The market is lower in early trading on many of the same concerns as well as a fresh dose of economic data that came in below expectations.
The ADP Employment report showed private payrolls increased by 133,000 during May, but that was below forecasts for 157,000. The ADP report hasn't been the best indicator of the govt. jobs report on Friday, but forecasts seem to be coming down for that report as well.
A revised reading for Q1 GDP came in at +1.9%, which is below the +2.2% preliminary reading. Separately, the Chicago PMI index fell to 52.7 in May from 56.2 last month.
In corporate news, many retailers are reporting same-store sales figures for last month. Of the reports I've seen, I'd say that more retailers beat expectations than fell short, but the reactions in the underlying stocks are mixed.
Stocks rising on SSS reports: COST, ZUMZ, SKS, TGT, TJX, ROST
Stocks falling on SSS reports: KSS, JWN, GPS, BKE
Among the sector ETFs, energy stocks are down the most again while defensive consumer staples and utilities are down the least. But every sector is lower this morning.
The dollar is higher again while commodities are moving lower. Gold prices are down near $1560, but were able to reverse higher during yesterday's session. Oil prices are lower to $86.50. Has anyone started to see lower gas prices yet?
The 10-year yield is a disaster, breaking to new generational lows at 1.54%. The only silver lining I suppose could be another wave of refis, but I would think most people have already refi'd.
As for the VIX, it has now broken out to new monthly highs and is currently +5% higher to 25.30. So fear is building in the market. The VIX hasn't been at these levels since December 2011.
Trading comment: The SPX is testing the 1300 level, which is an important round number, but the big line in the sand is SPX 1292. That markets the lows from a couple of weeks ago from where the market bounced. A break of those levels opens the door to further downside. Bearish sentiment is on the rise, but not yet at extreme levels. If SPX 1292 gives way, I would expect selling to accelerate and for pessimism in the sentiment indicators to spike. That could offer a better setup for a tradeable bottom. But we are not there yet so I want to stay defensive for now.
31 Mayıs 2012 Perşembe
30 Mayıs 2012 Çarşamba
New Lows For Bond Yields Don't Inspire Confidence
The markets are down sharply in early trading after yesterday's low volume bounce. There are no specific news items per se, but the general concerns out of Europe that were absent from yesterday's trading are back on the front burner today.
Yields on sovereign debt are on the rise as concerns about the financial conditions in the eurozone resurface. Italy and Spain are the bond markets folks are watching. Greek yields have already been extraordinarily high.
The opposite is occurring here in the US (and in Germany), where bond yields have moved to new generational lows. The 10-year yield has broken recent support levels near 1.70% and plunged to 1.64% today. Those are the lowest yields in my lifetime, and they are not a good indicator for the health of the US economy. While bonds are being affected by a global flight to safety, a healthy outlook for our economy would normally correspond to higher yields in the bond market.
The dollar is also rallying in this flight-to-safety trade, and pushing the euro to new lows. The dollar is nearing a 2-year high. This is also weighing on commodities. Oil prices have fallen to $88, gold prices are lower near $1540, and silver and copper prices are down as well.
In economic news, pending home sales for April unexpectedly fell -5.5%. That's a big drop, and has taken some wind out of the sails of folks who have been pointing to a bottom in the housing market.
As for the VIX, I wrote yesterday that it was not a good sign that the VIX wasn't moving lower on the big rally yesterday. Today shows why folks were skeptical. The VIX is up over 11% to 23.42. For the last few weeks the VIX has been trading within the 20-25 range. Let's see if the upper end of that range holds next time we get there.
Trading comment: Yesterday's bounce came on very low volume. That's not what the bulls want to see. Bulls want to see rallies accompanied by rising volume, which has been missing of late. And while the eurozone news was absent from yesterday's headlines, it looks like just a brief one-day reprieve. I had been looking for the S&P 500 to rally at least into the 1340-1360 range. If the market can reverse today's losses into the close, we still might have a chance. But if we close near the lows for the day, then I think yesterday's high near SPX 1335 might be the high for the bounce in the short-term. Right now there are just a lot of headwinds for the market and it is understandably having difficulty making headway.
Yields on sovereign debt are on the rise as concerns about the financial conditions in the eurozone resurface. Italy and Spain are the bond markets folks are watching. Greek yields have already been extraordinarily high.
The opposite is occurring here in the US (and in Germany), where bond yields have moved to new generational lows. The 10-year yield has broken recent support levels near 1.70% and plunged to 1.64% today. Those are the lowest yields in my lifetime, and they are not a good indicator for the health of the US economy. While bonds are being affected by a global flight to safety, a healthy outlook for our economy would normally correspond to higher yields in the bond market.
The dollar is also rallying in this flight-to-safety trade, and pushing the euro to new lows. The dollar is nearing a 2-year high. This is also weighing on commodities. Oil prices have fallen to $88, gold prices are lower near $1540, and silver and copper prices are down as well.
In economic news, pending home sales for April unexpectedly fell -5.5%. That's a big drop, and has taken some wind out of the sails of folks who have been pointing to a bottom in the housing market.
As for the VIX, I wrote yesterday that it was not a good sign that the VIX wasn't moving lower on the big rally yesterday. Today shows why folks were skeptical. The VIX is up over 11% to 23.42. For the last few weeks the VIX has been trading within the 20-25 range. Let's see if the upper end of that range holds next time we get there.
Trading comment: Yesterday's bounce came on very low volume. That's not what the bulls want to see. Bulls want to see rallies accompanied by rising volume, which has been missing of late. And while the eurozone news was absent from yesterday's headlines, it looks like just a brief one-day reprieve. I had been looking for the S&P 500 to rally at least into the 1340-1360 range. If the market can reverse today's losses into the close, we still might have a chance. But if we close near the lows for the day, then I think yesterday's high near SPX 1335 might be the high for the bounce in the short-term. Right now there are just a lot of headwinds for the market and it is understandably having difficulty making headway.
29 Mayıs 2012 Salı
How High Can Stocks Bounce?
The market is getting a nice bounce in early trading as investors return from their holiday weekend in a buying mood.
Asian markets rallied overnight after speculation is increasing that further stimulus will come out of China to deal with its slowing economy. Europe's markets are mixed today as fears about Greece, etc. are off the front burner-- at least briefly. I expect the headlines to resume shortly. There are headlines out right now that the EU is planning on coming up with a new stability plan in June.
In economic news, the Consumer Confidence index came in below expectations in May at 64.9 from 68.7 last month. This differs from the Univ. of Mich. survey last week which was at a 4-year high.
The dollar is lower vs. the euro, which is helping commodities. Oil prices are higher near $92.10. Gold prices are also higher to $1576, as are silver and copper prices.
The 10-year yield is still languishing at 1.73%, not far from its recent lows. And the VIX is only down 1% today to 21.50. If folks were buying into this rally, I would expect the VIX to be down more than it is. That likely means folks are still skeptical of this market's ability to hold these gains.
Trading comment: Last week I said I still felt that with the market oversold and bearish sentiment at high levels that the market should continue to move higher. I thought the rally could carry the S&P 500 into the 1340-1360 range. Today the SPX has reached 1335, which is pretty close to that lower band. As we approach those levels, I want to look to lighten up on our equity exposure and add back to some ETF hedges. I don't want to get too bearish, as I suppose its possible that the EU could come up with some good can-kicking ideas, and Greece could elect a govt. that sticks to the austerity plans. But I don't think we've seen the last of the volatility and the summer swoon-type declines like we saw in each of the last 2 years.
Asian markets rallied overnight after speculation is increasing that further stimulus will come out of China to deal with its slowing economy. Europe's markets are mixed today as fears about Greece, etc. are off the front burner-- at least briefly. I expect the headlines to resume shortly. There are headlines out right now that the EU is planning on coming up with a new stability plan in June.
In economic news, the Consumer Confidence index came in below expectations in May at 64.9 from 68.7 last month. This differs from the Univ. of Mich. survey last week which was at a 4-year high.
The dollar is lower vs. the euro, which is helping commodities. Oil prices are higher near $92.10. Gold prices are also higher to $1576, as are silver and copper prices.
The 10-year yield is still languishing at 1.73%, not far from its recent lows. And the VIX is only down 1% today to 21.50. If folks were buying into this rally, I would expect the VIX to be down more than it is. That likely means folks are still skeptical of this market's ability to hold these gains.
Trading comment: Last week I said I still felt that with the market oversold and bearish sentiment at high levels that the market should continue to move higher. I thought the rally could carry the S&P 500 into the 1340-1360 range. Today the SPX has reached 1335, which is pretty close to that lower band. As we approach those levels, I want to look to lighten up on our equity exposure and add back to some ETF hedges. I don't want to get too bearish, as I suppose its possible that the EU could come up with some good can-kicking ideas, and Greece could elect a govt. that sticks to the austerity plans. But I don't think we've seen the last of the volatility and the summer swoon-type declines like we saw in each of the last 2 years.
25 Mayıs 2012 Cuma
Consumers Upbeat Despite Negative Headlines
The market is slightly lower in early trading, despite a surprisingly positive report on consumer sentiment. The final reading from the Univ. of Mich. for May consumer sentiment improved to 79.3, which marks the highest level in more than four years. I think that is pretty surprising given the constant negative headlines about Greece, the fiscal cliff, etc. Or it may be that as a portfolio manager those headlines are front and center for me everyday, but for the general public they are not considered front page news.
Despite some lackluster action the last few days, the S&P 500 is up about 2% for the week if it were to close at current levels. Among the sector ETFs, defensive utilities are again leading the early action, but surprisingly financials are getting a bounce this morning also.
The euro is bouncing around the flat line today, after having a very bad week. This has helped the dollar rally for most of the week, and commodities faced a nearly 3% weekly loss. This morning, oil prices are slightly higher near $90.85 and gold prices are also bouncing a bit to $1565.
Europe's markets are mixed as eurozone leaders continue to call for the creation of a euro bond to help provide funds for dealing with the debt issues. But Germany remains opposed to the measure since many believe they would be the ones paying for it.
The 10-year yield remains at low levels overall near 1.75%. As for the VIX, it closed near its lows yesterday and is up slightly this morning to 21.65.
Trading comment: We haven't seen the follow through day bulls were looking for, but the window is still open next week for it to come. It will probably take some positive developments out of Europe to light a fire under the market, but the conditions are in place for it since bearish sentiment remains high among investors and the put/call ratio is coming off a long streak of very high readings.
Despite some lackluster action the last few days, the S&P 500 is up about 2% for the week if it were to close at current levels. Among the sector ETFs, defensive utilities are again leading the early action, but surprisingly financials are getting a bounce this morning also.
