Well, BigCharts looks to have changed a service provider, so all the links are broken and need to be redone with the new names in them. This could take a while (especially to get to the Racing Stocks tab, but it looks like I’m the only one who really uses that tool). Don’t think I’ll go back to all the OLD postings and update them. At least not until I’m incredibly bored.
Not surprisingly, the comment on news flow stays substantially the same as it was about 2 months ago:
The “news flow” is all about the Greek Crisis. With good cause. Greece is doing the hard path of “austerity” and the Greeks are not liking it. The jury is still out on how this will end, but the SHTF moment is coming (no matter how much they “kick the can down the road”). Not only is Germany getting tired of funding Greek excess, but the IMF and other lenders, too, have said “No more cash without balanced books.” Greece has huge debt, but also does not take in enough revenue to fund the government expenditures even if it were not in debt. (Unlike Italy who is in debt, but has enough revenue to break even, just not enough to get out of debt.)
Only real change is now “And Italy is in the soup too!” Things will be volatile and dodgy until that whole mess gets settled some more. So far we have governments turning over fast in both countries. More to come?
Conclusions and Likely Actions
Gently easing into selected positions. Nothing very risky, and ready to get out in a hurry if needed. Holding some cash and selling bonds, mostly, along with a few long term holdings (like BRKA). Adding positions in selected issues as their chart says “OK”. Emphasis out of Europe related…
Found some interesting things to investigate further, but still in the ‘do your homework’ phase (noted in line below) and I’ve finally added the Mo’-MO momentum section. Some interesting individual names there to investigate and vet too.
Pointer To Other Topics
Some general comments on how long term investing differs from trading and my thoughts on things to do for the long term investor, start with this page:
If you are expecting global warming stuff, it’s under the “AGW” categories in the right hand margin. Things specific to the NCDC data and GIStemp are under categories with those in their names.
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 Nature of the Charts Here
The charts in this posting are usually 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. If I capture a “static image” I usually label it as such. You can tell by looking at the date bars on the bottom of a graph. I typically use the live charts 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, 14 November, 2011
Long Term Context
I’m promoting this chart to the top for a while, as it is now in control. Look closely at what it’s saying.
This is a very long duration chart (5 years) of NYSE. It will not change much from week to week (just one tick mark) so guides longer term attitude.
Price is still below the SMA lines. Bear Market, be out of stocks. For traders, you can trade-in and buy the dips, then ride them back up. At this point, that ‘dip’ has reached the SMA stack. Time for traders to step out, too. (At least on this time scale).
The SMA lines say the same as last time:
The SMA lines are converged ( I call that a “weave”). In “corrections” those are times to “buy the dip”, in “tops”, they are times to stay out. Right now, we are not in a confirmed Bear Market (the ‘weave’ has not gone to ‘inverted order’ with longest duration on top; nor have we had the price return from below and fail to penetrate the SMA stack).
I would just point out that right now price has converged with the SMA stack. It’s the ‘make or break’ moment where prices either fall away into a confirmed Bear Market downtrend, or break through to a new Bull Market Rise (or, rarely, stay weaving in a mess and muddle).
MACD is below zero and with ‘blue on top’. Indicating a ‘positive run’ underway, but inside a negative (below zero) context. Slow Stochastic has reached 90 and is poised for a downturn. That ‘swing trade’ from the spike down in October is reaching an end. I’d not be buying in at this point, wait for the Slow Stochastic to reach a low again.
DMI is ‘red on top’, but we’ve had the red cross below the black line. The black line is inflected down. All in all, it’s saying a negative bias ending, but not a lot of positive bias yet present. We need blue on top to have a positive long term investment bias. For now it’s just a ‘traders market’. (You can still make money then. But you need to either go to a faster time scale and trade the ripples, or buy “deep value” stocks on the cheap, or for very selected issues, buy momentum stocks fighting the tide… Broad Index investing ‘has issues’ in this context.)
As prices return to the middle of the SMA stack, we are at greatest risk of a new plunge.
There is no “numerology” nor “voodoo” in this. The price motion captures the decisions of all the fundamental analysts, news hounds, manipulators, hedge fund managers, et.al. All we are doing is standardizing how we read that “tell” on what they are thinking (through how they move the prices).
