The SPX has rallied +11% off the year's lows. How are investors feeling about that? Not that great! The Investors Intelligence Bull/Bear Ratio (one of the better sentiment surveys) remains at parity. Let's take a look at Ed Yardeni's excellent comparison of market performance when the ratio is less than or equal to 1 (where it now resides) versus when the ratio is greater than or equal to 3 (which was the case for much of 2014-2015):
http://www.yardeni.com/pub/stmktbullbear.pdf
It's informative to read the entire document, but if you're short on time, take a look at Figures 6 and 7 on page 4. I like the way Yardeni uses red shading to indicate periods when the ratio was greater than or equal to 3, and green shading to indicate periods when the ratio was less than or equal to 1. Makes it easy for us to think 'red light' and 'green light' at the appropriate points.
In my opinion, skepticism has driven and will continue to drive this rally. As I left Friday afternoon, I threw out 'Dow 18,000' as a possible medium-term target. Eminently achievable if we use 'greater than or equal to 3' as an end point for the current rally.
Interesting stuff. Only thing that makes me question that method is the preponderance of Red signals leading up to last year's top. The optimism was way more than we saw in the 90's
ReplyDeleteIt seemed the last couple years, people stopped declaring themselves as bears and moved more into the correction status, probably because of the relentless rise of the bull. Some technicians talked about using "Bears Plus Correction" as a better indicator of negative sentiment.
ReplyDeletehttps://pbs.twimg.com/media/CN-40I3UEAAsw2Z.png:large
That ratio got low the last couple years, but nowhere near to the same extreme as the bears-only did.
Traveling all weekend....
ReplyDeleteLike the F play.
I was in Fresno this weekend and went to the CMG directly across the street form Fresno State for lunch at 12:00. We were the only people there.
ReplyDeleteI think the issue here is price based. The ecoli BS made people re-think the cost proposition and have decided it's too expensive if food safety is even remotely a posibility... when food sourcing/freshness was a major appeal to many.
DeleteBB- "Rates going up" -> 10yr was 3.15% at this time
ReplyDelete2nd - "China going on a tear" -> YINN was $25 at this time, but pat him on the back anyway.
Morgan Stanley today says:
"Most major economies will do worse in 2016 than 2015, the analysts said. Central banks in Europe and Japan will keep easing monetary policy, while the Fed and the Bank of England will delay raising rates, they wrote. Treasury 10-year yields will fall to 1.45 percent by the end of September, they said, approaching the record low of 1.38 percent set in 2012. The Fed starts a two-day meeting Tuesday, with analysts surveyed by Bloomberg predicting the central bank will keep its benchmark rate unchanged."
TD Quant guys think we may be moving into late-cycle re-inflation stage of the market. If you read the whole thing, they are not super-confident in this due to things like deflation outside the US, but I think it is the likely scenario going forward as well:
ReplyDeleteFrom a macro/technical perspective, we be
lieve that the recent recovery in gold
may be signaling an inflection point and
the potential beginning of a late cycle
re-inflation phase
. Admittedly, over the past five years, we have seen examples of
gold leading seasonal/technical commodity rallies, usually into Q1, only to be
followed by a swift reversal in Q2. However,
if the longer-term history is to be a
guide, we believe that the current recovery has the potential to be more cyclical
and sustainable compared to what we have seen in recent years.
An important historical pre-condition to
initiate a re-inflation cycle, and a shift
in market sentiment from disinflation to
wards rising inflatio
n expectations, has
been a collapse, and a bottom, in oil prices.
The major oil collapses in 1981 (early
cycle), 1985 (late), 1992-1993 (early), 1997-
1998 (late), 2002 (early), 2006 (late),
2008 (early), and 2014-2015 (late) were initially disinflationary. However, once
the year-over-year change in oil prices begins to rise off a low base (down 50%
year-over-year, in most cases), we believe it sets the disinflation low. Flat or rising
oil prices become inflationary as the year-over-year change begins to rise.