The euro is bouncing around the flat line today, after having a very bad week. This has helped the dollar rally for most of the week, and commodities faced a nearly 3% weekly loss. This morning, oil prices are slightly higher near $90.85 and gold prices are also bouncing a bit to $1565.
Europe's markets are mixed as eurozone leaders continue to call for the creation of a euro bond to help provide funds for dealing with the debt issues. But Germany remains opposed to the measure since many believe they would be the ones paying for it.
The 10-year yield remains at low levels overall near 1.75%. As for the VIX, it closed near its lows yesterday and is up slightly this morning to 21.65.
Trading comment: We haven't seen the follow through day bulls were looking for, but the window is still open next week for it to come. It will probably take some positive developments out of Europe to light a fire under the market, but the conditions are in place for it since bearish sentiment remains high among investors and the put/call ratio is coming off a long streak of very high readings.
24 Mayıs 2012 Perşembe
Will Euro Bonds Float The Market?
The market is slightly higher in early trading after a nice reversal yesterday off the lows. Sentiment is slightly improved in Europe as leaders meet to discuss more plans for dealing with the debt crisis and the possibility of a Greek exit. The issue of eurobonds has been floated around, and it seems like most members are in favor of the idea with Germany being the lone standout and strongly opposed to the idea.
There has also been some chatter that the Fed is helping provide liquidity by considering a cut to swap line fees as part of a large coordinated bank action. History shows us that any time we get coordinated global central bank action the market usually rallies in the short-term. But it doesn't always mark the low.
The improved tone in Europe is helping the euro bounce a tiny bit, which is also helping commodities lift. Oil prices have bounced to $91.41, gold prices are higher near $1575, and silver and copper prices are higher also.
In corporate news, HPQ was able to top estimates and its stock is higher. COST is also higher after topping estimates. NTAP lowered guidance and the stock is taking it on the chin. Other stocks lower after reporting include TIF, HNZ, SIG.
In economic news, durable goods for April were essentially in-line at +0.2%. And last month's figures were revised higher. Jobless claims were also in-line, while continuing claims declined to 3.26 million from 3.29 million.
So far among the economic sectors etfs, energy stocks are lagging while defensive utilities are leading (so are consumer staples).
The 10-year yield is getting a bounce to 1.77% after successfully holding the 1.70% level yesterday for the 3rd time in the last week. Hopefully this will provide a floor. As for the VIX, it is right between that 20-25 level I have been talking about at 22.20 right now. Yesterday it got close to the 25 level before a big downside reversal into the close.
Trading comment: If the central banks are coordinating something, that could be the catalyst that provides a spark to this weak oversold rally we've been seeing. The lows at SPX 1300 held yesterday but we need to take out Tuesday's highs at 1328 for the uptrend to pick up steam. We are still in the window for IBD-style folks to be looking for a follow through confirmation rally to Monday's rally. I think the SPX can get up into that 1340-1360 range where it will run into stiffer resistance. We would be looking to lighten up on equity exposure and add back to some etf hedges if and when we reach said levels.
There has also been some chatter that the Fed is helping provide liquidity by considering a cut to swap line fees as part of a large coordinated bank action. History shows us that any time we get coordinated global central bank action the market usually rallies in the short-term. But it doesn't always mark the low.
The improved tone in Europe is helping the euro bounce a tiny bit, which is also helping commodities lift. Oil prices have bounced to $91.41, gold prices are higher near $1575, and silver and copper prices are higher also.
In corporate news, HPQ was able to top estimates and its stock is higher. COST is also higher after topping estimates. NTAP lowered guidance and the stock is taking it on the chin. Other stocks lower after reporting include TIF, HNZ, SIG.
In economic news, durable goods for April were essentially in-line at +0.2%. And last month's figures were revised higher. Jobless claims were also in-line, while continuing claims declined to 3.26 million from 3.29 million.
So far among the economic sectors etfs, energy stocks are lagging while defensive utilities are leading (so are consumer staples).
The 10-year yield is getting a bounce to 1.77% after successfully holding the 1.70% level yesterday for the 3rd time in the last week. Hopefully this will provide a floor. As for the VIX, it is right between that 20-25 level I have been talking about at 22.20 right now. Yesterday it got close to the 25 level before a big downside reversal into the close.
Trading comment: If the central banks are coordinating something, that could be the catalyst that provides a spark to this weak oversold rally we've been seeing. The lows at SPX 1300 held yesterday but we need to take out Tuesday's highs at 1328 for the uptrend to pick up steam. We are still in the window for IBD-style folks to be looking for a follow through confirmation rally to Monday's rally. I think the SPX can get up into that 1340-1360 range where it will run into stiffer resistance. We would be looking to lighten up on equity exposure and add back to some etf hedges if and when we reach said levels.
23 Mayıs 2012 Çarşamba
Touring the West
We're in Seattle now, staying at the house of Mark's friends, Jim and Laura. Our book tour is almost done (at least for now?). We plan to go to Olympia, Washington today, then to Bellingham on Friday. Then it looks like I'm riding back to Missoula, Montana with Mark, hitching to Moab, Utah, and probably snagging a ride with a friend to Vermont, to see another old friend.
Before I go on, please, before making general comments or questions about my life, please read the FAQ on Living Without Money. Then, if your question or comment is not addressed, I'll try to answer it. I hope to add more FAQs when there's opportunity.
A big one that I haven't addressed yet in the FAQ is about publicity and the book:
Are you making profit from this book, and a media whore promoting yourself?
Yes I do have an ego, and I feel sure I'll be okay if I acknowledge and admit it, and then I won't become a slave to it. And I am human, I do have a mouth and like to speak. Speaking draws attention to ourselves, even as crying did when we came out of the womb. I don't believe it's right to suppress our nature of speaking, to hide our lamp under a bushel. Lights shine and flowers bloom for a reason, and why be a liar by pretending I don't enjoy it? I enjoy quiet anonymity also, for which people condemned me equally in the past, too! And we all recede into quiet anonymity in the end - every one of us.
That said, the book is not and never was my idea, and I am making zero profit from it. In 2009, after an article was written about me by Chris Ketchum in Details Magazine (also not something I sought out or asked for), Penguin/Riverhead books initially asked me if I wanted to write a book back in 2009, and I told them I'd only do it if it could be totally given away for free and I, of course, make no profit. They then asked Mark Sundeen to write it, and I agreed to it after he wrote to me and told me his vision of what the book would be. Mark was already going on this book tour and invited me along in his car. We have been staying at friends' houses and camping out. I have not once stayed in a hotel. Mark is making money from the book, because he works in the money system and has to make his very, very modest living as a writer. Contrary to public opinion, he is not rolling in the dough and makes way less money than most average Americans I know.
Also, Penguin/Riverhead has honored my request and given hundreds of books away for free at many events, as well as to libraries all over.
What I find comical about the thousands of negative comments is I'm damned if I do and damned if I don't. Before, when people decided I spent most my days hiding out in a cave, there were thousands of comments condemning me for being a recluse, not "contributing." Now that I'm more in the spotlight, thousands say I'm both a mooch living off society as well as a media whore trying to get attention and profit, and that if I were truly living moneyless I'd be hiding out in the wilderness away from society!
A seed falls to the ground and dies, hiding in the soil. It grows up into a plant that flowers in fluorescent color, attracting bees and hummingbirds and humans. Condemn it for hiding. Then condemn it for blooming. Condemn it for wilting. Then it might produce fruit. What condemnation then? Are we resentful because the plant knows only to follow its own nature, both hiding and blooming in glory and bearing more seeds? I don't know how any of it works, it just does, and it's beautiful and I'll enjoy it, whether or not people like to crush plants under their feet.
What if we spoke as fact only what we know, and not what we assume, in every part of life? How lovely life would be if everybody were innocent until proven guilty, huh?
What if we saved our anger and venom for actions that are actually bringing harm to the world?
But I have to admit I get a kick out of the negative shit. It's comical and entertaining, even wiping away my doubt. Even Taiwanese capitalists have jumped on the bandwagon. Might as well enjoy it:
Positive Response
If most anonymous Internet comments have been negative, most human-to-human response Mark and I have gotten have been positive. And the negative criticisms to our face have been constructive and helpful. People who have the guts to give face-to-face criticism have an integrity and courage that I'm grateful for.
Yeah, we've been astonished at the turn-out and the openness and receptiveness of people at all these book events and media interviews. There have been lots of hugs and even tears from "strangers." The love I've felt has been indescribably heart-warming. Every one of them through-out the west have been standing room only, except in Eugene and Seattle. Seattle, in fact, had the smallest turn-out of all, which surprised us.
The Second Leg of Our Tour
Our event in Missoula was splendid, and I feel like Missoula has become another home. We had a Quit Money Day panel discussion at the Missoula Public Library with Kate Keller (Missoula Community Food Co-op), Pastor Christian Cryder (Imagine Missoula), Bob Giardano (Free Cycles), Josh Slotnick (Garden City Harves), Mark, and me. What was beautiful about this was that this wasn't about a single dude living in a cave, but about getting heads of experience together to discuss ways of bringing out cooperation and gift economy into community! And I got to hang out a bit with all four of these Missoula folks in the following weeks that I stayed in Missoula, & be a little part of some of their projects. Kate & I became close friends, I got to attend the All Souls Church that Christian pastors, help out a little with one of Bob's Free Cycles events, and play in the dirt at Josh's farm, as well as strike up a friendship with the librarian, Molly, and the dude working in the library coffee shop, Evan (who also happened to work at Free Cycles). And Evan's friend, Drew, had a wonderful 2 hour discussion with me on his morning radio show on KBGA. I even ran into a couple old friends from Moab passing through, Val (scout for the Rainbow Gathering), and Dan (son of my good friend Roberta)!
After Missoula, we had events in Boise & Ketchum, Idaho. Then we went to Santa Cruz, a farm in Pescadero, San Francisco, Arcata, up to Ashland, Eugene, and Portland, Oregon, then to here.
In San Francisco we stayed a few days with Mark's childhood friend, Tim Bluhm, and Tim's spouse Nicki. Little did I know this was the Nicki with the band Nicki Bluhm and the Gramblers, and Tim plays with her as well as in his own band, The Mother Hips.
In San Francisco I was also was overjoyed to see my twin cousins, Sue and Annie (and her boyfriend Mark), as well as my old friends Kristen, Felix, and their Mother, Louise. In Arcata I didn't expect to see anybody I knew, but an old friend named Mystery, who lived in Moab years ago, showed up!
After Arcata, we went to Ashland, Oregon and stayed at the house of my friends, Frank and Sara and kids, joined by my old friend Tim Wojtusik and his daughter, Logan (Tim is one of the two Tims who provided years of my letters for Mark's book). After Ashland we went to Eugene, where I was overjoyed to see my old friend Jennifer.