I’m adding another chart. This one is TLT vs SPY, as the S&P 500 is the basic investment vehicle for most folks (unless you really want to pick sectors or individual stocks, you ought to start with a “SPY / Bond” oscillator, as on this long term chart. TLT is long term US Treasuries, so gives a good view of the major alternative where cash runs during times of doubt. If you plotted a line 1/2 between those two, you would get the performance of a portfolio that was 1/2 in each. A pretty good basic strategy for times that are hard to judge. They form a natural hedge pair during spikes, for example.
This chart is interesting as you can see how volatility spikes at BOND market tops (the opposite of stocks, where volatility spikes are at bottoms) and drops lower during times of bottoming actions.
Ok, the indicators. RSI on 80. Saying “top soon, prepare to be out”. MACD well above zero, but looking like a crossover “soon”. Again saying ‘get ready to leave’. DMI with ‘blue on top’ saying ‘be in bonds’, but it has crossed over the black ADX line. While ADX has not inflected, it has gone flat. Not yet saying ‘be out, just be out’, but it’s certainly not time to be buying in (and I’d be scaling out of large positions right now, as that takes time. Scaling out being selling a position in several pieces over a week or three… or sometimes months.) That bond volatility has been very high lately also argues for this being a bond top, of sorts. Prices are well above the SMA stack, so will converge with it. Selling now and buying back into bonds on an SMA touch ought to be a decent trade plan.
The Dollar Lately
Time to measure our Rubber Ruler.
As we said last time, only more so:
The two most dramatic lines on this are the plunge of the FXF Swiss Frank on central bank intervention and the plunge of TBT on long bond strength. Folks will remember I said to watch out for that…
It looks like the Swissy has now converged with the other major currencies, so the central bankers are likely done (for now…) diddling their currency. FXF is back on the “Likely OK to buy” list. The TBT fund has also got a pretty good ‘bottoming look’ to it. Not surprising given the above look at TLT. A fast trader can watch the TBT for a ‘short the bonds’ trade to develop (whenever Europe stops being a conflagration…)
In other notes, FXM Mexico tanked on their having no effective control of large parts of their country (and so, of their economy). Killing tourists is not good for business. Gold took a plunge and recovered. LOTS of volatility to trade, long term stable investment, not so much. Most stable currency with an uplift looks to be the Canadian Looney FXC. All that loverly oil and minerals along with having trimmed back their prior socialist leanings. Also note how the $US line is less volatile than the others. That is part of why I park in $US when I want a break. If I want to NOT TRADE, then I want to NOT trade, and that means picking a low volatility instrument. Everything else is still a trade… So I go to the low volatility stuff. IFF the $US ever goes volatile, I’ll go elsewhere. The Swiss have a small currency, and folks run to it driving it up fast, then they have an interventionist Central Bank that whacks it. Not something you can ignore. Japan has a bank that listens to their industry demand intervention for trade advantage. The Euro was an alternative, and has now gone wonky. Gold always has been wonky volatile… At times I’ve thought that having a basket predefined would be ‘better’. Perhaps a 10% GLD, 10% FXY, 10% FXF, 10% FXE, 60% $USD? But I’ve been too lazy to do the work to figure out if that’s better or worse…
Oh, and notice that FXB the British Pound has been fairly good (stable and higher than USD) and the Aussy FXA has been good, but very volatile. More suited to trades than just ‘park in it’…
OK, our ruler is “OK but a tad biased low over the longer term”, up the last few months.
While the indicators are generally saying ‘be long $US’, that ADX line is just laying there dead. Not much movement at all. So it’s OK to be in, but you won’t see anything much happening…
Here’s the same chart with the main ticker being “UDN” the “Dollar Down” ticker and TLT instead of TBT. Note also that the XAU ‘gold and silver stock index’ is swapped for GLD gold metal. The period is shortened to 6 months for a more detailed separation in the recent time periods.
Same story, just with inverted indicators and vehicle. You do get a nice view of the Japan Central Bank interventions as the FXY Yen dips down, then drifts back up. The massive gold volatility stands out nicely. Again, good for fast trades, not for ‘sleep well’ nights.
And here is the 10 day Euro chart, with BZF the Brazilian Real added.
Looks like a lot of mindless volatile hash. That happens when folks are getting pummeled by daily Euro-Nuttiness Newsflow…
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:
Last time I’d said:
Bonds were the place to be, and longer term more than shorter.
If The Fed keeps the easy money flowing tomorrow, then bonds will continue to win.