Gold
prices almost always move higher in
anticipation of this very simple re-
inflationary math
.
I hope they're right, I think. This market is schizoid.
DeletePCRX - Did you guys see that double? I missed it but it retraced a good bit.
VRX - Last chance for romance...
ReplyDeleteFCAU - Has retaken the 50SMA, not looking too bad?
ReplyDeleteDDD - So much for 3D printing?
ReplyDeleteISRG - UVA brain and cardiovascular surgery.
ReplyDeleteWHR - Nice rocket launch out of the recent $130 area, huh?
ReplyDeleteWould you agree with me, these guys seem underpaid, in comparison to their employer salaries?
"Even the members of Obama's economic team who have spent most of their lives in public office have managed to make small fortunes on Wall Street. The president's economic czar, Larry Summers, was paid more than $5.2 million in 2008 alone as a managing director of the hedge fund D.E. Shaw, and pocketed an additional $2.7 million in speaking fees from a smorgasbord of future bailout recipients, including Goldman Sachs and Citigroup. At Treasury, Geithner's aide Gene Sperling earned a staggering $887,727 from Goldman Sachs last year for performing the punch-line-worthy service of "advice on charitable giving." Sperling's fellow Treasury appointee, Mark Patterson, received $637,492 as a full-time lobbyist for Goldman Sachs, and another top Geithner aide, Lee Sachs, made more than $3 million working for a New York hedge fund called Mariner Investment Group. The list goes on and on. Even Obama's chief of staff, Rahm Emanuel, who has been out of government for only 30 months of his adult life, managed to collect $18 million during his private-sector stint with a Wall Street firm called Wasserstein-Perella."
http://www.commondreams.org/news/2009/12/13/obamas-big-sellout-president-has-packed-his-economic-team-wall-street-insiders
NWPX - Can you imagine in 12 months when this is trading at $24 near a top just prior to rolling over, the revealing flurry of articles and accompanying upgrades touting large orders for replacement municipal and infrastructure water pipe?
ReplyDeleteMade another attempt at AEZS at 3.89. Placed a stop at 3.5.
ReplyDeleteWIN 10 without approval, how to mitigate.
ReplyDeletehttp://www.pcworld.com/article/3043464/windows/windows-7-users-complain-of-unprovoked-windows-10-auto-upgrades.html
I like Windows 10, much better than Windows 8. Still not perfect, but faster and less errors.
DeleteAre you avoiding the upgrade?
For now, I like Windows 7 and not sure I want to deal with problems if they occur during the upgrade, but it is good to know you like it. I went from 8 to 10 on the laptop, but do not use it very much and the install was done at a shop when i had a hardware problem.
DeleteI only use Windows 10 in desktop mode and none of the tablet-style stuff.
DeleteI find the performance better than 8 and the Settings / Printers stuff better.
My wife is till running Windows 7 on a Sony laptop and she likes it, but it is still not available for an update to Win-10 as it is a Sony.
Top value investor Pzena on CNBC at lunch today - you have to be a PRO to see, but talked about growth vs. value and how spread is so wide, so good time for value coming and, if you catch it, will be good for outperformance. Said this cycle, value is in financials, energy, industrials. Liked financials a lot as they are making 9 or 10 on their equity, you buy at 70% of book value, so your return is even higher and if rates do go up, they will do even better.
ReplyDeleteCNBC getting to be a pain these days. The Value Act guy was on talking about Rolls Royce yesterday and called it "The only high-quality business that we have found in the last 12 months is Rolls Royce which – where the stock is down by half." Would like to hear the rest of the interview, but again a PRO only video.
What is included in industrials?
DeleteRails, aerospace, companies like GE, CAT, a lot of manufacturing.
DeleteBA too? I almost bought BA a little while ago.
DeleteTA missed, eh? Hmm.... Expectation too high or what?
ReplyDeleteI see why, but that market cap seems small. Something not mentioned is truckers don't appreciate the new high price of their dining.
