I’m going to be making a set of “standard live chart” postings that will be in the stock charts category. There will not be any analysis or description of the status or meaning of these charts, just a live chart that will change over time.
Why do this? It effectively replaces the function of the “Racing Stocks” tab up top. Not only have all those links been broken (thanks to BigCharts changing their URL structure) but the statistics say nobody but me used the tab as a tool anyway. This will also let me make the WSW posting much more efficiently as it will just have a constant format with a link to the standard chart page. Any static charts I want to save, I can save via a download of the image. This will also let me put notes about any particular type of trade vehicle with the chart, so I do not need to repeat them from posting to posting.
It will take time to get all these in place, just like it took a long time to build the “Racing Stocks” tab in the first place. Along the way I’m going to update some of these for changes in my interests and market changes, too. You can click on, or open, the graph to get a much larger one that is easier to read.
Broad View Of The World
Those same tickers with Volume, Volatility, and Willions %R indicators at Bigcharts.com where you can change setting and tickers.
SPY - S&P 500 ETF - the basic stock benchmark TLT - US Treasuries, 20 year maturity - ETF EEM - Emerging Market Basket - ETF EWA - Australia - ETF EWU - Great Britain - ETF QQQQ - NASDAQ 100 - ETF EWZ - Brazil - ETF EWG - Germany - ETF EWJ - Japan - ETF FXI - Chiha - ETF
A 6 month version of the same chart, which will show recent trend impacts more clearly:
The purpose of these charts is to let you see, at a glance, the major industrial centers of the world, the emerging market big players, and a comparison with US bonds (still the ‘risk off’ target for most traders and investors). In one glance you can see if it is a ‘risk on’ or a ‘risk off’ world, how global stock markets are going relative to that trend to risk, and generally which areas are winning the stock race. Deciding “risk on” vs “risk off” is the first and in many ways the most important decision. Run to safety, or take some risk on stocks?
In general, “Emerging Markets” tend to more volatility (in both directions) but are having the most real growth. They often have the most Sovereign Risk (such as Brazil recently re-embracing their Socialist Leanings, thus tanking their market that had been stellar); yet at times, the established markets can be just as stupid. ( Such as the EU recently, who have also decided to embrace their “inner socialist” as they attempt to ‘socialize the debt’ of the PIIGS to the entire EU – and via the IMF, the USA and rest of world too.)
Once you have decided “risk on” vs “risk off”, then you can pick a likely target. Resource economies such as EWA? Emerging Growth such as FXI? European such as EWG? US such as SPY? Tech leading, such as QQQQ? British Empire such as EWU? Staid Japan via EWJ? At that point, you can look at the more detailed graphs below. They look inside various regions with more detail. So, if EEM is up, is that China? Mexico via EWM? Who? Is there a Latin cluster, or an Asian one? Is it all EWZ, or are particular industries moving the needle?
With that in mind, here are the regional close ups
Inside the USA
SPY - S&P 500 ETF - the basic stock benchmark GLD - Gold - ETF TLT - US Treasuries, 20 year maturity - ETF RUT - Russel 2000 "Small-Cap" stocks - ETF MDY - Mid sized "Mid-Cap" stocks - ETF DIA - Dow Jones "Industrials" - ETF IYE - Energy - ETF IYT - Transports - ETF XRT - Retail - ETF IYF - Finacials - ETF
Why these tickers?
GLD and TLT are there to let you see the “fear index”. Are folks embracing fear, or greed?
S&P 500 is your basic benchmark. It is very hard to beat it long term as it is a simple capitalization weighted benchmark that automatically cuts losers from the pack, and inducts new growth once it is large enough to be interesting.
DIA is a more staid index. It has a long history and is part of The Dow Theory of trading (though that theory compares industrials to transports, and I have trouble thinking of Bank Of America as an industrial… DIA is now managed more as a broad market fund of mega caps.) I really ought to put an “industrials” ETF here, but haven’t picked one yet.
QQQQ is focused into the Tech market generally, though it does include any large NASDAQ companies. That capitalization weighting helps here, too.
MDY lets you look at the mid sized companies. Are they creeping up on the Big Boys?
RUT is a very broad 2000 company index. It lets you look past that NASDAQ 100 largest leaders and see if the small guys are getting killed, or are they the green shoots of spring?