Then it was Portland, which turned out another grand event. I stayed with my old friends Satya and Sara at the house of Alex (who so generously has opened up his house for wandering penniless folks, including me, for years, and happens to be the son of Burma's Aung San Suu Kyi). Sara and Satya cooked up a big feast for Food Not Bombs friends beforehand. Then we all made a street procession to Powell's bookstore for the book reading. Food Not Bombs folks even served free food on the sidewalk after the event. The love I felt was astounding. It was grand seeing and hanging out with so many other old and new friends, but I'm out of time and space to mention them.
We talked to an Everett Community College class, taught by Mark's friend Cobi, the day before yesterday. They had already read and wrote analysis of the book, and taking their questions and comments was fun but also strange. It feels quite bizarre having whole classes study things I used to only tell my closest friends.
Though our Seattle event was the smallest of all, my inspiring friend Irv Thomas showed up, as well as a friend from my days in Ecuador I haven't seen for 25 years, Melissa! It's amazing seeing friends from my distant past coming out of the woodwork!
Now we'll see what's next. I'm excited and sometimes a little nervous about the wonders that keep unraveling. Part of me has visions of moneyless community unfolding (and I still don't know how, but with so many heads and hearts together, we'll see). But the other part of me warns me not to have any expectations. Maybe my life will go back to quiet obscurity, or maybe not. It's really out of my hands. What is natural will unfold naturally, without our manipulation, if we're open to it. So Be It. Nature is absolutely splendid, isn't it?
How is all this publicity affecting me?
I still say the same as in my last blog post, Fickle Fun.
Before I go on, please, before making general comments or questions about my life, please read the FAQ on Living Without Money. Then, if your question or comment is not addressed, I'll try to answer it. I hope to add more FAQs when there's opportunity.
A big one that I haven't addressed yet in the FAQ is about publicity and the book:
Are you making profit from this book, and a media whore promoting yourself?
Yes I do have an ego, and I feel sure I'll be okay if I acknowledge and admit it, and then I won't become a slave to it. And I am human, I do have a mouth and like to speak. Speaking draws attention to ourselves, even as crying did when we came out of the womb. I don't believe it's right to suppress our nature of speaking, to hide our lamp under a bushel. Lights shine and flowers bloom for a reason, and why be a liar by pretending I don't enjoy it? I enjoy quiet anonymity also, for which people condemned me equally in the past, too! And we all recede into quiet anonymity in the end - every one of us.
That said, the book is not and never was my idea, and I am making zero profit from it. In 2009, after an article was written about me by Chris Ketchum in Details Magazine (also not something I sought out or asked for), Penguin/Riverhead books initially asked me if I wanted to write a book back in 2009, and I told them I'd only do it if it could be totally given away for free and I, of course, make no profit. They then asked Mark Sundeen to write it, and I agreed to it after he wrote to me and told me his vision of what the book would be. Mark was already going on this book tour and invited me along in his car. We have been staying at friends' houses and camping out. I have not once stayed in a hotel. Mark is making money from the book, because he works in the money system and has to make his very, very modest living as a writer. Contrary to public opinion, he is not rolling in the dough and makes way less money than most average Americans I know.
Also, Penguin/Riverhead has honored my request and given hundreds of books away for free at many events, as well as to libraries all over.
What I find comical about the thousands of negative comments is I'm damned if I do and damned if I don't. Before, when people decided I spent most my days hiding out in a cave, there were thousands of comments condemning me for being a recluse, not "contributing." Now that I'm more in the spotlight, thousands say I'm both a mooch living off society as well as a media whore trying to get attention and profit, and that if I were truly living moneyless I'd be hiding out in the wilderness away from society!
A seed falls to the ground and dies, hiding in the soil. It grows up into a plant that flowers in fluorescent color, attracting bees and hummingbirds and humans. Condemn it for hiding. Then condemn it for blooming. Condemn it for wilting. Then it might produce fruit. What condemnation then? Are we resentful because the plant knows only to follow its own nature, both hiding and blooming in glory and bearing more seeds? I don't know how any of it works, it just does, and it's beautiful and I'll enjoy it, whether or not people like to crush plants under their feet.
What if we spoke as fact only what we know, and not what we assume, in every part of life? How lovely life would be if everybody were innocent until proven guilty, huh?
What if we saved our anger and venom for actions that are actually bringing harm to the world?
But I have to admit I get a kick out of the negative shit. It's comical and entertaining, even wiping away my doubt. Even Taiwanese capitalists have jumped on the bandwagon. Might as well enjoy it:
Positive Response
If most anonymous Internet comments have been negative, most human-to-human response Mark and I have gotten have been positive. And the negative criticisms to our face have been constructive and helpful. People who have the guts to give face-to-face criticism have an integrity and courage that I'm grateful for.
Yeah, we've been astonished at the turn-out and the openness and receptiveness of people at all these book events and media interviews. There have been lots of hugs and even tears from "strangers." The love I've felt has been indescribably heart-warming. Every one of them through-out the west have been standing room only, except in Eugene and Seattle. Seattle, in fact, had the smallest turn-out of all, which surprised us.
The Second Leg of Our Tour
Our event in Missoula was splendid, and I feel like Missoula has become another home. We had a Quit Money Day panel discussion at the Missoula Public Library with Kate Keller (Missoula Community Food Co-op), Pastor Christian Cryder (Imagine Missoula), Bob Giardano (Free Cycles), Josh Slotnick (Garden City Harves), Mark, and me. What was beautiful about this was that this wasn't about a single dude living in a cave, but about getting heads of experience together to discuss ways of bringing out cooperation and gift economy into community! And I got to hang out a bit with all four of these Missoula folks in the following weeks that I stayed in Missoula, & be a little part of some of their projects. Kate & I became close friends, I got to attend the All Souls Church that Christian pastors, help out a little with one of Bob's Free Cycles events, and play in the dirt at Josh's farm, as well as strike up a friendship with the librarian, Molly, and the dude working in the library coffee shop, Evan (who also happened to work at Free Cycles). And Evan's friend, Drew, had a wonderful 2 hour discussion with me on his morning radio show on KBGA. I even ran into a couple old friends from Moab passing through, Val (scout for the Rainbow Gathering), and Dan (son of my good friend Roberta)!
After Missoula, we had events in Boise & Ketchum, Idaho. Then we went to Santa Cruz, a farm in Pescadero, San Francisco, Arcata, up to Ashland, Eugene, and Portland, Oregon, then to here.
In San Francisco we stayed a few days with Mark's childhood friend, Tim Bluhm, and Tim's spouse Nicki. Little did I know this was the Nicki with the band Nicki Bluhm and the Gramblers, and Tim plays with her as well as in his own band, The Mother Hips.
In San Francisco I was also was overjoyed to see my twin cousins, Sue and Annie (and her boyfriend Mark), as well as my old friends Kristen, Felix, and their Mother, Louise. In Arcata I didn't expect to see anybody I knew, but an old friend named Mystery, who lived in Moab years ago, showed up!
After Arcata, we went to Ashland, Oregon and stayed at the house of my friends, Frank and Sara and kids, joined by my old friend Tim Wojtusik and his daughter, Logan (Tim is one of the two Tims who provided years of my letters for Mark's book). After Ashland we went to Eugene, where I was overjoyed to see my old friend Jennifer.
Then it was Portland, which turned out another grand event. I stayed with my old friends Satya and Sara at the house of Alex (who so generously has opened up his house for wandering penniless folks, including me, for years, and happens to be the son of Burma's Aung San Suu Kyi). Sara and Satya cooked up a big feast for Food Not Bombs friends beforehand. Then we all made a street procession to Powell's bookstore for the book reading. Food Not Bombs folks even served free food on the sidewalk after the event. The love I felt was astounding. It was grand seeing and hanging out with so many other old and new friends, but I'm out of time and space to mention them.
We talked to an Everett Community College class, taught by Mark's friend Cobi, the day before yesterday. They had already read and wrote analysis of the book, and taking their questions and comments was fun but also strange. It feels quite bizarre having whole classes study things I used to only tell my closest friends.
Though our Seattle event was the smallest of all, my inspiring friend Irv Thomas showed up, as well as a friend from my days in Ecuador I haven't seen for 25 years, Melissa! It's amazing seeing friends from my distant past coming out of the woodwork!
Now we'll see what's next. I'm excited and sometimes a little nervous about the wonders that keep unraveling. Part of me has visions of moneyless community unfolding (and I still don't know how, but with so many heads and hearts together, we'll see). But the other part of me warns me not to have any expectations. Maybe my life will go back to quiet obscurity, or maybe not. It's really out of my hands. What is natural will unfold naturally, without our manipulation, if we're open to it. So Be It. Nature is absolutely splendid, isn't it?
How is all this publicity affecting me?
I still say the same as in my last blog post, Fickle Fun.
Markets Worry About A Potential "Grexit"
The markets were acting fairly well yesterday until news hit the wires that Greece's PM was making comments about Greece leaving the euro. This news shouldn't come as a big surprise, as the possibility has been bandied about for awhile now. But I guess the fact that they are now entertaining the idea in public brings it into reality.
There have also been rumors going around this morning that eurozone officials have been telling members to make contingency plans for a potential Greek exit (which some are now calling a "Grexit"). As a result European stock markets are down a fair amount today, and the euro is very weak as well. The euro is nearing the $1.25 level vs. the dollar, which is just about a 2-year low for the currency.
The dollar is up vs. the euro, which is weighing on commodities as well. Oil prices are down to $90.35 (when are gas prices at the pump coming down?), and gold has fallen back to $1536. Copper and silver prices are also weak reflecting concerns about global economic growth.
Asian markets were also down overnight, with Japan down -2.0% following the downgrade of the country's debt rating by Fitch.
In earnings news, a few retailers reported earnings and garnered positive actions. PETM is the big winner as the pet retailer topped estimates. AEO and GES are also trading higher after reporting earnings. Today's big loser is DELL, which is down -16% after missing estimates and lowering guidance.
The 10-year yield is also down a lot today, back near its recent lows at 1.71%. And the VIX, which got down to the 20 level yesterday before snapping back is up another 8% today back to 24.23 in a hurry. For reference, last week's high in the VIX was 25.14.
Trading comment: The market ultimately repeated its recent pattern yesterday of opening strong but closing weak. That's not what bulls want to see. Today the markets opened weak, which is better than opening higher but its the close that counts. So hopefully the market can cut some of its losses into the close. On a positive note, I am seeing lots of growth stocks bucking the early weakness and trading in the green today. AAPL and GOOG are also both higher as of now. The market is still coming off of grossly oversold levels, and sentiment is also coming off of very bearish levels. So while the Grexit news is making for scary headlines, I think any positive developments out of the EU could lead to further rallies.
