Friday, August 26, 2016

8/26/16 Get Shorty

Have you noticed the number of high-profile investors (most notably George Soros + the Goldman Sachs team) calling for a market downturn?  The right question to ask is why.  In my opinion, they sold out earlier (in Soros' case, hedged with SPY puts) and are hoping to reenter at lower prices.

This morning, Janet Yellen is signaling an increase in interest rates.  The DJIA promptly responded by rallying +120 points.  So a rate hike was already priced in.

I still believe we're overdue for a sharp dive, but for the time being a combination of skepticism (record high cash positions reported by global funds, all the more remarkable as US indexes set new highs) + short bets has placed a 'floor' under the markets.  

My best guess?  The S&P500 (currently trading around 2184) will rise another 4-5% before we take a nosedive.  Of course, it's only a guess and we may well spiral down before Labor Day!

Sunday, July 31, 2016

7/31/16 The First Day in August

DJs dusting off this beautiful Carole King ballad often signals the onset of 'the season of volatility' in the markets.  Investors who choose to board (or continue on) in August and September expect turbulence.  My take can be summarized as follows:

(a) Very short term.  New highs for US indexes.

(b) Short term.  Up to a -5% retracement, which is likely to include at least one 'nose dive' to discourage travelers.

(c) Longer term.  Ascent to new 52-wk highs for most/all global indexes.  

Monday, July 25, 2016

7/25/16 Twist and Shout

The Beatles understood a few things about the market (that
is to say, crowd behavior!).

We're likely to see new highs in all global indexes before
the summer ends.  The ascent to new highs will not occur in a straight
line.  We should be grateful for each dip along the way.  Those of us
who enjoy driving know that roads with the most 'twists and turns, dips and
rises' lead to the best summits. 

Wednesday, July 20, 2016

7/20/16 Judy Collins - "Open The Door"

I wore out the grooves on Judy's 'Living' album playing this track back in the Seventies (when it was titled 'Song for Judith').  Forty years on, and she performs it like she just wrote it!  

Thursday, June 30, 2016

6/30/16 Dylan's Advice to Bears

(a) The DJIA is headed for three consecutive double-digit gains (currently +212 points @ 17907, and +767 points over the past three days).
(b) The SPX (S&P500), despite dire headline predictions (they'll need to change the definition of the word 'prediction' when applied to market prognostications!) of an imminent -8% drop, is now trading @ 2096.
(c) London's FTSE exchange up another +2.27% to 6504, well above the June 23 (day before Brexit) close of 6338.  VGK (Europe) has recovered almost all of the decline due to Brexit.
(d) EEM (emerging markets), FXI (China 'H' Shares), ASHR (China 'A' Shares), RSX (Russia) and VT (total world stock market) are all back to pre-Brexit levels.
(e) EWZ (Brazil) is now @ 3010, a new 2016 high.

How do bears cope?  Here's good advice from Dylan:

It ain’t no use to sit and wonder why, babe
It don’t matter, anyhow
An’ it ain’t no use to sit and wonder why, babe
If you don’t know by now

Experienced traders have learned not to approach the markets from a rational perspective.  The 'market' represents the collective decisions of homo sapiens driven by fear and greed.  Don't think twice, and you'll be better off!  

Thursday, June 23, 2016

6/23/16 Preflight


DJIA +230 points.  SPX +1.34% to 2113.  EEM (emerging markets) +2.42%.  RSX (Russia) +3.9%.  EW (Brazil) +3.94%.  FXI (China 'H'Shares) +2.43%.

In my opinion, 'maximum pain' will be a further gap up on Friday.  One which essentially forces bystanders to buy at any price (or be forced to continue standing by).

Thursday, June 9, 2016

6/9/16 The Soros Thresher

'After a long hiatus, George Soros has returned to trading, lured by opportunities to profit from what he sees as coming economic troubles.

'Worried about the outlook for the global economy and concerned that large market shifts may be at hand, the billionaire hedge-fund founder and philanthropist recently directed a series of big, bearish investments, according to people close to the matter.

'Soros Fund Management LLC, which manages $30 billion for Soros and his family, sold stocks and bought gold and shares of gold miners, anticipating weakness in various markets. Investors often view gold as a haven during times of turmoil.'

As much as I respect Soros' earlier track record, my take here is that he's in danger of denting his family portfolio.  At age 85, it's time to stop making 'big, bearish' bets, especially given the major role that luck plays in most successful trading careers.  He may be right.  But realistically, he's probably at least as likely to be wrong.

The Soros story made headlines on several financial sites this morning, which probably contributed to the -90-point selloff in the DJIA (now well off the lows).  The market is always in the process of separating the wheat (strong hands) from the chaff.