And that was true in the last couple of months. (Yeah, I’ve spent a couple of months not doing a new WSW posting… -slaps hand-…) But that trade has “gone flat”. It’s time to exit a flat vehicle… For TBT, we have MACD “red on top” and below zero, so still not time to put on a short of bonds, just not a lot of reason to be in them. (WIP and TIP, the inflation protected bond funds are a different matter. This is just the US Treasuries long duration…)
Base Metals vs. Precious Metals
DBB - Base Metals ETF GLD - Gold (physical metal) ETF JJU - Aluminum ETN JJN - Nickel ETN JJC - Copper ETN JJP - Precious Metals ETN ld - Lead ETN JJT - Tin ETN SLV - Silver (physical metal) ETF PALL - Palladium (physical metal) ETF
A mixed bag. Silver in a nice run. Looks OK to be in (perhaps I’ll do a new SLV detail posting…) but I don’t like the way it flattened at the end… Platinum looks good too. Copper did a ‘pop and drop’ while Palladium did a ‘pop and hold’. I’d buy Palladium ahead of copper on that basis. OK, looks to me like the more ‘rare’ metals are doing better than the more common ones. Palladium and Platinum over copper and tin.
Nickle just laying there on a bottom (but it looks like a bottom that is holding) right next to tin (the green line). The DBB basket indicators are looking like “bottom is in” but upward run not started yet. Long term investors can likely take positions in metals with some safety at this point. It would be good to look at the metals miners, too. As metals prices rise, their stocks will too.
A closer look at gold:
Just a mess. Weaving SMA lines. Price in the middle of it, but lower than the prior high. MACD just above zero and ‘blue on top’ but the ADX strength line just nowhere, reminding us that this is a positive TRADE run, not a long term momentum action… The ‘gap’ to the miners is also still a bit distressing. All in all, I think I’d rather buy the miners and get the gold ‘cheap in the ground’…
Here’s a little look with a couple of other indicators. Volume+, Volatility Fast, and Momentum. I’ve also put PSAR (the little red dots) on the upper graph. This is a 6 month daily chart so you can see the daily volume bars better.
Volume is just dead. Volatility spiky, but fading. Momentum on the skids, headed to a zero cross to negative. Pretty much says “not interested in Gold”… We’ve also got a weaving disordered SMA stack too. Not nearly as interesting as the base metals, or the mixed industrial / precious metals of Platinum and Palladium, IMHO.
Last time I’d said we were in a downtrend. That continues.
DMI cruising along with Red On Top, steady downtrend. We had a one month ‘return toward the 50 day SMA’ line, that never quite got there. MACD went ‘blue on top’ for a while, but never crossed over the zero line into a positive trend, just a counter trend rally, and not much of one at that. COW rising some, as meat prices rise. That and a spiky sugar line that gives regular swing trades is about it.
Looks like Ag is not interesting at the moment. (Though a look at the meat packers might be in order…)
Anying new in the “bottom fishing” waiting game for Brazil. Same as before:
Last time I’d said:
With RSI ‘near 20’, it’s time to start looking at CZZ and Brazil as ‘bottom fishing’ with a potential entry point. Still not liking the politics in Brazil, and their market will generally do worse than ours in a downturn (better in an upturn). But one can still watch for the turn to come, if it comes. And you start watching when it looks the worst.
And CZZ obliged with a very nice bounce off a spike bottom. It is about to touch the SMA stack from the topside and bounce off. With a MACD move to ‘blue on top’ and ‘above zero’, it becomes an OK longer term investment. (But always with an eye on the politics of Brazil and the price of oil…) The BZF line looks like money flowing into Brazil too. Time to look again at Brazil…
When things are looking bad for the USA, stay completely out of Emerging Markets… BUT when the world lights up, the emerging markets can be a rocket ride…
Monthly Running Stock Sectors
So what “won” and “lost” over the last month? (though remember, they may not be the winners next month… it’s just to provide ‘context’).
This list is a bit misleading as you had to time the entry just right to capture this one up month after a big drop, but it WAS possible to make money if you did.