DeleteThat company is whacked man. I don't get it.
DeleteI'm pretty sure it has all to do with the ownership structure with HPT. THe market doesn't care about their assets or their transition into a C-store like CASY. They just think mgmt milking them dry by the arms length leasing deals they have in place with HPT.
Delete"BB- "Rates going up" -> 10yr was 3.15% at this time
ReplyDelete2nd - "China going on a tear" -> YINN was $25 at this time, but pat him on the back anyway."
Everyone has an opinion on things, doesn't mean their right ya know? What's your opinion on where we go from here?
their, they're...eh, whatever
DeleteTough road IMO, Germany is gonna be pissed at ecb. Not sure corp usa can pass higher price of debtload to consumer. That said us gov is spending like drunken sailor. Everyone I know personally works for gov or gov contractor indirectly or directly. Www. Governmenteconomy.org is the main growth story. So I dunno.... we aren't growing much aside from debt?
DeleteThis comment has been removed by the author.
DeleteVrx premarket the lose nut behind the wheel.
ReplyDeleteMike,
ReplyDeleteSiemens, that you were talking about before, is another classic industrial stock. Should also benefit from the rebound in Europe.
VRX- Remember when i threw 42 out there??
ReplyDeleteNo but my memory stinks. Good call.
DeleteTrying IWM @ 106.01.
ReplyDeleteGreen AAPL's should be hitting resistance here.
ReplyDeleteDHR - My stupid broker just added DHR to US1 list...
ReplyDeleteThey took MMM and TMO off the list. ANTM still on list last I looked.
DeleteCVRR - Keep an eye on this one, eventually it finds support. Didn't check the cap but a simple refinery is worth about $5B and this one's just 100mi from the Oklahoma hub. Never been there.
ReplyDeleteBack in TNA $51.2
ReplyDeleteI'm thinking RUT holds the 12 day moving average and rallies back to 1100 into / post Fed rally. Then we stall and get a nasty 5-7% pullback that scares the shit out of people. Then it rallies above 1100.
DeleteI like Bernie's idea for free college, don't you guys? I think it would add a lot of value.
ReplyDeleteWHR - Wonder if a Chinese company would like to buy this one?
ReplyDeleteRalph Acampora CMT @Ralph_Acampora 4m4 minutes ago
ReplyDeleteApple Computer (AAPL) broke above near-term resistance at 103.75. Next near-term upside target is to the 111-112 area.
Funny...
Therefore sell
DeleteCooperman said out of AAPL as well. Said iphone was such a success and so profitable, but becoming commoditized and nothing they have can replace this.
DeleteI've been hearing about some pretty interesting watches coming from China, one guy I know has one that detects "nanny cams", whatever that means, wifi cameras or IR not sure.
DeleteWHR - My broker upgraded to buy 3/8, what a bunch of turkeys these guys are, wasn't it obvious in January?
ReplyDeleteLeon Cooperman on CNBC today.
ReplyDeleteSaying we've had a stealth bear market and many stocks are cheap. Ones he talked about were like AIG, AER, NAVI, Airlines, GOOG, MSFT, FDC, energy - a very similar in characteristics to my portfolio.
Says there are issues, but no recession on the horizon, so not major concerns of a big bear. Said his choices are cash at 0%, bonds at 2% or stocks, many of which yield more than 2%. Said stocks are the obvious choice, but to keep some cash as well in case something bad happens.
All in line with what I am thinking.
Hard to argue, given the bearishness. The FED could choose to create trouble. Draghi is over his head and seems like capital is fleeing China, where does it land besides real estate?
DeleteMy bet is it all lands here in the US
DeleteRUSL - Quite a different story today?
ReplyDeleteCLMT - These guys are banking on Canadian sands crude production, FWIW.
ReplyDeleteSEDG- Still waiting on a good entry.
ReplyDeleteI have a name for your brothers beer label: "Cold Turkey"
DeleteI took another look at NAVI as Cooperman has talked about it a few times. It's quite complex, but I just think the risk-reward is not worthwhile as the loans outstanding are around 30 times their equity, so a small shift in payback rates can dramatically affect the long term net asset value.