In general, these will all move together when they move. “A rising tide raises all boats” and “When the Cops come, they take the good girls out with the bad” are old market aphorisms of some merit. Comparing them is more for ‘fine tuning’ and only AFTER deciding “risk on” vs “risk off”; best used only in established and clearly identified market trends (though in dead flat markets it can eke out a percent or two when nothing else is working). Watch out for mistaking the greater volatility of the smaller stocks for a trend. They can move up OR down with greater velocity…
There are also some selected sector funds. These give a view into the turn of the business cycle.
IYE – Energy is a resource that underlays substantially everything else. From plastics to metals (especially aluminum) to transports. When the economy slows, demand for energy slows. When energy spikes up for non-economic reasons, the entire economy is hurt. Rising energy costs portend rising inflation.
XRT – If Retail is tanking, it is unlikely that the rest of the economy will hold up for long. If retail is in a prolonged rise, folks are spending and the economy will show follow on growth. (Though now I’d expect more of that to show up in China and not in the USA). It has a strong seasonal component and the typical pattern is rising into Christmas, then falling from mid-January / February into about August / September, when the rising cycle repeats. Never buy retail near Christmas… Trade yes, invest no. Investors only buy in the summer retail doldrums when folks are all spending on vacations and beaches… A decent oscillator trade xor hedge trade can be made out of the Vacation Sector vs the Retail Sector.
IYT – Transports. If Transports are rising, something is being shipped somewhere – the game is afoot and the economy is likely to do well. It makes up part of The Dow Theory. IMHO, a modern version of that would look at transports vs China, as it is now substantially the industrial sector of the world.
IYF – It is often said that the broad market can not rise in a Bull Market if the financials are nor participating. (Something that the folks in the EU and Washington DC ought to keep in mind as they attack financial companies…) For now, we need to be watching them for some sign that the Sovereign Risk coming from the Obama Administration, the EU, and the UN/IPCC might be abating…
So, look at the chart. Allow for the seasonal nature of retail. Who is winning, who is losing? Are financials participating? Is there evidence of transportation rising? Are folks running into bonds, or dumping them? (The bond market is orders of magnitude larger than the stock market, so any move out of bonds and into stocks can cause big stock market moves.) Are the Gold Bugs telling you they are paranoid about inflation right now? Or is gold tanking as someone liquidates? (Often a fund in trouble has stock positions or other hedge fund directional trades fail, so they must sell what they have with real value in it.) Are central banks playing games with their gold stocks?
Then ask, which is winning, small companies (green shoots, new economic growth) or large companies (modest growth at best, folks looking to hide from a slow economy in ‘safe’ things)?
IF the SPY is flat or falling, it’s a time to be ‘risk off’. If it is rising, it’s a time to be ‘risk on’. Only after that do you decide ‘which risk’… When it is flatish, shorten your time horizon. Go to ‘swing trades’ that follow those ‘week or two long’ rolling swings of the market; or in extreme cases go to ‘day trades’ that follow the daily pattern of news flow and market events (like the mid afternoon margin calls…) Only once a clear trend is in place can you “buy and hold”; but even then keep an eye on it for a topping action…
EZU - European Monetary Union - ETF WIP - International Government "inflation protected" bond fund - ETF BWX - Barclays International Treasury Bond Fund - ETF EWG - Germany - ETF EWU - United Kingdom fund - ETF EWQ - France - ETF EWI - Italy - ETF EWD - Sweden - ETF EWK - Belgium - ETF EWL - Switzerland - ETF
This set gives a broad overview of Europe and lets you compare the Euro Zone to some none Euro Zone economies. In particular, the UK, Sweden, and Switzerland have their own currencies. There are two broad government bonds funds on the chart as well (with exposure to both Euro and non-Euro, even non-European, currencies and bonds).
WIP is an ‘inflation protected’ fund (but does not protect against currency risk or sovereign risk…) while BWX has more broad exposure to bonds that lack any inflation ‘uplift’ feature.
Most of the individual country funds are the iShares funds. These are generally traded with enough volume and have been around long enough that there is little risk the manager will decide to end them… (yes, folks get their cash back when a fund winds down, but it makes the charts messy ;-)
Belgium is interesting to me, even though a small country, as it may give some insight into the “industry” of growing EU Bureaucracy.
Germany, France, and Italy are major industrial players inside the EMU. They can tell you about EMU exports and internal growth.
Sweden is outside the EMU, but inside the EU, as is the UK, so both give a bit of a “without EMU monetary screw ups, how do economies in the area do?” view of things.
