Rio ;-)
UPDATE: [ What a difference a day or two makes. TLT is tilted, Gold is lost some glitter, Rio is rocking and we even “got wood” going up. Looks like a “whale” is swapping from the ‘safety play’ to the “Got Growth?” play. Need to see some confirmation that it’s not just a short cover, but I got ‘bought in’ to several things today including Brazil and Australia ( EWZ and IAF / EWA ) This is why I liked Silver and Copper more than Gold at this point as the first two are also industrial metals, so you get a natural hedge. Semi-precious metal if the money tanks, but also an industrial demand growth if the economy does recover. I’m also back in FCX and Southern Copper SCCO as of today. ]
What about Brazil? A Closer Look.
India looking a bit like a ‘double top’ and ‘failure to advance’ while Brazil is still a bit downslope. I wonder if the money if flowing into Brazilian bonds, of if the volume is just not yet enough to move their stock up? Or most likely it’s just dollars being dumped against all currencies…
EWZ - Brazil BZF - Brazilian Real currency FXI - China EWA - Australia EPI - India - WIsdom Tree fund EWC - Canada EWW - Mexico GUR - Middle East Fund
The stock indicators do not yet say buy. So we’re out, and still waiting for a reentry indication.
UPDATE: [ We have DMI “blue on top” (odd as it is usually slower than MACD) while MACD is looking like a set up to a crossover upside. Not quite a full ‘buy’ indication, but with a pattern of higher lows and with this rise starting from RSI further off the bottom than before, and in the context of rising Real currency, I’m “Back in Rio in size”. Time will tell if I’ve ‘shot the wad’ too early or not. ]
This chart has a couple of the other ‘trade’ indicators on it. Slow Stochastic (that isn’t very slow), Williams %R (that usually tells you the same thing as MACD, but sometimes more clearly), and “momentum” that is like Rate Of Change, but sometimes seems to move a bit faster. We see here that Slow Stochastic and Williams %R are in ‘buy’ territory (SlowStoch is inflected up of a bottom crossover and W%R is crossed over the midline) while Momentum is back at the midline. Not yet a ‘buy’ but at least a neutral.
OOTUS – Out Of The U.S.
The only real ‘news’ here is that it adds the Swiss Frank to the currencies that are gaining.
UPDATE: [ Yen and Gold take a downtick while Euro and British Pound tick up. The Real continues to climb. It looks to me like ‘something is afoot’. More of my money is now in non-US dollar form than anything else. Brazil and Australia mostly. ]
Last week I’d said
A load of “talking heads” were saying to buy gold this week, last week it was Goldman Sachs. But I’m not so sure. It looks more flat to me. If you want to play ‘catch up’ with Gold, I would be more likely to use silver or copper.
That was bad on two counts. First off, when Goldman says buy, a load of folks buy, so don’t fight them, ride the trend THEN get off… Second, I ought to have said “use silver, copper, or PLATINUM”… Doh.
UPDATE: [ Technically the chart says to still be in Gold, but if a lot of the hedge funds who are in gold start selling to move into moving stocks, this could drop fast. I still like silver and copper better, and even platinum and palladium as they are both precious metals and industrial metals. ]
Some Selected Emerging Markets
This chart compares FXI – China 25 big stocks, EWZ – Brazil, EWO – Austria, EPI – Wisdom Tree India fund, and the Indonesia fund.
IDX Indonesia Fund FXI China EWZ Brazil EWO Austria ('emerging Europe proxy) EPI India with dividends and growth fund
For Indonesia, we have “failure to advance” with a “double top”. Falling RSI. ADX line low (low directional strength) and MACD headed down. Time to leave Indonesia for a while. But the others don’t look very good either. So I guess it’s global equity liquidation and run for the vaults of Switzerland…
VIX the Volatility Index
Same as the last few weeks:
“We’re still getting the peaks characteristic of a falling market, but with lower strength over time. We did have a blip up, so as volatility picks up, things will get rocky and we drop some.”
VIX - Volatility Index (not a ticker, you can't trade it) VXX - Short term VIX futures ETN (a ticker you can trade) VXZ - Medium term VIX futures ETN (a ticker you can trade) FXY - Japanese Yen SH - "Short" sell of SPY SPY - S&P 500 benchmark IYT - Transports, a leading sector XHB - Homebuilders, a leading sector and "canary" XRT - Retail
UPDATE: [ The VIX took a big downtick today. That is ‘bullish’ for stocks and implies rising markets. We’ll see if it was a ‘one day wonder’. As VIX drops, buying calls becomes cheaper and selling options becomes less attractive, so if it drops even more, it could make call buying attractive. ]
This is a ‘US Dollar UP” trade chart of UUP. The down bet is UDN.