ReplyDeleteHe could well be right and I don't have a good grasp of the Student Loan business as it is government run here, so better just to stay away for me.
That was the worst day I've had in a while, probably since the mid-Feb bottom.
ReplyDeleteCould have just been profit taking in front of the Fed tomorrow - will be interesting to see what they say. Ideally, something like "the economy is improving in the US, but issues exist in the rest of world, so we are not raising rates now, but think we will have to if the US economy continues on this path"
VRX - Lol, "no more surprises", might be able to argue it's no surprise.
ReplyDeleteMust be Ackman averaging down in ah?
DeleteLet's see if it take test $6.
DeleteThere's times when I wonder what the hell I am doing sometimes and then I see a guy like Ackman just leading himself to destruction and it makes me feel a little more sane.
DeleteSo Putin not only went to battle but he also ended battle and went home, another something US can't seem to do.
ReplyDeleteIs tomorrow the first day of the year we go green?
ReplyDelete1,130 is what I'm thinking for the Russell 2000.
ReplyDeleteIf the Fed meeting goes off smoothly then this could happen by next week.
DeleteIf not then maybe we get the drop first? Tomorrows data will be important if we have a big rally day tomorrow I think. We have housing starts, CPI, and industrial production to go along with the Fed.
DeleteFCAU with top growth in car sales in Europe - still #4 in total behind, VW, Renault, Peagot, but have a lot of vehicles people like:
ReplyDeletePenalized by its emissions scandal, Volkswagen (OTCPK:VLKAY) continues to miss out on the booming European car market.
Sales across the continent accelerated by 14.3% in February, although VW brand deliveries nudged up just 4.4%, according to the European carmakers' association. VW group sales, boosted by Audi and Skoda, grew by 8%, but market share eroded to 23.9%.
That compares with double-digit expansion by mass-market and premium competitors alike, with Fiat Chrysler (NYSE:FCAU) showing the strongest growth at 23%.
Good article on how benchmarks are actually much higher than average investor return:
ReplyDeletehttp://www.fool.com/investing/general/2016/03/15/benchmark.aspx
Take the Vanguard 500 fund. It's the closest thing we have to a tradable benchmark – an S&P 500 fund with a negligible fee.
The fund has an average annual return of 6.3% over the last 10 years. But the average investor in the Vanguard 500 fund earned 4.4% a year. The difference is due to money coming into the fund when the market is high and selling when it's low. (Morningstar tracks these figures).
Someone who earned 5% a year over the last 10 years would be trailing the benchmark but still doing far better than most investors. We should cheer them, but we don't. We call them failures, even if they're top-tier and accomplished something their peers couldn't. It's a peculiar standard.
GMO has been rocking out of that $0.20 zone.
ReplyDeleteSeems to me we're working through the rough patch, climbing a wall of worry. Hopefully we don't tumble back down again.
ReplyDeleteBXE - This is a typical response that occurs shortly after $1 zone is retested.
Rocket Man today?
ReplyDeletehttps://www.youtube.com/watch?v=uNNl3C0qvKg
I ended up closing out of TNA ahead of the Fed at $51.38. Let's see if I get enough of a pullback to try again.
DeleteGot back in at $51.38. Happy broker
DeleteTotal wholesales were $433 billion. Drug wholesales were $53 billion.
ReplyDelete"I use insulin and was paying $80 a bottle for it in the US. I found that I could purchase the same bottle through a Canadian Pharmacy for $30. That worked fine until big Pharma complained to Congress about it and they passed a law that stopped me from importing it across the border. That same bottle of insulin is now priced at $256."
ReplyDeleteWould actually like to see the Fed go ahead and raise rates today. Inflation is ticking up above the 2% mark and commodities are off their lows. Oil inventory levels better today and seems like OPEC, other than Iran, is putting in a production freeze, so could easily see more commodity price pressure.