KAM Advisors has long positions in AAPL, GOOG
There have also been rumors going around this morning that eurozone officials have been telling members to make contingency plans for a potential Greek exit (which some are now calling a "Grexit"). As a result European stock markets are down a fair amount today, and the euro is very weak as well. The euro is nearing the $1.25 level vs. the dollar, which is just about a 2-year low for the currency.
The dollar is up vs. the euro, which is weighing on commodities as well. Oil prices are down to $90.35 (when are gas prices at the pump coming down?), and gold has fallen back to $1536. Copper and silver prices are also weak reflecting concerns about global economic growth.
Asian markets were also down overnight, with Japan down -2.0% following the downgrade of the country's debt rating by Fitch.
In earnings news, a few retailers reported earnings and garnered positive actions. PETM is the big winner as the pet retailer topped estimates. AEO and GES are also trading higher after reporting earnings. Today's big loser is DELL, which is down -16% after missing estimates and lowering guidance.
The 10-year yield is also down a lot today, back near its recent lows at 1.71%. And the VIX, which got down to the 20 level yesterday before snapping back is up another 8% today back to 24.23 in a hurry. For reference, last week's high in the VIX was 25.14.
Trading comment: The market ultimately repeated its recent pattern yesterday of opening strong but closing weak. That's not what bulls want to see. Today the markets opened weak, which is better than opening higher but its the close that counts. So hopefully the market can cut some of its losses into the close. On a positive note, I am seeing lots of growth stocks bucking the early weakness and trading in the green today. AAPL and GOOG are also both higher as of now. The market is still coming off of grossly oversold levels, and sentiment is also coming off of very bearish levels. So while the Grexit news is making for scary headlines, I think any positive developments out of the EU could lead to further rallies.
KAM Advisors has long positions in AAPL, GOOG
22 Mayıs 2012 Salı
Stocks Look To Add To Big One-Day Rally
The market is higher in early trading after posting its best one-day gains in two months yesterday. Volume was nothing to write home about yesterday, but the price action was very strong and now we need to see if stocks can build on those gains.
A handful of retail companies have reported earnings this morning and the reactions in the underlying stocks is mostly positive. Some of the stocks rising on earnings include: RL, BBY, DSW, WSM, URBN. The big retail disappointment today is EXPR, which missed estimates and reduced guidance which is killing the stock.
In economic news, existing home sales were in-line for April at 4.62 million rate. The homebuilders etf (XHB) is higher on the news. But the leading sector so far this morning is financials (XLF) with JPMorgan bouncing back nearly 6% currently.
Asian markets were higher overnight, closing before analysts at Fitch lowered Japan's debt rating. Europe is also higher this morning, but the euro is not benefiting from the improved tone. Bond yields in Europe are lower as well.
The dollar is higher vs. the euro, weighing on commodities. Oil prices are weaker at $92.25 and gold prices are also a little lower near $1586.
The 10-year yield is getting a little bounce to 1.80%. And the VIX is down another -7.5% today to 20.35. It has now taken out last week's lows. My guess is it will find some support near the 20 level and bounce.
Trading comment: The price action so far this morning is impressive, especially with all of the naysayers saying yesterday's rally was just a one-day wonder. IBD growth-style investors will be looking for a confirmation day to follow yesterday's rally. This would come in the form of a 1% - 1.5% up day accompanied by rising volume in the next several days. But the 50-day average on the S&P 500 has rolled over, and as such should offer stiffer resistance if and when the index gets up there to test it. The SPX would have to rally to around 1375 to meet up with the downsloping key average. Financials are up more than 2% as I finish this post, which is encouraging.
A handful of retail companies have reported earnings this morning and the reactions in the underlying stocks is mostly positive. Some of the stocks rising on earnings include: RL, BBY, DSW, WSM, URBN. The big retail disappointment today is EXPR, which missed estimates and reduced guidance which is killing the stock.
In economic news, existing home sales were in-line for April at 4.62 million rate. The homebuilders etf (XHB) is higher on the news. But the leading sector so far this morning is financials (XLF) with JPMorgan bouncing back nearly 6% currently.
Asian markets were higher overnight, closing before analysts at Fitch lowered Japan's debt rating. Europe is also higher this morning, but the euro is not benefiting from the improved tone. Bond yields in Europe are lower as well.
The dollar is higher vs. the euro, weighing on commodities. Oil prices are weaker at $92.25 and gold prices are also a little lower near $1586.
The 10-year yield is getting a little bounce to 1.80%. And the VIX is down another -7.5% today to 20.35. It has now taken out last week's lows. My guess is it will find some support near the 20 level and bounce.
Trading comment: The price action so far this morning is impressive, especially with all of the naysayers saying yesterday's rally was just a one-day wonder. IBD growth-style investors will be looking for a confirmation day to follow yesterday's rally. This would come in the form of a 1% - 1.5% up day accompanied by rising volume in the next several days. But the 50-day average on the S&P 500 has rolled over, and as such should offer stiffer resistance if and when the index gets up there to test it. The SPX would have to rally to around 1375 to meet up with the downsloping key average. Financials are up more than 2% as I finish this post, which is encouraging.
21 Mayıs 2012 Pazartesi
Monday Morning Musings
The market is getting a nice bounce in early trading. Last week, this was a bad sign as every up open in the market sold off by the end of the day and the market would close weak. That could still happen today, but the market is heavily oversold now and feels like there is a bit more bid to stocks than last week. And stocks have been down for 11 of the last 13 trading days.
Industrials and materials stocks are leading the early action, as those groups were the hardest hit over the last few weeks. Defensive consumer staples and utilities are lagging. Financials are also faring well, but JPMorgan is not participating today after it said it will suspend its stock buyback but maintain its dividend in the wake of its large trading losses revealed last week.
There isn't a lot of news to attribute the strength to. Asian markets were mixed overnight with little action. But Europe is up slightly today and the message out of the G8 meeting over the weekend was that global leaders want to keep the EU intact and would like to keep Greece in the eurozone. Somehow I still feel before all is said and done that Greece will decide it is better for them to exit the euro.
Despite the G8 news, the euro is basically flat on the day, but it is up from its lows earlier this morning. Commodities are getting a bounce with oil prices up near $92.25 and gold prices trying to get back to $1600 (currently $1595). I sure haven't notices a drop in prices at the pump here in LA. Has anyone else?
In corporate news, CBE will be acquired by ETN for a nice premium. And LOW reported earnings and the stock is getting hit due to lackluster guidance.
The 10-year yield is getting a bounce from last week's ultra low levels, currently 1.74%. And the fear premium is coming out of the options market in the form of a 10% drop in the VIX so far. The VIX has broken below Friday's lows (23.07) and is close to taking out Thursday's lows at 21.87. The VIX is trading near 22.50 as of this post.
Trading comment: I was early last week looking for an oversold bounce. But bounces do come at some point, and it looks like now we have more ingredients lined up to make it happen this week. The fear premium is coming out of the VIX, bearish sentiment spiked last week, and the market is as oversold by several measures as it has been since the bottom last October. I still expect continued volatility this summer, so we would be looking to use any upcoming rallies to trim/sell lagging stocks and move to a more defensive allocation for the intermediate-term.
Industrials and materials stocks are leading the early action, as those groups were the hardest hit over the last few weeks. Defensive consumer staples and utilities are lagging. Financials are also faring well, but JPMorgan is not participating today after it said it will suspend its stock buyback but maintain its dividend in the wake of its large trading losses revealed last week.
There isn't a lot of news to attribute the strength to. Asian markets were mixed overnight with little action. But Europe is up slightly today and the message out of the G8 meeting over the weekend was that global leaders want to keep the EU intact and would like to keep Greece in the eurozone. Somehow I still feel before all is said and done that Greece will decide it is better for them to exit the euro.
Despite the G8 news, the euro is basically flat on the day, but it is up from its lows earlier this morning. Commodities are getting a bounce with oil prices up near $92.25 and gold prices trying to get back to $1600 (currently $1595). I sure haven't notices a drop in prices at the pump here in LA. Has anyone else?
In corporate news, CBE will be acquired by ETN for a nice premium. And LOW reported earnings and the stock is getting hit due to lackluster guidance.
The 10-year yield is getting a bounce from last week's ultra low levels, currently 1.74%. And the fear premium is coming out of the options market in the form of a 10% drop in the VIX so far. The VIX has broken below Friday's lows (23.07) and is close to taking out Thursday's lows at 21.87. The VIX is trading near 22.50 as of this post.
Trading comment: I was early last week looking for an oversold bounce. But bounces do come at some point, and it looks like now we have more ingredients lined up to make it happen this week. The fear premium is coming out of the VIX, bearish sentiment spiked last week, and the market is as oversold by several measures as it has been since the bottom last October. I still expect continued volatility this summer, so we would be looking to use any upcoming rallies to trim/sell lagging stocks and move to a more defensive allocation for the intermediate-term.
17 Mayıs 2012 Perşembe
MAJOR LONG-TERM BOTTOMS FORMING IN GOLD AND COMMODITIES
Once every year gold and stocks form a major yearly cycle low. Commodities form a major cycle bottom every 2 1/2 to 3 years. Every once in a while all three of those major cycles hit at the same time. I'm pretty sure that's what is happening right now.
The implications are that once the CRB has completed this major cycle bottom that we should see generally higher prices over the next year and a half to two years, presumably topping during a major currency crisis as the dollar drops into its next three year cycle low in the fall of 2014.
I think the 30 point rally in gold today is signaling that gold has put in its yearly cycle bottom. Since gold did not break below the December low of $1523 I think we can assume that this is a B-Wave bottom and should be followed by the consolidation phase of a new C wave that should breakout to new highs either later in the fall or next spring. The next two years should generate an even more impressive advance then the 2009-2011 rally, possibly even generating the bubble phase of the bull market in late 2014 or early 2015 as the dollar crisis reaches a crescendo.
As gold usually leads the stock market by a few days, we should see the stock market put in its yearly cycle low sometime in the next several days. However the outlook for stocks is not as bright as the commodity sector. While I do think continued currency debasement will probably drive the stock market to at least marginal new highs I also think an increasing inflationary environment is going to compress profit margins and constrict consumer spending. After a long topping process the stock market and economy will probably roll over and follow the dollar down into that 2014 bottom.
While I'm not ruling out one more quick dip below $1523 to wash out stops below that technical level, I think gold is in the initial stages of the next leg of the secular bull market. This last C-wave from 2009 - 2011 was the C-wave of silver with a 400%+ gain at the parabola top in May of last year.
This next C-wave will be the C-wave of the mining stocks. During the irrational selling over the last eight months mining stocks have reached levels of undervaluation that have only been seen one other time in history. That drove a 300% rally over the next two years.