We had a big run up with a near parabolic “blow off top”, then an overdone drop to the downside, now the ‘dead cat bounce’ as it recovers from the plunge. Next? I’d expect a dribbling drop. Slowly, over a long period of time. The RSI returned to the midline. In a long term drop it will wander 20-50-20-50-20-50. In a flat sideways it’s more of 35-65 35-65 etc. So the next dip will tell. Since this is mostly measuring against the Euro, it’s less useful than looking at the whole basket of currencies.
UPDATE: [ Gee, one whole day for the predicted drop to show up… Not much time to act on it. ]
Ideas of the Week
Covering in some shorts, moving to ‘safe haven’ trades a bit more. Reducing dollar balances.
Update: [ Right advice, though not soon enough, and I’d now say there is also some movement out of ‘safe haven’ into ‘risk with growth’ happening. Need a couple of more days to confirm it though.]
What does the 10 day hourly chart say is happening now?
Here’s a 10 day houly chart of the Dow 30 Industrials (DIA), the S&P 500 (SPY), the Nasdaq tech companies (QQQQ), the Russel 2000 (RUT), and both a Brazil fund (EWZ) and an Australia fund (EWA). It also has a ‘short fund’ (SH) on the chart so you can see what being short this market is doing right now. We also have EWO, an emerging Europe Austria fund, EWW for Mexico and IIF for India.
Close to nothing.
UPDATE: [ Well it was close to nothing right up until it spiked up. Then sat there nearly dead flat at the higher level. Very odd. EWA, Australia, especially is ‘off to the races’. I bought back into IAF for the larger dividend of about 10% but remember it is much more thinly traded than EWA and harder to get in/out in size fast.]
Other Asset Classes
The 6 month asset class race:
SPY S & P 500 US stocks GLD Gold EEM Emerging Markets FXY Japanese Yen JJC Copper TLT Long term bonds 20 year+ USO U.S. Oil DBA Agricultural basket SLV Silver WOOD Wood / Timber
Same thing we’ve seen before. At least the call on silver beating gold looks like it was a good one…
UPDATE: [ Silver, Emerging Markets, Copper spiking up. I’m now back into both emerging markets and copper. DBA the ag mix is rising steadily but unspectacularly. I was going to be in it, but got sucked into other things today with more action. Oil looks like a ‘double bottom’ with “failure to advance to the downside”, so I’ve bought back into some Canadian Tar Sands (IMO and SU). ]
So what happened in the Tech Market relative to world markets?
QQQQ Nasdaq 100 mostly Tech companies DIA Dow Jones 30 Industrials SPY S & P 500 largest companies in the U.S.A. MDY Midcap (Middle sized in terms of market capitalization) RUT Russel 2000 - a collection of 2000 companies from small to large. EWZ Brazil fund EWA Australia fund EWO Austria fund EWW Mexico fund
Pretty crappy place to play…
UPDATE: [ Got a good ‘kick’ today with Slow Stochastic saying a fast trade at least is ‘on’. Still waiting for the slower MACD and DMI to catch up. ]
Were Bonds a good idea?
OK, lets take a peak at the Bonds Race but with TBT (the “long term bonds” short sell ETN – that is, the thing that “shorts bonds”) as the main ticker symbol:
Yup. Still running higher. But at some point we’ll have a ‘failure to advance’…
UPDATE: [ And today that looks a lot like a ‘double top’ with ‘failure to advance’ in the green TLT line. The main ticker of this chart, TBT a bond short fund, has what looks like a ‘bottom’ with early indication of an entry. It would be good to look at Slow Stochastic for it, to plan a bond short, but that RSI is near 20 and the black ADX line on the bottom has made a hump inflection with DMI- headed down says ‘time to short bonds is soon’. As the economy shows life, The Fed will stop having near zero interest rates. Anyone still in bonds then will get creamed as the market price drops. Hard. You want to be out of bonds before then. The impact is worst in the longest dated bonds, so dump your 20 and 30 year bonds first, then the 10s and 5s… Me? I’m preparing to but TBT as a bond short. When MACD has crossover and DMI is “blue on top” it will likely stay that way for some time as The Fed can take a year or three to finish ‘tightening’ interest rates. It can be a very long and lucrative play, so no need to rush in to it. ]
Some Selected Global Oils:
XOM Exxon Mobil - Largest, U.S. / Global COP Conoco Philips - U.S. with Russian exposure CVX Chevron Texaco - U.S. PBR Petrobras - Brazil PCZ Petro Canada HAS NOW MERGED WITH SU SUNCOR BP British Petroleum STO Norway E Eni Italy TOT Total - France RDSA Royal Dutch Shell IMO Imperial Oil - Canada Oil and Oil Sands SU Suncor - Canadian Oil Sands SSL Sasol - South African Synthetic Oil Company
Same basic story as last two times:
Oils get spanked in economic slowdowns, so the ‘double dip’ talk has folks stepping out of oils. I’m still holding large dividend oil and gas trusts. Not much reason to own US oils until we know what the government is going to do to them.