10 Best Performing Industries Industry Name Percent Change (over time selected) Dow Jones U.S. Pipelines Index 20.06% Dow Jones U.S. Consumer Electronics Index 19.79% Dow Jones U.S. Exploration & Production Index 18.31% Dow Jones U.S. Platinum & Precious Metals Index 17.11% Dow Jones U.S. Tires Index 15.78% Dow Jones U.S. Hotel & Lodging REIT Index 15.33% Dow Jones U.S. Industrial Suppliers Index 14.27% Dow Jones U.S. Steel Index 14.14% Dow Jones U.S. Oil Equipment Services & Distribution Index 13.55% Dow Jones U.S. Home Construction Index 13.39%
Looks like I left a lot of money on the table by being a lazy bum and not doing that Momentum Posting…
Generally, an ‘industrial recovery’ trade. Metals, with some emphasis on industrial metals like platinum and steel, oil, piplelines, and some construction (homes and industrial suppliers). Some more tires and a bit of the end of vacation season. As Europeans flooding to US Hotels on vacation has likely hit a pause, I’d be careful about the hotels going forward… But the theme of ‘industry will export with a weaker dollar’ looks to have legs.
How about the losers?
10 Worst Performing Industries Industry Name Percent Change (over time selected) Dow Jones U.S. Airlines Index -5.64% Dow Jones U.S. Brewers Index -2.05% Dow Jones U.S. Nondurable Household Products Index -1.57% Dow Jones U.S. Mortgage Finance Index -1.51% Dow Jones U.S. Full Line Insurance Index -1.44% Dow Jones U.S. Waste & Disposal Services Index -1.33% Dow Jones U.S. Computer Hardware Index -1.02% Dow Jones U.S. Specialized Consumer Services Index -0.99% Dow Jones U.S. Auto Manufacturers Index -0.66% Dow Jones U.S. Personal Products Index -0.35%
Airlines (NEVER own an airline…) largely on oil price hikes (ALWAYS own some oil…) along with brewers ( I guess we’re not drinking as much beer lately). LOTS of household related… Mortgages, insurance, garbage and computers, consumer services, autos, personal products.
Yeah, that ‘fits’. The only inflation destroying folks lives is in the stuff we all buy (food and fuel) and not in the wage we earn (net to zero, so ‘no inflation’ on The Fed level…) while the somewhat buggered dollar makes some exports more sellable and the Euro-Fiasco making it more sensible to put operations in America for folks making an A/B decision… So, “Bugger the population, buy the industry” looks like the theme. Likely to continue, IMHO, as I’m not seeing anything being done to change the trends.
Any change vs. “lately”?
Weekly Running Stock Sectors
The best and worst of the week? Do they tell a different story on the short term trade?
The ‘up / down ratio’ is about flat. Looking at those percents, if you owned the whole basket, not much happened. It’s a flat market, but with selected winners.
10 Best Performing Industries Industry Name Percent Change (over time selected) Dow Jones U.S. Brewers Index 5.53% Dow Jones U.S. Home Improvement Retailers Index 5.47% Dow Jones U.S. Health Care Providers Index 3.70% Dow Jones U.S. Home Construction Index 3.45% Dow Jones U.S. Travel & Tourism Index 2.58% Dow Jones U.S. Health Care Equipment & Services Index 2.48% Dow Jones U.S. Telecommunications Equipment Index 2.41% Dow Jones U.S. Distillers & Vintners Index 2.39% Dow Jones U.S. Railroads Index 2.29% Dow Jones U.S. Pharmaceuticals Index 2.24%
An odd mix. Looks like some short covering in things like Brewers and other consumer related. Some large hedge funds changing bets? Railroads and Pharma look like new players. I’d be cautious about buying a Dead Cat Bounce in consumer related based on one positive week, but it might argue for the short leaving indicating a ‘bottom soon’.
10 Worst Performing Industries Industry Name Percent Change (over time selected) Dow Jones U.S. Coal Index -5.96% Dow Jones U.S. Business Training & Employment Agencies Index -4.53% Dow Jones U.S. Airlines Index -4.02% Dow Jones U.S. Gambling Index -3.90% Dow Jones U.S. Hotel & Lodging REIT Index -3.21% Dow Jones U.S. Toys Index -3.21% Dow Jones U.S. Real Estate Services Index -2.89% Dow Jones U.S. Electronic Office Equipment Index -2.87% Dow Jones U.S. Aluminum Index -2.86% Dow Jones U.S. Leisure Goods Index -2.75%
Coal getting whacked? I wonder why… with oil up and an ‘industrial recovery’ bet in place. Sovereign Risk based on Obama pigeon hole of the Canada Pipeline? (IF an already approved pipeline with as low an environmental impact as can be imagined, with union jobs in the mix, and with oil we desperately need; if THAT can be canned, would ANY coal project be approved by His Highness?)