I suspect we will see something similar or even larger as the market gets busy correcting this irrational undervaluation.
I think we are at, or very close to what is likely to be a once or twice a decade opportunity in the metals sector, especially the mining stocks.
The implications are that once the CRB has completed this major cycle bottom that we should see generally higher prices over the next year and a half to two years, presumably topping during a major currency crisis as the dollar drops into its next three year cycle low in the fall of 2014.
I think the 30 point rally in gold today is signaling that gold has put in its yearly cycle bottom. Since gold did not break below the December low of $1523 I think we can assume that this is a B-Wave bottom and should be followed by the consolidation phase of a new C wave that should breakout to new highs either later in the fall or next spring. The next two years should generate an even more impressive advance then the 2009-2011 rally, possibly even generating the bubble phase of the bull market in late 2014 or early 2015 as the dollar crisis reaches a crescendo.
As gold usually leads the stock market by a few days, we should see the stock market put in its yearly cycle low sometime in the next several days. However the outlook for stocks is not as bright as the commodity sector. While I do think continued currency debasement will probably drive the stock market to at least marginal new highs I also think an increasing inflationary environment is going to compress profit margins and constrict consumer spending. After a long topping process the stock market and economy will probably roll over and follow the dollar down into that 2014 bottom.
While I'm not ruling out one more quick dip below $1523 to wash out stops below that technical level, I think gold is in the initial stages of the next leg of the secular bull market. This last C-wave from 2009 - 2011 was the C-wave of silver with a 400%+ gain at the parabola top in May of last year.
This next C-wave will be the C-wave of the mining stocks. During the irrational selling over the last eight months mining stocks have reached levels of undervaluation that have only been seen one other time in history. That drove a 300% rally over the next two years.
I suspect we will see something similar or even larger as the market gets busy correcting this irrational undervaluation.
I think we are at, or very close to what is likely to be a once or twice a decade opportunity in the metals sector, especially the mining stocks.
16 Mayıs 2012 Çarşamba
Still Looking For Upside
The market is getting a bounce in early trading, but it still needs to pick up some steam as the day wears on to have a real impact. We did get some positive economic reports today which seem to be helping.
Both Asian and European markets were both down overnight, but our market seems to be shrugging it off. The euro is getting a small bounce today, which isn't surprising given the 10-day tear the dollar has been on. Look at the chart of UUP to see what I'm talking about.
The relative weakness in the dollar today isn't helping commodities much. Gold prices are still struggling to hang on to the $1550 level, and oil prices have dipped below $94 on demand concerns due to slowing economic growth.
On the earnings front, a handful of retail stocks have reported earnings with mixed reactions. Target (TGT) beat estimates and its stock is higher, but ANF, JCP, and SPLS are all lower after reporting.
In economic news, industrial production for April grew by 1.1%, which is higher than expected. And capacity utilization was slightly above expectations at 79.2%. Also, housing starts increased in April to a rate of 717,000 units from 699,000 the prior month.
Later today we get the minutes from the last FOMC meeting. I don't expect any surprises here. Probably just more of the same debate over how much additional stimulus is needed vs. when the Fed should start removing said stimulus.
The 10-year yield is up a touch to 1.80%. And the VIX is down -3% to 21.25.
Trading comment: Yesterday's late action was disappointing. That's not what you want to see. Markets that open strong and close weak are the definition of a market that is not ready to rally. Let's see if today can change that pattern. We opened higher today and need to build on the gains into the close. The S&P 500 needs to get above yesterday's high of 1445 just to change the near-term trend. And above 1350 gives the market a shot at its overhead 50-day near 1384. As for the Nasdaq, the 2900 level has held very well. One stock that stands out today is Google (GOOG) which is retaking its 50-day average today on solid volume. GOOG is regaining some respect after the Facebook IPO documents highlight the potential for mobile advertising and the fact that FB will come public at a price-to-sales multiple far higher than GOOG.
KAM Advisors has long positions in GOOG
Both Asian and European markets were both down overnight, but our market seems to be shrugging it off. The euro is getting a small bounce today, which isn't surprising given the 10-day tear the dollar has been on. Look at the chart of UUP to see what I'm talking about.
The relative weakness in the dollar today isn't helping commodities much. Gold prices are still struggling to hang on to the $1550 level, and oil prices have dipped below $94 on demand concerns due to slowing economic growth.
On the earnings front, a handful of retail stocks have reported earnings with mixed reactions. Target (TGT) beat estimates and its stock is higher, but ANF, JCP, and SPLS are all lower after reporting.
In economic news, industrial production for April grew by 1.1%, which is higher than expected. And capacity utilization was slightly above expectations at 79.2%. Also, housing starts increased in April to a rate of 717,000 units from 699,000 the prior month.
Later today we get the minutes from the last FOMC meeting. I don't expect any surprises here. Probably just more of the same debate over how much additional stimulus is needed vs. when the Fed should start removing said stimulus.
The 10-year yield is up a touch to 1.80%. And the VIX is down -3% to 21.25.
Trading comment: Yesterday's late action was disappointing. That's not what you want to see. Markets that open strong and close weak are the definition of a market that is not ready to rally. Let's see if today can change that pattern. We opened higher today and need to build on the gains into the close. The S&P 500 needs to get above yesterday's high of 1445 just to change the near-term trend. And above 1350 gives the market a shot at its overhead 50-day near 1384. As for the Nasdaq, the 2900 level has held very well. One stock that stands out today is Google (GOOG) which is retaking its 50-day average today on solid volume. GOOG is regaining some respect after the Facebook IPO documents highlight the potential for mobile advertising and the fact that FB will come public at a price-to-sales multiple far higher than GOOG.
KAM Advisors has long positions in GOOG
15 Mayıs 2012 Salı
You Call That A Bounce?
The market is only slightly higher in early trading despite the market back in oversold territory and down the last 7 of 9 days. The futures were pointing to a stronger open early this morning, but the enthusiasm quickly faded.
The latest Empire State Manuf. Index improved to 17.1 in May from 6.6 in April. Also, the NAHB Housing Index came in better than expected at 29 vs. 25 the previous month.
Futures were pointing to a strong open, but when the news hit that no agreement has been reached in Greece on an elected government the futures lost some ground.
The news also hit the euro vs. the dollar. Commodities are slightly weaker, with oil prices at $94.70 and gold prices a bit lower to $1554.
The 10-year yield is still at low levels near 1.77%. And the VIX is only 2% lower to 21.40, after reaching multi-month highs yesterday.
In earnings news, Groupon (GRPN) is soaring on a combination of short-covering, which began yesterday, and a solid earnings report that has caused additional short-covering today. Home Depot (HD) reported in-line earnings but its stock is lower in reaction.
Trading comment: So far this is a very weak bounce. I think bulls really would like to see the market build into the close and for volume to pick up as well. The lack of buying enthusiasm so far is notable. The SPX is hovering right near the 1340 level that marked the March lows. Bearish sentiment has been on the rise lately, which should be supportive of a near-term bounce that I have been looking for. It's hard to tell how much of this is concern from Greece (and Spain), but I'm sure that is certainly a factor. Sovereign bond yields and also CDS prices have all been on the rise of late. Credit default swaps are at multi-week highs, but still below levels seen earlier this year. Maybe some good news out of Greece regarding its political strife would serve as a catalyst for a rally.
The latest Empire State Manuf. Index improved to 17.1 in May from 6.6 in April. Also, the NAHB Housing Index came in better than expected at 29 vs. 25 the previous month.
Futures were pointing to a strong open, but when the news hit that no agreement has been reached in Greece on an elected government the futures lost some ground.
The news also hit the euro vs. the dollar. Commodities are slightly weaker, with oil prices at $94.70 and gold prices a bit lower to $1554.
The 10-year yield is still at low levels near 1.77%. And the VIX is only 2% lower to 21.40, after reaching multi-month highs yesterday.
In earnings news, Groupon (GRPN) is soaring on a combination of short-covering, which began yesterday, and a solid earnings report that has caused additional short-covering today. Home Depot (HD) reported in-line earnings but its stock is lower in reaction.
Trading comment: So far this is a very weak bounce. I think bulls really would like to see the market build into the close and for volume to pick up as well. The lack of buying enthusiasm so far is notable. The SPX is hovering right near the 1340 level that marked the March lows. Bearish sentiment has been on the rise lately, which should be supportive of a near-term bounce that I have been looking for. It's hard to tell how much of this is concern from Greece (and Spain), but I'm sure that is certainly a factor. Sovereign bond yields and also CDS prices have all been on the rise of late. Credit default swaps are at multi-week highs, but still below levels seen earlier this year. Maybe some good news out of Greece regarding its political strife would serve as a catalyst for a rally.
14 Mayıs 2012 Pazartesi
Monday Morning Musings
The markets are lower in early trading on the heels of increasing political unrest in Greece which is weighing on European markets. Europe's markets are all lower this morning, while bond yields are rising in the peripheral countries.
Asian markets were also mostly lower overnight, including China, despite a move by the central bank in China to cut its reserve requirement for banks. So China is easing monetary policy to help stem the slowdown they are seeing over there. Time will tell how much additional stimulus might be needed.
The political rhetoric continues to heat up in Greece, with chatter about them leaving the euro. This is causing the euro to drop further, while the dollar is adding to its back-to-back weekly gains. The strong dollar is also weighing on commodities. Oil prices are lower near $94.30 while gold prices are back down to $1560. I haven't heard much about lower prices at the pump for consumers, but it should be coming. A look at the chart of UGA (gas etf) shows it peaked a month ago and remains in a downtrend.
There is not much in the way of corporate news or economic data in the U.S. to distract investors from Europe. Financials are down the most so far today, while defensive utilities are down the least.
The 10-year yield has fallen to new multi-month lows. The yield at 1.77% is at its lowest levels since last October. Of course, that was prior to a big multi-month rally in the markets. But I think its too early to look for a similar setup. As for the VIX, it has topped last week's highs and is up 8% near 21.65.
Trading comment: Last Friday I wrote that I felt the market was making a short-term bottom. Trading is never precise, and I still feel that is the correct call. Today the SPX has undercut last week's lows and also breached the March lows at 1340. But so far the market seems to be hanging in there, and we will just have to see how the market fares into the close. If we can reverse some of this weakness and close in the upper range of the day I would feel better about more upside in the near-term. What I don't want to see is the market to close at its lows.
Asian markets were also mostly lower overnight, including China, despite a move by the central bank in China to cut its reserve requirement for banks. So China is easing monetary policy to help stem the slowdown they are seeing over there. Time will tell how much additional stimulus might be needed.
