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.      

Wednesday, May 25, 2016

5/25/16 Corrective Lenses-> Long Live The Bull

I scan through dozens of market commentaries each day, with an emphasis on market views which differ from my own.  Occasionally I come across one which truly sparks the imagination.

Mark Hulbert (last night) casually brought up the possibility that the 2009 bull ended in May 2015, which was then followed by a correction that now stretches over a year:

'The bull is dead.  Long live the bull!'

I can almost guarantee that the article will go unnoticed by the vast majority of traders.  Moreover, the vast majority of those who actually read the article will dismiss it.  In which case there's a very good chance Hulbert is right.  In a year or two, the media will (re)discover Hulbert's prescient 'take' and grant him kudos for calling the start of the 2016 bull.  A very fitting start, in fact, to this century's version of the Roaring Twenties.

It's all well and good to back Hulbert's view, and to further leverage his take into a Roaring Twenties scenario.  But how likely is it?  After all, most of the commentators I follow are adamant that stock sales are inevitable as retiring Boomers begin mandatory (or necessary) withdrawals.  The problem with that consensus opinion?  It's inflexible and narrow-minded.

Here's a more optimistic alternative view:

(a) A few Boomers have saved enough for retirement.  The vast majority have not.
(b) The Fed (many themselves Boomers) are well aware of the above.
(c) They are also well aware that Social Security and Medicare budgets are stretched.
(d) Japan is facing a similar demographic crisis, and has taken steps toward pension reform.  Basically-> 'risk on.'
(e) I think the US follows suit.
(f) If/when (and in my opinion it will be when) Congress approves a 'risk on' approach to managing Social Security and Medicare funds, we will have another perfect market outcome.  That is to say, the market will have fooled the majority of investors.  The DJIA may well rise to 30000, eclipsing budget deficits on its way to creating record budget surpluses.  In this case, both Congress and Boomers win as well.

Sunday, May 22, 2016

5/22/16 Rock(et)ing Higher

Crowds love to party.  And it's the crowd that elects the politicians that drive the economic policies that will ultimately drive the global stock market to the kind of highs that Boomers are known for.  Impossible?  In my opinion, it's impossible they won't.