Businesses not investing in training (well, duh.. hire someone from India instead and lobby for H1B visas)
End of the vacation trade, with airlines and gambling ‘coming off’. Hotels too. Folks expecting a Grinch for Christmas with toys and leisure goods in the dumper. Aluminum too (beer cans and autos…)
And nobody thinking real estate is in a good way yet. Quelle Surprise…
Mostly I’m seeing echos of Hedge Funds changing their computer driven trades based on themes that they take from The Trade Book. Not a lot of actual investor driven movement. Not a lot of substance to grab onto in that jello of fickle swing traders.
This is a new section and will be a bit of ‘under construction’ for a while. But at least if I put it here, I’ll be motivated to make it better ;-)
First off, the caveat page. Know how to exit before you enter a momentum trade:
This is NOT buy and hold investing, OK?
The general approach is to find lists of stocks going up, then look at their chart for ‘what is in a good configuration and likely to continue’, then wait for an entry. That last part can be particularly frustrating in stocks with a strong momentum as the ‘dips’ either never come, or come at the eventual blow off top of an exhausted big momentum run. So sometimes I’ll just ‘scale in’ to momentum stocks. Buy some each dip, and exit all of it on a topping indication.
This posting gives an overview of the method of picking:
FINVIZ Daily Bubbles chart right now lists these as the most Mo’-Mo stocks right now (and many more near them, like X as a bottom fish in U.S. Steel):
CRM - Salesforce.com AVY - Avery Dennison Company TIF - Tiffany LOW - Lowe's BA - Banc Of America TSN - Tyson Foods SNA - Snap On Tools QCOM - Qualcom GLW - Corning Glassworks ETN - Eaton
BAC looks like a bottom, but not exactly any upward momentum. AVY too. CRM is more of a flat roller in my view, but near a bottom point. TSN is in a nice rocket up. Meat, where did we see that idea before? (see the rest of the posting, this was added last…) SNA is moving nicely and with a good looking chart. Expecting mechanics to buy some tools to fix all those old cars we continue to drive. TIF doing well after a dip (those little blue boxes for Christmas) and I own some (or rather, my spouse does). LOW looks great (so a check of HD would be in order). QCOM is on a nice new run too. GLW is clean off a bottom, nice ‘bottom fish’, IMHO. Last up we have ETN that also looks like a nice pop off a bottom.
All in all, it looks like a decent list (though I have my doubts about BAC unless you take a 5 year point of view on it…)
GR - Goodrich Corp FFIV - F5 Networks SNDK - Sandisk RHT - Red Hat TSO - Tesoro EP - El Paso GWW - WW Granger KLAC - KLA Tencor ORLY - O'Reilly Automotive Parts FAST - Fastenal
This is a much more ‘mixed bag’ look. Several look like a big pop, then flat. Some major news driven event that is now long gone. GR and EP are clearly that way. Others have an ongoing ‘run’ that may have some room left, but look like more behind than in front, to my eye. Then again, MO often looks that way… FFIV, SNDK, RHT, TSO (that looks like a tired pop), a few look like a hard run continuing. KLAC, GWW, FAST, ORLY.
In the next posting I think I’ll try a time scale between those two, perhaps a one week scale. For now, this will have to do on the ‘getting started’ with Mo’-MO at FINVIZ.
How about the Barchart Top 100?