The political rhetoric continues to heat up in Greece, with chatter about them leaving the euro. This is causing the euro to drop further, while the dollar is adding to its back-to-back weekly gains. The strong dollar is also weighing on commodities. Oil prices are lower near $94.30 while gold prices are back down to $1560. I haven't heard much about lower prices at the pump for consumers, but it should be coming. A look at the chart of UGA (gas etf) shows it peaked a month ago and remains in a downtrend.
There is not much in the way of corporate news or economic data in the U.S. to distract investors from Europe. Financials are down the most so far today, while defensive utilities are down the least.
The 10-year yield has fallen to new multi-month lows. The yield at 1.77% is at its lowest levels since last October. Of course, that was prior to a big multi-month rally in the markets. But I think its too early to look for a similar setup. As for the VIX, it has topped last week's highs and is up 8% near 21.65.
Trading comment: Last Friday I wrote that I felt the market was making a short-term bottom. Trading is never precise, and I still feel that is the correct call. Today the SPX has undercut last week's lows and also breached the March lows at 1340. But so far the market seems to be hanging in there, and we will just have to see how the market fares into the close. If we can reverse some of this weakness and close in the upper range of the day I would feel better about more upside in the near-term. What I don't want to see is the market to close at its lows.
11 Mayıs 2012 Cuma
Sentiment Improved In U.S., Deteriorating In Europe
The market is higher in early trader after starting out on a weak note. The big news last night was this $2 billion trading loss at JPMorgan (JPM). JPM said it was due to some hedges on their credit portfolios that went awry, and investors were not pleased. Trading losses are often one-time in nature, so I think the news will fade, but JPM is always considered best-of-breed so this one caught some folks off guard.
The markets started out in the red, but quickly reversed the early losses and are currently up across the board. The consumer sentiment survey for May from the Univ. of Michigan helped as it showed an improvement to 77.8 from a reading of 76.4 last month.
While sentiment improved in the U.S., it continues to deteriorate in Europe. Markets are lower across the pond, and bond yields in Spain have topped the 6% level that traders view as a line in the sand above which markets are considered to be getting jittery. Spain already had to nationalize one bank earlier this week.
Asian markets were also lower overnight. The dollar is up a tad today, and most commodities are lower. Oil prices are down near $96.75 and gold prices are weaker at $1588.
The 10-year yield has drifted back to 1.85% following yesterday's brief spike higher. And the VIX is down to 18.74 after failing to retake the 20 level. But this was just the first stab at the 20 level, and a lot of traders expect volatility to pick up into the summer which would take the VIX higher.
Trading comment: Yesterday I said the market looked like sellers were getting tired and it could bounce. More evidence of that this morning as the S&P 500 again poked below the 1350 level but found support. We have now tested that 1350 level successfully 4 days in a row. So although volume will likely be light today, I think the early action is constructive and supportive of my view that a short-term bounce is in the cards. If the SPX is unable to retake its 50-day average, I would look to lighten up on stock exposure and get more defensive. But I think a lift will allow us to do that at better prices.
KAM Advisors has long positions in JPM, SH
The markets started out in the red, but quickly reversed the early losses and are currently up across the board. The consumer sentiment survey for May from the Univ. of Michigan helped as it showed an improvement to 77.8 from a reading of 76.4 last month.
While sentiment improved in the U.S., it continues to deteriorate in Europe. Markets are lower across the pond, and bond yields in Spain have topped the 6% level that traders view as a line in the sand above which markets are considered to be getting jittery. Spain already had to nationalize one bank earlier this week.
Asian markets were also lower overnight. The dollar is up a tad today, and most commodities are lower. Oil prices are down near $96.75 and gold prices are weaker at $1588.
The 10-year yield has drifted back to 1.85% following yesterday's brief spike higher. And the VIX is down to 18.74 after failing to retake the 20 level. But this was just the first stab at the 20 level, and a lot of traders expect volatility to pick up into the summer which would take the VIX higher.
Trading comment: Yesterday I said the market looked like sellers were getting tired and it could bounce. More evidence of that this morning as the S&P 500 again poked below the 1350 level but found support. We have now tested that 1350 level successfully 4 days in a row. So although volume will likely be light today, I think the early action is constructive and supportive of my view that a short-term bounce is in the cards. If the SPX is unable to retake its 50-day average, I would look to lighten up on stock exposure and get more defensive. But I think a lift will allow us to do that at better prices.
KAM Advisors has long positions in JPM, SH
10 Mayıs 2012 Perşembe
Will The Market Bounce Be Convincing?
The market is higher in early trading after being down for 6 straight days, which is the longest streak since summer 2011.
The Nasdaq is underperforming after earnings reports from both Cisco (CSCO) and Priceline (PCLN) failed to impress. CSCO beat by a penny but lowered guidance and its stock is down -8.7% currently. PCLN beat estimates by a wide margin, but didn't raise guidance and its stock is down -4.5% so far.
Asian markets were mixed overnight. China's trade balance figures showed imports and exports below expectations. In Europe markets are higher after the Bank of Spain nationalized Bankia by taking a 45% stake. I would think this is not the last bank that will need a lifeline.
The dollar is slipping a bit vs. the bouncing euro today, and that is helping commodity prices. Oil prices are bouncing back near $97 and gold is trying to get above the $1600 level.
The 10-year yield is also seeing a bounce to the still low level of 1.90%. And the VIX is down a touch today to 19.81. Yesterday after reaching 2-month highs the VIX reversed lower and close right at 20.
Trading comment: Today is day 1 of the bounce and too early to make any calls about it. It would be nice for the bulls to see some volume pickup as the day progresses. The fact that the Nasdaq is lagging in early action is not a great sign, as that index has been a leader most of the year. But it is possible we will see some rotation. If the SPX can put together a multi-day bounce it should at least be able to get back to the underside of its overhead 50-day, which will now act as resistance near 1385. Most leading stocks remain in corrections/consolidation so investors' best bet is to either average in with small trades, or wait for a new base to build and then watch for a fresh breakout.
KAM Advisors has long positions in PCLN
The Nasdaq is underperforming after earnings reports from both Cisco (CSCO) and Priceline (PCLN) failed to impress. CSCO beat by a penny but lowered guidance and its stock is down -8.7% currently. PCLN beat estimates by a wide margin, but didn't raise guidance and its stock is down -4.5% so far.
Asian markets were mixed overnight. China's trade balance figures showed imports and exports below expectations. In Europe markets are higher after the Bank of Spain nationalized Bankia by taking a 45% stake. I would think this is not the last bank that will need a lifeline.
The dollar is slipping a bit vs. the bouncing euro today, and that is helping commodity prices. Oil prices are bouncing back near $97 and gold is trying to get above the $1600 level.
The 10-year yield is also seeing a bounce to the still low level of 1.90%. And the VIX is down a touch today to 19.81. Yesterday after reaching 2-month highs the VIX reversed lower and close right at 20.
Trading comment: Today is day 1 of the bounce and too early to make any calls about it. It would be nice for the bulls to see some volume pickup as the day progresses. The fact that the Nasdaq is lagging in early action is not a great sign, as that index has been a leader most of the year. But it is possible we will see some rotation. If the SPX can put together a multi-day bounce it should at least be able to get back to the underside of its overhead 50-day, which will now act as resistance near 1385. Most leading stocks remain in corrections/consolidation so investors' best bet is to either average in with small trades, or wait for a new base to build and then watch for a fresh breakout.
KAM Advisors has long positions in PCLN
9 Mayıs 2012 Çarşamba
Market Could Be Ready For A Bounce
The markets are down again in early trading, and getting a bit oversold. The Dow has been down for six straight days and the markets could be due for a short-term bounce.
The news today is more of the same. The concerns out of Greece now focus around the prospect that they will not get another bailout and will actually exit the euro. This was the story that was making the rounds yesterday, and the manager of one of the largest currency hedge funds said he tough it was likely to occur this summer.
Earnings reactions have been a mixed bag lately.
Asian markets were down across the board overnight. The flight-to-safety trade is only occurring in Treasuries, which is pushing the yield on the 10-year down to 1.81%.
As for the VIX, it has broken out to new highs today above the 21 level but looks poised to reverse. I still expect the VIX to pull back from these levels in the near-term, but if we get a deeper correction down the road it still has plenty of room to run. Remember last summer the VIX spiked as high as 48.
Trading comment: The Dow has been down for six straight days, and the S&P 500 is basically the same. The SPX has now pulled back more than 5% from its April highs. That is pretty much an intermediate correction and I wouldn't be surprised to see a bounce in the near-term. Also, yesterday I mentioned the March lows at SPX 1340 as next support. The SPX touched 1343 this morning, which is close enough for govt. work. As such, I am covering some of our hedges and decreasing our short exposure in anticipation of a bounce. I think it is likely to just be an oversold bounce, so I plan to add back to our hedges from higher levels.
KAM Advisors has long positions in EFZ, SH
The news today is more of the same. The concerns out of Greece now focus around the prospect that they will not get another bailout and will actually exit the euro. This was the story that was making the rounds yesterday, and the manager of one of the largest currency hedge funds said he tough it was likely to occur this summer.
Earnings reactions have been a mixed bag lately.
- Stocks rising on earnings reports today include: DIS, DF, EZCH, and SODA.
- Stocks falling on earnings include: M, FCN, AGU, TEVA
Asian markets were down across the board overnight. The flight-to-safety trade is only occurring in Treasuries, which is pushing the yield on the 10-year down to 1.81%.
As for the VIX, it has broken out to new highs today above the 21 level but looks poised to reverse. I still expect the VIX to pull back from these levels in the near-term, but if we get a deeper correction down the road it still has plenty of room to run. Remember last summer the VIX spiked as high as 48.
Trading comment: The Dow has been down for six straight days, and the S&P 500 is basically the same. The SPX has now pulled back more than 5% from its April highs. That is pretty much an intermediate correction and I wouldn't be surprised to see a bounce in the near-term. Also, yesterday I mentioned the March lows at SPX 1340 as next support. The SPX touched 1343 this morning, which is close enough for govt. work. As such, I am covering some of our hedges and decreasing our short exposure in anticipation of a bounce. I think it is likely to just be an oversold bounce, so I plan to add back to our hedges from higher levels.
KAM Advisors has long positions in EFZ, SH
8 Mayıs 2012 Salı
Are The Wheels Coming Off In Greece?
The markets are down sharply this morning, in what looks like continuation selling from last week's selloff. Yesterday's action appears like a brief reprieve at the moment.
The news washing up on our shores from Europe centers around the political turmoil in Greece again. A new leftist leader is making some threatening comments that not only should Greece not accept any more bailout money but they should not ratify and even renege on the last 2 bailout deals they made. His comments would seem to pave the way for Greece exiting the euro at some point. Greece's stock market has plunged in recent days.