ReplyDeleteDoubt they will do it, but would make for a wild market today and I think a healthier market going forward.
Not sure they have that option considering the system remains broken.
Delete'Fed leaves interest rates unchanged, sees only two hikes in 2016.' That's all it took to reverse early declines in global indexes.
ReplyDeleteDJIA +85 to 17337, SPX +11 to 2027. EEM (emerging markets) +2% and back above 33 for the first time in 2016, EWZ (Brazil) +1.5%, ASHR (China 'A' Shares) +1.7%, RSX (Russia) +3.4%. Crude oil +5.78% to 38.44.
Anybody know Mexico's largest single taxpayer?
ReplyDelete"Pemex owes over $80 billion to international investors and banks. It needs to raise $23 billion this year to stay afloat. Pemex not only finances close to 30% of Mexico's public budget, it is the central provider of basic provisions for the population,”
Brazil's Petrobras is the world’s most indebted oil company.
AN - Seems like there's some kind of sales campaign going on this one, the ticker keeps popping up in various places?
ReplyDeleteSPWR - This one might be ready to rock, no?
ReplyDeleteGlobal indexes are mixed this morning. US indexes are flat to slightly green. Europe selling off-> Germany’s DAX, which had opened back above 10,000 earlier in the day, has now pulled back -1.67%. On the other hand, emerging markets continue to outperform. ASHR (China ‘A’ Shares) +0.76%. EWZ (Brazil) +7.08%! RSX (Russia) +1.36%. EEM (emerging markets) +1.45%. Crude oil +2.55%, and I’m guessing it may print 40 (currently 39.41) sometime today.
ReplyDeleteCAT...a tell? Horrible guidance and it's Saint Paddy's day green!
ReplyDeleteYep, I was liking that earlier too. We'll see but lately things are looking better, the crash tendency factor seems to have subsided. It felt pretty rough there for awhile.
DeleteAnd rates are down, ha, ha... That doesn't seem to fit, or maybe it's providing a tailwind?
All my port is green aside from crossed EYES
Do you know where Shia muslims live and where the genocide is/will taking place as this guy is suggesting?
ReplyDelete“The time is not far off in the Middle East, Richard, when it will be literally ‘God help the Shia’. More than a billion Sunnis have simply had enough of them.”
Saudi Prince Bandar, ambassador to the US and supporter of ISIS.
My point is, what happens when the American public finally discovers what's going on here? It amazes me you guys never comment on this, genocide is a crime against humanity and nobody cares, really?
DeleteVRX- Maybe play this as IBB at 240 ish?
ReplyDeleteNot sure but maybe. How many more surprises can there be, one or two maybe? I'm staying away from MDLZ though, I think microbreweries are eating beermakers lunch. At least MDLZ isn't all about beer, so maybe it's not affected so much?
DeleteCVRR is still getting crushed, eventually this ends.
SPWR - Why doesn't this one interest you, something not to like about it? I guess IF silicon prices drop due to breakthrough not so many will care about deposited substrates using exotic metals sputtered onto the backside of gaudy/fancy transparent objects?
VRX might be getting to a place it is buyable as their are some good companies within it, but it is so hard to know what news will come out next.
DeleteBut I'd think IBB follows a similar to the Nasdaq in 2000 and probably goes back under 100, maybe to 50 before its done.
They own Bausch and Lomb which alone is worth like $8 Billion.
Deletehelluva day for TNA so far. I'm thinking RUT gets to 1120 / 1130 which was an area of focus last year. it pauses there but ultimately I think this is the year of small caps and we see RUT back up over 1200.
ReplyDeleteAlmost bought an agriculture stock today, but luckily looked at the chart first. It's in Canada, AFN.TO and the valuation, dividend and growth all look good, but just noticed it is up 40% in March. Still another 60% of upside to get to 2015 highs, but think the odds are pretty high I'll get a better entry if I wait a couple weeks.
ReplyDelete