The top of their list today is:
Sym Name Weighted Alpha Last Change Percent High Low Time SIMO Silicon Motion Techn +313.10 19.88 +1.40 +7.58% 19.90 18.15 11/14/11 QCOR Questcor Pharmaceuti +210.91 43.35 +0.21 +0.49% 44.41 42.96 11/14/11 EGAN Egain Comm Cp +201.70 5.94 +0.39 +7.03% 5.94 5.21 11/14/11 PZZI Pizza Inn +189.04 6.05 +0.05 +0.83% 6.30 5.86 11/14/11 ARIA Ariad Pharmaceutical +180.06 11.01 +0.08 +0.73% 11.11 10.77 11/14/11 VRUS Pharmasset +168.21 68.93 +1.13 +1.67% 69.37 65.96 16:00 GLNG Golar Lng Limited +164.59 42.36 +1.46 +3.57% 43.40 40.56 11/14/11 SPPI Spectrum Pharmaceuti +159.82 12.50 +0.48 +3.99% 12.66 11.98 11/14/11 COG Cabot Oil & Gas Corp +141.90 86.31 -1.75 -1.99% 87.55 84.94 11/14/11 EDAC Edac Technologies +137.50 9.11 +0.04 +0.44% 9.27 8.77 11/14/11 VHI Valhi +130.06 58.03 -0.09 -0.15% 58.75 56.93 11/14/11 HSTM Healthstream +129.33 16.05 -0.07 -0.43% 16.59 15.88 11/14/11 DPZ Domino's Pizza Inc +125.85 32.60 +0.23 +0.71% 33.00 32.30 11/14/11 SIFY Sify Technologies +125.72 4.77 -0.01 -0.21% 4.95 4.71 11/14/11 RIC Richmont Mines +120.50 11.97 -0.33 -2.68% 12.32 11.75 11/14/11 FTK Flotek Industries +119.37 8.63 +0.39 +4.73% 8.82 8.12 11/14/11 PHMD Photomedex +114.03 12.83 -0.22 -1.69% 13.10 12.83 11/14/11 MAKO Mako Surgical +113.40 33.98 +1.13 +3.44% 34.21 32.27 11/14/11 STMP Stamps.Com Inc. +110.49 28.38 +0.06 +0.21% 29.36 28.01 11/14/11 AMPE Ampio Pharmaceutical +109.33 6.85 -0.22 -3.11% 7.06 6.76 11/14/11 RGR Sturm Ruger & Compan +106.16 32.08 -0.15 -0.47% 32.52 31.64 11/14/11 PSMT Pricesmart +104.83 67.92 +0.06 +0.09% 68.62 66.92 11/14/11 TNH Terra Nitrogen Compa +104.60 174.74 -0.48 -0.27% 176.95 174.00 11/14/11 ULTA Ulta Salon Cosmetics +104.16 71.78 -0.57 -0.79% 73.40 71.21 16:00
A couple of names there are familiar, like TNH. So lets look at a chart of some of these.
Generally nice looking charts, and more or less what you want to see, rising lower left to upper right.
I note that RSI is getting a bit high (as it does on big movers) for SIMO and that EGAN has had quite a ‘blow off top’ pop and plunge. Clearly there needs to be a bit of ‘post charting vetting’ before you buy one of these things…
Still, all in all, it does look to do a decent job of sorting out the ‘upper left to lower right’ stocks.
OK, that’s all the Mo’-MO I can do in this posting. Folks ought to mine the lists at those sites and chart up the candidates, then ‘vet’ them for things like, oh, over $2 price and not having flaky financials. Basically start with the bigger names that you know and avoid the strange names with penny stock pump and plunge behaviours. In any case, it does look like a good way to find individual names with some momentum behind them, and for the FINVIZ daily to find some bottoming reversals.
With that, on to looking at how the ‘shorts’ are feeling…
Shorting The Broad Market
Here we have a Big Short, then a big Short Cover, then a go flat. Looks like the ‘long’ phase is over and a new ‘short stocks’ will happen soon. Unless a load of ‘natural investors’ show up with a bucket of cash to squeeze those shorts, we’re just going to continue to ‘ring’…
All in all, I’m still not enthusiastic about long term investing in this market, only short fast ‘swing trades’. Some individual stocks and sectors can still be winners though.
10 Day Hourly Fast Trader Chart
Bunch of wobble going nowhere the last few days for the broad SPY market. Yeah, a 2% gain over the two weeks, but mostly dominated by spikes and drops. ADX about 12 on an hourly chart is just dead money. That MACD is setting up for a ‘crossover red on top’ and heading for below zero after that says to ‘sit out for a few days’ at least. Yes, it will be ‘news driven’ out of Europe…
What about Brazil? Also India and China.