In earnings news, today's big disappointment comes from retailer Fossil (FOSL). FOSL management lowered guidance and made some very negative comments about the picture in Europe. FOSL stock is getting crushed by nearly -40% today, and it is weighing heavily on a host of other high end retail and apparel stocks.
Overnight action in Asia was mixed. The dollar is getting a boost today, while commodities are lower again. Oil prices have pulled back to $95.50 while gold prices are down all the way back near the $1600 level. One silver lining would be if gas prices at the pump fell which would be a boost to the consumer ahead of summer.
The 10-year yield is fading further, now down to a yield of 1.82%. As for the VIX, it is up more than 10% so far breaking above the $20 level and testing the April highs near 21.
Trading comment: The S&P 500 has broken the near-term support levels traders have been watching near the 1360 level. It is currently trading near 1350. I would say the next support area comes into play near the March lows at 1340. Yesterday I cautioned that the recent price action meant the market has more work to do before this correction fully plays out. But corrections are part of the investment landscape, so one should learn from their previous mistakes and try not to repeat them. Stay defensive, raise cash to levels that you can sleep comfortably at night, and start making a list of stocks that are holding up well or are poised to rally when the selling looks exhausted.
The news washing up on our shores from Europe centers around the political turmoil in Greece again. A new leftist leader is making some threatening comments that not only should Greece not accept any more bailout money but they should not ratify and even renege on the last 2 bailout deals they made. His comments would seem to pave the way for Greece exiting the euro at some point. Greece's stock market has plunged in recent days.
In earnings news, today's big disappointment comes from retailer Fossil (FOSL). FOSL management lowered guidance and made some very negative comments about the picture in Europe. FOSL stock is getting crushed by nearly -40% today, and it is weighing heavily on a host of other high end retail and apparel stocks.
Overnight action in Asia was mixed. The dollar is getting a boost today, while commodities are lower again. Oil prices have pulled back to $95.50 while gold prices are down all the way back near the $1600 level. One silver lining would be if gas prices at the pump fell which would be a boost to the consumer ahead of summer.
The 10-year yield is fading further, now down to a yield of 1.82%. As for the VIX, it is up more than 10% so far breaking above the $20 level and testing the April highs near 21.
Trading comment: The S&P 500 has broken the near-term support levels traders have been watching near the 1360 level. It is currently trading near 1350. I would say the next support area comes into play near the March lows at 1340. Yesterday I cautioned that the recent price action meant the market has more work to do before this correction fully plays out. But corrections are part of the investment landscape, so one should learn from their previous mistakes and try not to repeat them. Stay defensive, raise cash to levels that you can sleep comfortably at night, and start making a list of stocks that are holding up well or are poised to rally when the selling looks exhausted.
7 Mayıs 2012 Pazartesi
GOLD IS AT OR NEARING A BOTTOM.
I am making Monday's premium report available to the public. I think we are at or very close to what is likely to be a once or twice a decade opportunity in the metals sector, especially the mining stocks. If you like today's report the $10 one week trial is still available. That includes the archives, cycle counts, COT reports, and model portfolio. I strongly suggest one read the last several weeks of reports so they understand how we got here and what is unfolding. Now on to Monday's report.
I doubt anyone is surprised by the reversal in the dollar index today.
It’s been made painfully clear that Bernanke is not going to tolerate a rising dollar, at least not for very long. Cycles are still working, and still generating bounces out of daily cycle lows, but they are never allowed to get any traction before the next beat down starts.
I would say there’s a pretty good chance that today’s reversal is signaling that the current daily cycle topped on day four, and the pattern of lower lows and lower highs is still intact.
Presumably the dollar will now start to decline and penetrate the May 1st intraday low before the next significant bounce. The daily cycle timing bands have adhered pretty closely to standard durations in the dollar index. I don’t see any indication that has changed, so we can probably expect the next significant bounce sometime around the last week of May.
Stocks:
If the dollar cycle has topped then the half cycle low scenario is still on the table.
In this scenario the stock market is on day 19 of its daily cycle and due to form a half cycle low at any time. As most of you probably remember, I’ve been expecting an extended consolidation in the general stock market. A dollar cycle topping on day 4 and a half cycle low on day 19 would be consistent with that theory.
If by some chance the dollar can recover and continue to rally for a few more days it could force stocks to penetrate the April 10th low. In that scenario I would re-phase the daily and intermediate cycles as shown in the chart below.
At the moment I have no idea which scenario has a greater odds of playing out, although I must admit the reversal today does not look good for the dollar.
Gold:
In my opinion gold is trying to move down into one more failed and left translated daily cycle, which I’m pretty confident would mark an intermediate degree bottom. However, as you can see from the chart below, as soon as Bernanke broke the dollar rally gold lost all of its downside momentum.
This has turned gold’s B-Wave decline into a mostly sideways consolidation for the last two months. If the dollar has indeed topped then I have my doubts that gold will be able to finish its intermediate decline and penetrate the April 4 low. The fact that the current daily cycle is running out of time may indicate that we are going to have to leave the April 4 low as an early intermediate bottom.
I would prefer to see gold drop down and penetrate $1612 as it would make the intermediate cycle count “fit” better. I know that’s not what most of you would like to see. Most of you probably just want the draw down to end as quickly as possible. I on the other hand understand that this is a secular bull market and that this is going to be a winning trade. (Well unless the bull market has ended ). So I’m not overly worried about a draw down. In a bull market timing mistakes get corrected.
To me a move below $1612 means that we didn’t waste an entire daily cycle on a sideways consolidation and that we have all of a new intermediate cycle still ahead of us. That’s why I would prefer to see gold poke through the April 4 low. It would signal that we have more time to rally, an entire daily cycle more.
So even though we weren’t able to time a perfect bottom, I’m confident that we have entered “close enough” and when the regression to the mean occurs, and it always eventually does, our mining positions are going to deliver a very hefty profit.
Heck, if one was willing to just turn their computer off and wait for the bubble phase of the bull market, our current positions are probably set up to deliver a 500-1000 percent gain. Of course the cost is that you have to ignore the market and go on with your life for the next several years.
When you think about it, that’s a pretty good bargain. Do absolutely nothing, and get rich doing it.
I doubt anyone is surprised by the reversal in the dollar index today.
It’s been made painfully clear that Bernanke is not going to tolerate a rising dollar, at least not for very long. Cycles are still working, and still generating bounces out of daily cycle lows, but they are never allowed to get any traction before the next beat down starts.
I would say there’s a pretty good chance that today’s reversal is signaling that the current daily cycle topped on day four, and the pattern of lower lows and lower highs is still intact.
Presumably the dollar will now start to decline and penetrate the May 1st intraday low before the next significant bounce. The daily cycle timing bands have adhered pretty closely to standard durations in the dollar index. I don’t see any indication that has changed, so we can probably expect the next significant bounce sometime around the last week of May.
Stocks:
If the dollar cycle has topped then the half cycle low scenario is still on the table.
In this scenario the stock market is on day 19 of its daily cycle and due to form a half cycle low at any time. As most of you probably remember, I’ve been expecting an extended consolidation in the general stock market. A dollar cycle topping on day 4 and a half cycle low on day 19 would be consistent with that theory.
If by some chance the dollar can recover and continue to rally for a few more days it could force stocks to penetrate the April 10th low. In that scenario I would re-phase the daily and intermediate cycles as shown in the chart below.
At the moment I have no idea which scenario has a greater odds of playing out, although I must admit the reversal today does not look good for the dollar.
Gold:
In my opinion gold is trying to move down into one more failed and left translated daily cycle, which I’m pretty confident would mark an intermediate degree bottom. However, as you can see from the chart below, as soon as Bernanke broke the dollar rally gold lost all of its downside momentum.
This has turned gold’s B-Wave decline into a mostly sideways consolidation for the last two months. If the dollar has indeed topped then I have my doubts that gold will be able to finish its intermediate decline and penetrate the April 4 low. The fact that the current daily cycle is running out of time may indicate that we are going to have to leave the April 4 low as an early intermediate bottom.
I would prefer to see gold drop down and penetrate $1612 as it would make the intermediate cycle count “fit” better. I know that’s not what most of you would like to see. Most of you probably just want the draw down to end as quickly as possible. I on the other hand understand that this is a secular bull market and that this is going to be a winning trade. (Well unless the bull market has ended ). So I’m not overly worried about a draw down. In a bull market timing mistakes get corrected.
To me a move below $1612 means that we didn’t waste an entire daily cycle on a sideways consolidation and that we have all of a new intermediate cycle still ahead of us. That’s why I would prefer to see gold poke through the April 4 low. It would signal that we have more time to rally, an entire daily cycle more.
So even though we weren’t able to time a perfect bottom, I’m confident that we have entered “close enough” and when the regression to the mean occurs, and it always eventually does, our mining positions are going to deliver a very hefty profit.
Heck, if one was willing to just turn their computer off and wait for the bubble phase of the bull market, our current positions are probably set up to deliver a 500-1000 percent gain. Of course the cost is that you have to ignore the market and go on with your life for the next several years.
When you think about it, that’s a pretty good bargain. Do absolutely nothing, and get rich doing it.
How Deep Will The Correction Be?
The markets are slightly lower in early trading, although the Nazz is trying to buck the early weakness and go positive as I write.
The news over the weekend mostly centered around elections in Europe. In France, the Socialist candidate (Hollande) was elected over incumbent Sarkozy. And in Greece the elections also point to a political shakeup. So especially in France investors worry that the austerity plans in the eurozone could be in jeopardy, and the Franco-German leadership will likely lose one of its key leaders.
Overnight action in Asia was lower across the board, with Japan and Hong Kong down more than -2.5% each.
The dollar is higher today, which is also weighing on commodities. Oil prices are lower near $96.60 and gold prices are lower to $1634.
On the earnings front, this morning's big disappointment comes from a stock we really like, CTSH. The company beat estimates but lowered revenue guidance for FY12 and the stock is getting killed. I think this is an overreaction, and will likely present a good buying opportunity when the dust settles.
The 10-year yield continues to languish and is trading at 1.86%. This is about a 3-month low. As for the VIX, it is up fractionally and nearly reached the 20 level this morning before pulling back a bit. The 20 level has pretty much acted as resistance since mid-January of this year.
Trading comment: Back-to-back higher volume selloffs on Thursday and Friday lend themselves to the notion that the market is still in correction mode. The SPX and Nasdaq both broke back below their 50-day support levels. When the SPX broke back above its 50-day in late April, I commented that the rally was on light volume and most market leaders were still in corrections. As such I felt that the market would remain choppy and it was not the time to rush back into buying mode. I think that was the right call, as last week's market action looks like it means this correction has more work to do-- both in time and price.