Switzerland, of course, is unique. Money, running to hide, can shove the Swiss Franc around, that can then reflect in their stocks. An interesting mix of financials, drug makers, and chocolate ;-)
Below is a 6 month close up so you can see ‘what is the trend now’ a bit more clearly, but at the loss of some context. Oh, and as long as things are going ‘down hill’ it is hard to read the ticker labels…
This next chart is a collection of ‘smaller Europe’. Outside of the industrial powerhouses, is there anything interesting?
These are the ‘other stocks’ of Europe. When things are going great, ‘lesser names’ tend to rise. When it is a ‘risk off’ world, few buyers are standing around demanding a name they have rarely heard of or know little about. In this chart I’ve left WIP on as our benchmark of currency / ‘stability’. To the extent it is falling or rising that will be saying more about the $US “rubber ruler” we use rather than the fund itself (so any co-wiggles with the stock funds will likely be $US currency artifacts… then again, “rising is rising’ and if some other currency denominated vehicle is winning, you do want to know that.)
GUR - Emerging Europe - ETF WIP - International Government "inflation protected" bond fund - ETF EZU - European Monetary Union broad fund - ETF RSX - Russia - ETF EWN - Netherlands - ETF EWO - Austria - ETF IRL - Ireland - CEF EPOL- Poland - ETF ESR - Emerging Markets Eastern Europe - ETF EWP - Spain - ETF
So, look at the chart and see if the benchmark bond fund shows any dollar bias that makes looking at non-dollar a better (or worse) idea. Then look at the individual country tickers. Is East beating West, or are folks running from the Russian Bear (and his lunch to be countries)? Austria tends to be on the cusp of Emerging Europe and invested in financials, so volatile at times (was good, recently more bad…) Any ‘pockets of interest’ or just ‘all go together when they go’?
Broad Emerging Markets & Resource Markets
In a future posting, I’ll be making a separate posting with the ‘in depth inside’ look at places like the old British Empire, Inside Asia, and around The Latin World. These charts will be a broader ‘sort’ that lets you know which one you might want to look at in depth. The first chart is a mix of some emerging markets with a TLT benchmark (as the currencies are so mixed). The second is a grab bag of Resource Markets with some other misc. things tossed in to fill out the bag.
EEM - Emerging Markets basket - ETF SPY - S&P 500 ETF - the basic stock benchmark TLT - US Treasuries, 20 year maturity - ETF FXI - China - ETF EWZ - Brazil - ETF EWW - Mexico - ETF EWX - Emerging Market Small Cap - ETF GAF - Emerging Middle East and Africa - ETF EWM - Malaysia - ETF EPP - Asia ex Japan (with some Australia)
Resource economies and minor economies are often in highly cyclical industries. They will tend to move more, both up and down, with the business cycle. Small cap more so than large cap, typically. As they are seen as ‘more risky’, during a ‘risk off’ cycle they will tend to fall more, during ‘risk on’ they can move up faster.
EWC - Canada - ETF SPY - S&P 500 ETF - the basic stock benchmark TLT - US Treasuries, 20 year maturity - ETF EZA - South Africa - ETF INP - India - ETF ENZL - New Zealand - ETF ECH - Chile - ETF CH - Chile - CEF (12% dividend on 15 Dec 2011) IDX - Indonesia - ETF EWA - Australia - ETF
I have Chile on this graph twice. CH is a closed end fund. In down markets these can sell at a significant discount to the stocks in them or to the index related to them. In some cases the dividend rate can become very high. Some are specifically managed to yield high dividends. IAF is a closed end fund analog of EWA and often has a higher dividend along with wider swings of price. As of 15 Dec 2011, CH has a 12.42% dividend while ECH is as 3.32%. IAF has a 12.41% dividend while EWA has 3.98%. Buying the closed end fund near a bottom can be very lucrative. Riding it down from a top can be brutal… The dividend can guide you as to market state. I have traded IAF with a dividend range from 9% to 14% as a general guide, though it can range further.
TLT and SPY are as above.
EWC Canada trades with minerals and, increasingly, with oil and energy prices. Also a grain exporter.
EWA Australia trades more strongly with minerals, and with coal. Also a grain exporter.
EZA South Africa has a lot of precious metals and diamond mines along with synthetic chemicals from coal.
CH and ECH Chile exports many things, from wine to minerals. It is becoming a more mixed product country over time.
IDX Indonesia is a large copper producer and has it’s own oil supply. Being somewhat isolated from ‘oil shocks’ can be a big benefit in times of oil rises. It also has forest products and manufacturing.