Oddly, looking rather like a bottom…
EWZ - Brazil GLD - Gold fund BZF - Brazilian Real currency IDX - Indonesia FXI - China EWA - Australia EPI - India - WIsdom Tree fund EWC - Canada EWW - Mexico GUR - Middle East Fund
We have the SMA stack doing a ‘reversal of order’ at the bottom. We’re in a ‘bottoming weave’. Next step is a recovery to the normal bull market order with price over fast over medium over slow… RSI is making “higher lows” off of a ‘near 20’ moment. MACD is above zero (new bull market indication) and while it’s looking like a ‘crossover to the downside soon’, that is more likely the buy moment than a sell. Price needs to kiss the SMA stack from above and THEN move up, so I’d expect a bit more weave and then a new run higher. Time to make an in depth set of Emerging Market charts and pick the best and brightest. IDX is looking good on this chart, as is EWW (but I’m leary of Mexico as they don’t have decent governmental control of their states, so I’d likely skip in in favor of EWA on a mineral play).
VIX the Volatility Index
Oddly, the most interesting thing to me on this chart is the IYT transportation index. Looking at that chart shows a dramatic spike down, then a major spike back up (probably Hedge Fund driven) and it’s now above the SMA stack with positive indicators. OK, note to self, do a Transportation Posting…
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
Still pretty volatile, but volatility dropping. That argues for less of a buy moment than a pause and select to buy on a high volatility down day spike moment… FXY Yen with a nice 8% or so rise as the Bank Of Japan rediscovers that they can’t beat the world by selling yen and buying dollars… (So folks afraid of a dollar inflation plunge ought to look at yen).
XHB, the homebuilders, on a big run up… from a big run down… Yeah, a nice trade, but no reason to invest in them. Just more fingerprints of computer driven hedge fund trading, IMHO.
You could make some money on volatility trades (VXZ and VXX), but it’s a dicey fast trade.
Last time I’d said:
Looking like Yen are nice and stable in comparison to just about everything else…
We got some BOJ intervention dips, but other than that (‘buying opportunity’ ;-) it was a nice place to park money. No real gain over the 2 months, but if you didn’t panic out on the BOJ, no significant loss either.
Ideas of the Week
There is a bunch of them scattered through the posting above. Investigations mostly, at this point. Making shopping lists for transports, emerging markets, metals. Park some money in Canada and Japan. Buy some Canadian Oil (and Rail? As they will need to ship all that lovely oil to China as they await His Highness deciding US Consumers have suffered enough and pipeline can be built… so Canadian Rail to the coast, and Chinese boats to China… By By Oil … or perhaps Buy Buy Oil ;-)
Looking to me like “out of the US” is coming back, but perhaps a bit bifurcated. US Consumer being OOTUS, while some selected US Industrials, heavy on exports, might be OK. Chemicals on cheap natural gas? A “dig here” idea.
Exit bonds, they are ‘toppy’.
That’s the big lumps. Now I just need to do it rather than talk about it ;-)
Last time I’d said:
Only real difference is that oil is likely to keep dropping for a while as economies continue to do nothing much. Metals demand down implies shipping down implies oil demand down too.
That didn’t hold up for 2 months. Oil is rising. Why? Libya is a mess, and will be for a while. Syria is out at the Arab Union (so tensions are rising) and rumors are that Israel may need to nuke Iran before Iran nukes them… Now THAT will put a spike in oil prices… So I need to do a better job of watch oil on a fast political / war news driven basis. No vacation for me…
But I did say:
Blend in some ‘hide in Yen and TIP/ WIP’ and that’s about if for now.
WIP didn’t do as well as TIP (taking a Euro hit) but both are presently in nice up trends. A blend of the two generally does make a nice place to hideout.
Oil And Fuels?
About 1 1/2 months back you can see a very nice ‘entry’ moment. MACD goes ‘blue on top’ and crosses the zero line to positive. Price crosses the SMA stack. RSI does a ‘higher low’ off of a ‘near 20 touch’. DMI goes “blue on top”. Just a stellar example of ‘buy now’. Just wish I’d looked at it a month ago instead of now. Then again, a month ago I was driving cross country after exiting from work… not exactly a great time to be focused on oil. That, BTW, is a great example of ‘know yourself’. I know my failure mode it so ‘stop looking’ when I’m distracted. If I had the discipline to get past that, I’d do much better…
At any rate, it’s looking like the Oil Trade is on and running. Natural gas continues to plunge on excess supply (so much for ‘energy shortage’…) which means US Chemical companies have cheap feed stock and US Electrical Generators have low fuel costs. They are worth a look. Coal does a plunge / bottom bounce. Probably why coal companies tanked… that and the Obama Put on coal. Watch coal for an election bounce if a Republican looks to be leading.