But with the addition that it’s now hurricane season, so things can be very volatile in a weather driven way. Watch for hurricanes threatening the major oil refineries on the Gulf Coast and “The LOOP” where supertankers unload. BP is off the radar as a Gulf risk, but hurricanes are now on.
Natural Gas is lined up for a seasonal drop as AC demand leaves and heating does not begin. Time to prepare to buy on that dip.
UPDATE: [ All the oils took an uptick. Looks like an entry indication shaping up. I’ve got positions in PBR Petrobras now. I also doubled my CZZ (green line on the next chart) on the combined sugar / fuel / Real currency / growth story. ]
What about oil service companies and Brazilian sugar / alcohol?
Last time I’d said:
CZZ has moved up nicely but took a dip. It’s back at the Simple Moving Average stack, so it’s a ‘reentry’ point. But the context is a bit of a worry. Still, sugar as a commodity is likely a decent play.
And that was exactly right. Love it when that happens!
UPDATE: [ Oil Services looks like an ‘entry’ call too. I’ve doubled my CZZ.
SEE the SEA!
No real change here from last two times either:
“Looks like crude oil tankers are in demand. VLCCF is also the abbreviation for Very Large Crude Carrying er Fellow… or Fleet, or something… ”
but with the addition that even they have ‘gone flat’.
When a slowdown is expected, shipping sinks 8-)
UPDATE: [ I’ve taken an early and small position in the cruise lines RCL CCL along with a ‘tiny’ marker position in a shipper and a modest position in TeeKay Shipping with a 10% dividend. Yeah, a bit early, but I sometimes need the ‘nibble buys’ to remind me to keep an eye on a sector… ]
Here is the RCL / CCL cruise lines chart. You can see how these have much more range (or “beta”) that the S&P 500 SPY fund:
The cruise lines can have a lot of ‘juice’ but can juice you in either direction…
Looks like the bottom is in. They are starting to rise. RSI is stair steps up from near 20. MACD is blue on top and crossing to positive. DMI is blue on top. Looks like “good to go” from the indicators.
UPDATE: [ I’ve got a ‘tiny’ in PLD Prologis a logistics REIT and some small Mall Reit positions now. The Healthcare Reits are probably ‘good to go’ but for emotional reasons I’m not in them. Never trade something where you have emotional baggage…]
PEI Pennsylvania Real Estate - Mall REIT (REMOVED to make better graph) VTR Ventas - sr. care, nursing homes, hospitals PSA Public Storage - junk storage units BXP Boston Properties - office REIT on BosWash corridor HCN Health Care REIT - extended care, senior care, medical offices HCP Health Care Properties - ex. care, senior living, Dr. offices PCL Plum Creek Timber - lumber and trees REIT SPY S & P 500 broad stock market benchmark RPT Ramco Mall REIT PLD Prologis - logistics
UPATE: [ I’m in Prologis, but that is probably not the best choice for most folks. It’s just the one I know best. PSA junk storage and VTR and the health care REIT group are probably better. I’ve taken out PEI for now as it’s wide range is distorting the look of the rest of the chart. ]
Conclusions and Likely Actions
Moving to non-US Dollars, physical assets, and the whole inflation “Real Estate, Gold, Platinum, Silver, Yen, Swiss Francs” set. The “Summer cooling demand’ trade on natural gas is over (used to make electricity in peak demand turbines) and the winter demand is not in place yet. Watch for natural gas to drop and plan a re-entry just before winter gets rolling.
Automated Stock Screens
Still no comments from anyone on these, so I’m figuring on leaving them out.
So far nobody has said a thing about the automated stock screens, so I’m leaving them out for a while. If no body looked at them, there is no reason for me to do the work of making this part of the posting.
I’ve moved the automated tool screens here. They are large listings of stock tickers that are not all that visually interesting, so I’m putting them at the bottom. Holler if you don’t like it here. (There have been no comments one way or the other so I’m gong to leave them out for now. Well see. If you want them, holler…)
Running Stocks and ETFs
(On Hold unless someone says they want this.)
I have a tool that searches chart patterns and finds those that I describe to it as “interesting”. For this section, “interesting” is those that have price over the 50 day Simple Moving Average. Basically, those that are in a steady up run.
This is most likely to continue, but will at some point each ticker will hit a “dip” and fall off this search, only to return at the next rise. So a high number is good, until it fails, and a low number can mean time for a second bite at the apple. Being ON the list can be as important as rank on the list. Races tell you how to rank them. Realize that these have not been filtered significantly for the quality of the fund, nor for the volume traded, nor for what they hold. I have filtered for “over a buck” price. Each ticker must be looked at for those qualities before buying anything. This is just a way to find “things of interest” to explore.
Let me know if this is of any use to folks, or just takes up way too much room for not much of interest.
If all this talk of indicators is leaving you wondering what the heck I’m talking about, hit the link in the heading of this paragraph and there is a bit of an explanation.
Remember that on any stock or ticker I say I’m looking at, you don’t just go buy it. You wait for a stock entry indication to get the best possible entry into the position.