ENZL New Zealand is a major food exporter. Historically to Europe and the UK, increasingly to Asia. They also have a significant and broad manufacturing base compared to their small physical size. Often they can decouple from the broader global markets, IMHO as the hedge fund guys just forget about it and don’t meddle there much. They have good wine, too ;-)
INP India is an emerging market manufacturer with strength in I.T. support, but volatile and somewhat inefficient. It really ought to be on a chart with the rest of the BRICS (Brazil, Russia, India, China, South Africa) but that is Sooo last century ;-) EPI is an India fund that concentrates on stocks with earnings. IIF is an ETN, so has a tendency to ‘loss of time value’, but in shorter time periods can track India reasonably well. IFN is a closed end India fund, presently with no dividend. Yes, 4 “India Funds” with very similar charts, but entirely different methods.
By looking at the chart of these, you can see patterns related to demand for various resources (in aggregate) and to some extent an indication of the “risk on” vs “risk off” profile. (Folks run from places like India and Chile in a ‘risk off’ world. During business downturns, you get lower resource consumption along with a ‘risk off’ market emotional state.)
OK, that’s the general World Tour of stocks. Generally you can get most of the value by just looking at EEM vs SPY vs TLT. Everything after that tends to be ‘tuning’ for low percent advantages. In general, if things “go south”, it’s a run from resources and emerging markets and into “safety”.
Exactly what is “safe” these days is an interesting question… but despite it being in trouble long term, the $US and US Government Bonds are still the short term “go to” asset class for “risk off” times along with the Japanese Yen. During “risk on” times, both resource stocks and emerging markets tend to rise dramatically while the more established stock markets are so large (and so closely studies) they don’t move as fast or as far. There also tends to be currency interactions as folks flood into, and out of, the ‘minor currencies’ of the smaller markets. This can cause those governments to do relatively stupid things like put in place “capital controls” (which typically do dampen the currency movements, but at the expense of investors abandoning those markets and economies and generally causing them to tank.) Watching the currencies of the minor markets can provide clues about the directional flow of investments into or out of those markets.
When in doubt, a mix of TLT and SPY gives a fairly safe “natural hedge” position. TIP is an inflation protected US bond fund, so if there is worry about inflation risk, it can be compared with TLT. We’ll look at that more in a posting on Bonds. A common recommendation is to have 10% of a portfolio in gold as the ‘third leg’ to protect against currency risk (often suggested by companies selling gold). I’d rather use TIP for that, but it is a reasonable strategy; provided you don’t buy in during a bubble in gold… So, when looking at stocks, don’t let it blind you to the benefits of a balanced portfolio blending stocks, bonds, and commodities (in moderation).
Finally, trading individual companies brings with it a lot of added risks. Not just the “sector risk” of picking which part of the economy will move up relative to the whole, but individual companies can have the CEO do a “perp walk” or an announcement of “accounting irregularities” or even have the stock halted for news. It can open “gap down” or announce a bankruptcy, or that they have just decided to buy another company and be ‘gap down’. Broad funds don’t have those risks. Only proceed to individual stocks and individual stock picking after you understand those risks and know how to handle them. Reading individual stock charts is also much harder as the prices can be much more erratic. It is often worth doing, but it’s very challenging.
I’ve put some abbreviations next to selected tickers. This is what they mean:
ETN is an Exchange Traded Note – holds options and futures. These are NOT long term investments, only trade vehicles for short duration. The "time value" of options evaporates in months so there is a constant leakage of 'value' out of these funds into options time decay.
ETF is an Exchange Traded Fund. In theory these hold real assets and can be held longer term. In reality, there are many trade related behaviours that can cause an ETF to have risk. In downtrends a fund may experience forced redemptions, so forced to sell a position at a loss or at a bad time. This is especially seen in bond ETFs where forced sales can eliminate the stability of the average principle.
CEF is a Closed End Fund. These buy a basket and then do not liquidate it. It can trade at a discount or premium to the stuff in the basket. Some closed end funds do some amount of buying and selling (that kinds of makes them an open end fund, now, doesn’t it…) so the definition has become a bit polluted…
There are also mutual funds that can be traded on a market (they fix the price at 5 pm ET rather than at the moment of trade execution) so I will sometimes trade them, though I use ETFs on the charts (as they give insight into the daily price ranges as the ‘price bar’ changes size.)