And with gasoline ‘surfing down’ in waves, while oil spikes up, look for refiners to fade as their ‘crack spreads’ compress.
The 10 day chart:
Nice two week run. Looking a bit tired to me. So I’d likely wait for a better entry into oil, as it returns to the SMA stack from above on that longer time cycle chart.
So what happened in the Tech Market relative to world markets?
Generally ‘best of the bunch’ but looking like it’s gone flat lately. Indicators say that too.
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
Not oil per se, but the companies that produce and process 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
Nice rise out of a bottom, but looks to have paused at the moment as stocks in general have paused.
Last time I’d said:
Hmmm…. Exxon and CVX look “bottomed”. Perhaps time for long term value investors to accumulate some. BP and some of the other tickers too. The higher leveraged oil sands companies are still dropping, though. (SU for example).
That was pretty much ‘spot on’. Just a bit ahead of that spike down, about enough time to get the orders lined up and in. I continue to put oils in the ‘buy the dips’ category.
What about oil service companies? Or that Sugar and CZZ?
Looking like a bit of a bottom. I’d concentrate on the OOTUS deep water drillers.
Last time I’d said:
Sugar looks like it’s made a ‘double top’. Probably time to exit the sugar trade.
And sugar has nicely ‘surfed down’ since then. Still not interesting… (but folks who BUY sugar might be ;-)
Ag and Ag support / Input companies
TNH is looking a bit toppy, but with an 8% dividend I’ll need to see proof before I give up on it and stop ‘buying the dips’.
TNH took a dive and recovered. Probably ought to do a news search on ‘why’. It’s a major dividend player, so I’m not real worried about it, though. MON Monsanto doing OK, not great given the volatility in it. Meat (COW) doing well, but not a big win. All in all, not that exciting. We do, at present, have a lower high. So if you are not interested in the dividend clipping, it’s likely over as a momentum trade.
SEE the SEA!
NAT is looking like a bottom. Some of the other shippers not quite yet.
Last time I’d said:
Looks like RCL and CCL may have a bottom in. With the strength in the vacation trade, it’s likely time to revisit them. A couple of the other boat tickers look ‘bottomy’ too.
And they have gone up nicely in the last two months. We’re now in the ‘return to the SMA stack from above’ process. This is the time when long term investment trends can start. I’d take this as a decent time to start ‘scaling in’ for long term holdings.
What I said last time was “Continuing weak.” and it has, and is. We do have some indications of a ‘bottom’ in that we’ve got, for BXP, RSI with a ‘lower high after a near 20 moment’. We have price over the SMA stack and we’ve got MACD above zero. I’d make this a ‘buy the dip’ moment for long term investors wanting dividends and some inflation hedge in real estate. Yes, a bit of risk as the ‘dip’ and bounce were a bit violent (hedge fund folks again?) and yes, you need to run a chart for each fund to find the best and time each individually. Still, it looks like the shorts have exited.
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
The Long Term Context
Nothing in this section has really changed. I’ve moved the charts from here to the top for a while, as we’re still in a negative long term context (though potentially near an inflection).
Here is another interesting chart where you can see how volatility spikes at market bottoms and drops lower during times of topping actions. It also has “momentum” on it which can act as a reminder of how much force a trend has, and which way. Slow Stochastic is better for a faster trade behaviour when ADX (of the DMI / ADX indicator above) is below 20 or so.
If this all looks like “too much”, just remember that you don’t need to look at more than the one basic chart. The rest of these indicators give more depth of insight into “why”, but not better answers as to when to be in stocks vs bonds.
While it generally is giving ‘be in’ indications (momentum positive, volatility dropping but not yet low) that Slow Stochastic is saying ‘expect a dip soon’. That ought to be a buying opportunity (unless things fall apart completely on Europe news or a new war…)
When the long duration charts say “maybe making a top, but perhaps a ‘buy the dip’ moment”, I look at the faster charts and faster indicators and move to a faster time scale with faster trades. But I’m a trader.
For long term investors, you just ride the ride until the chart says “top is definitely in” and “buy the dip” until proven otherwise by a confirmed roll over (price below SMA stack). In general, I’d put very long term bias as “be in”. Trend is up, dip happened. Be in. But you just can’t ignore that the price plot looks very “rolled flat” at least… and we’re all waiting for DC and Germany to “make their moves”… So you must WATCH the chart each week, even if not acting to be out of the market yet.
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.