At SPX 1370, the market is roughly 3.6% lower from its April highs. A 5% correction would take the S&P down to 1350, while an 8% correction would bring the 1300 level into focus. I think investors should be patient and wait for the market to mend itself. Watch your individual stocks. Some of them will begin to act positive again and break out ahead of the market. Others could lag. We will try to protect recent profits, stay defensive, and hold higher cash balances in the interim.
KAM Advisors has long positions in CTSH
The news over the weekend mostly centered around elections in Europe. In France, the Socialist candidate (Hollande) was elected over incumbent Sarkozy. And in Greece the elections also point to a political shakeup. So especially in France investors worry that the austerity plans in the eurozone could be in jeopardy, and the Franco-German leadership will likely lose one of its key leaders.
Overnight action in Asia was lower across the board, with Japan and Hong Kong down more than -2.5% each.
The dollar is higher today, which is also weighing on commodities. Oil prices are lower near $96.60 and gold prices are lower to $1634.
On the earnings front, this morning's big disappointment comes from a stock we really like, CTSH. The company beat estimates but lowered revenue guidance for FY12 and the stock is getting killed. I think this is an overreaction, and will likely present a good buying opportunity when the dust settles.
The 10-year yield continues to languish and is trading at 1.86%. This is about a 3-month low. As for the VIX, it is up fractionally and nearly reached the 20 level this morning before pulling back a bit. The 20 level has pretty much acted as resistance since mid-January of this year.
Trading comment: Back-to-back higher volume selloffs on Thursday and Friday lend themselves to the notion that the market is still in correction mode. The SPX and Nasdaq both broke back below their 50-day support levels. When the SPX broke back above its 50-day in late April, I commented that the rally was on light volume and most market leaders were still in corrections. As such I felt that the market would remain choppy and it was not the time to rush back into buying mode. I think that was the right call, as last week's market action looks like it means this correction has more work to do-- both in time and price.
At SPX 1370, the market is roughly 3.6% lower from its April highs. A 5% correction would take the S&P down to 1350, while an 8% correction would bring the 1300 level into focus. I think investors should be patient and wait for the market to mend itself. Watch your individual stocks. Some of them will begin to act positive again and break out ahead of the market. Others could lag. We will try to protect recent profits, stay defensive, and hold higher cash balances in the interim.
KAM Advisors has long positions in CTSH
2 Mayıs 2012 Çarşamba
Scheduling Conflict
I will be out of the office the remainder of the week. Please check back on Monday for our regular updates.
Thanks--
Thanks--
Shiller Backs Away From 'Late Great Depression' Remark
After declaring that the world was in a state of “late Great Depression” on Tuesday, renowned Yale economist Robert Shiller hedged his words.
“Did I say that? Well, I think there are a lot of analogies to what we’ve been going through to that of the Great Depression, but I don’t really think we’re in a depression, so I might have said it slightly wrong,” he said in an interview on CNBC’s “The Kudlow Report.”
Shiller, co-developer of the Case-Shiller index on housing trends and author of “Finance and the Great Society,” said that while the United States wasn’t in a recession, certain elements of the economy resembled one.
“The persistence of high unemployment is a problem,” he said, along with interest rates at “Depression levels.”
On Monday, Shiller told “Squawk Box Europe” that the world was in a “new age of austerity.”
“Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now,” he said in that interview.
Asked by host Larry Kudlow on Tuesday about whether the economy was in a recovery, Shiller said “not quite”.
“Depends on how you define these things. In some ways, we are not in a recovery. Look at the employment-population ratio. It’s stuck at 58.5 percent. That’s kind of close to the lowest it’s been in this whole debacle,” he said. “We haven’t recovered jobs. Unemployment rate is down, but that is because people have left the labor force.”
Shiller also reiterated his support for government stimulus.
“I’ve been advocating raising taxes and expenditures as a temporary measure to get us out of the weak economy. That’s the balanced budget multiplier first proposed by William Salant and Paul Samuelson in the 1940s,” he said. “Now’s the time to use it.”
Challenged on the idea that President Obama’s stimulus hasn't worked, Shiller defended the idea.
“We’ve had a worse recession than anybody expected. I don’t think it proves that the principle is wrong. I think we need to do that,” he said. “We can’t give up on the economy.”
“There’s no impact on the natural debt,” he added.
Shiller also said he believed in market forces.
“I would like to see financial markets expanded,” he said, adding that he had faith that the stock market was still a good bet.
Asked to weigh in on Jeremy Siegel’s prediction that the Dow Jones Industrial Average would hit 17,000 by the end of 2013, Shiller took a more modest outlook.
“I agree with him that stocks are a good investment,” he said. “I’m just not as high and gung-ho as Jeremy is.”
“Did I say that? Well, I think there are a lot of analogies to what we’ve been going through to that of the Great Depression, but I don’t really think we’re in a depression, so I might have said it slightly wrong,” he said in an interview on CNBC’s “The Kudlow Report.”
Shiller, co-developer of the Case-Shiller index on housing trends and author of “Finance and the Great Society,” said that while the United States wasn’t in a recession, certain elements of the economy resembled one.
“The persistence of high unemployment is a problem,” he said, along with interest rates at “Depression levels.”
On Monday, Shiller told “Squawk Box Europe” that the world was in a “new age of austerity.”
“Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now,” he said in that interview.
Asked by host Larry Kudlow on Tuesday about whether the economy was in a recovery, Shiller said “not quite”.
“Depends on how you define these things. In some ways, we are not in a recovery. Look at the employment-population ratio. It’s stuck at 58.5 percent. That’s kind of close to the lowest it’s been in this whole debacle,” he said. “We haven’t recovered jobs. Unemployment rate is down, but that is because people have left the labor force.”
Shiller also reiterated his support for government stimulus.
“I’ve been advocating raising taxes and expenditures as a temporary measure to get us out of the weak economy. That’s the balanced budget multiplier first proposed by William Salant and Paul Samuelson in the 1940s,” he said. “Now’s the time to use it.”
Challenged on the idea that President Obama’s stimulus hasn't worked, Shiller defended the idea.
“We’ve had a worse recession than anybody expected. I don’t think it proves that the principle is wrong. I think we need to do that,” he said. “We can’t give up on the economy.”
“There’s no impact on the natural debt,” he added.
Shiller also said he believed in market forces.
“I would like to see financial markets expanded,” he said, adding that he had faith that the stock market was still a good bet.
Asked to weigh in on Jeremy Siegel’s prediction that the Dow Jones Industrial Average would hit 17,000 by the end of 2013, Shiller took a more modest outlook.
“I agree with him that stocks are a good investment,” he said. “I’m just not as high and gung-ho as Jeremy is.”
1 Mayıs 2012 Salı
THE INFLATION TRADE IS ON: BERNANKE HAS BROKEN THE DOLLAR RALLY
It may not seem like much happened yesterday, but a very important event occurred. Yesterday the dollar index breached 78.65. The reason that is significant is because 78.65 marked the intraday low of the prior daily cycle. A penetration of that level indicates that the current daily cycle has now topped in a left translated manner and a new pattern of lower lows and lower highs has begun. Any time a daily cycle tops in a left translated manner it almost always indicates that the intermediate cycle has also topped.
In this case it would indicate that the intermediate dollar cycle topped on week two and should now move generally lower for the next 10-12 weeks, bottoming sometime in late June or early July, about the time Operation Twist ends
Now that we have confirmation that Bernanke has broken the dollar rally I'm confident in calling April 4th an intermediate bottom (B-Wave bottom) in the gold market. Gold should now be entering the consolidation phase of the next C-wave. I expect a test of the all-time highs sometime this summer as the dollar moves down into its intermediate bottom.
That being said I have no interest in a 15% rally in gold. The real money will be made as the mining stocks exit their bear market, re-enter the consolidation zone between 500 and 600, and move up to retest the old highs. It's not inconceivable that we could see a 30-45% gain in mining stocks over the next 2 1/2 months.
Sentiment in the mining index has reached the same levels of bearishness that were seen in the fall of 2008. That black pessimism drove a 300+ percent rally over the next two years. I have little doubt this time will be any different.
Now what we need to see is a change in character. We need the mining stocks to stop generating these sharp bear market rallies and transition into the wall of worry type rally that characterizes a bull market. So far that is exactly what is happening. The miners are rallying very hesitantly, and as long as this continues it will camouflage the move and keep sentiment depressed. That's exactly what we need to happen to drive a long sustained rally back up to the old highs.
The problem with the rocket launch type rallies we've seen over the last year and a half is that they swing sentiment very quickly to the bullish side and we run out of buyers.
As long as the bottoming process proceeds gradually I think there's a very good chance the HUI could break back above the 200 day moving average, and possibly test the 600 level by mid-July.
So far all of the pieces are starting to fall in place to initiate the very early stages of what I think will eventually become another huge momentum move similar to what happened in silver and gold last year. Ultimately culminating in a parabolic blowoff top sometime in late 2014 as the dollar moves down into its next three year cycle low.
Now is the time to invest in this sector as it struggles to transition from a bear market back to the secular bull trend. The time to enter is at the very beginning when no one believes. This is when the really big money is made. If you wait till your emotions give you the all clear, half the move will be over.
Most traders are going to jump back into the general stock market, or tech stocks. You have to be smarter than that. The stock market, including tech, have already generated a massive move out of the October bottom. That kind of move usually leads to a multiweek, or month, consolidation. The odds of another 20 to 30% rally in the stock market are very slim.
The odds of a 20 to 30% rally as the mining stocks resume the secular bull trend are extremely high.
The combination of extreme downside momentum, and irrational human nature has created the kind of oversold conditions and extreme undervaluation that generates an opportunity that only comes around once or twice a decade.
The $10 one-week trial for the premium newsletter will be available for the rest of the week. Click on the subscribe link on the right hand side of the homepage.
In this case it would indicate that the intermediate dollar cycle topped on week two and should now move generally lower for the next 10-12 weeks, bottoming sometime in late June or early July, about the time Operation Twist ends
Now that we have confirmation that Bernanke has broken the dollar rally I'm confident in calling April 4th an intermediate bottom (B-Wave bottom) in the gold market. Gold should now be entering the consolidation phase of the next C-wave. I expect a test of the all-time highs sometime this summer as the dollar moves down into its intermediate bottom.
That being said I have no interest in a 15% rally in gold. The real money will be made as the mining stocks exit their bear market, re-enter the consolidation zone between 500 and 600, and move up to retest the old highs. It's not inconceivable that we could see a 30-45% gain in mining stocks over the next 2 1/2 months.
Sentiment in the mining index has reached the same levels of bearishness that were seen in the fall of 2008. That black pessimism drove a 300+ percent rally over the next two years. I have little doubt this time will be any different.
Now what we need to see is a change in character. We need the mining stocks to stop generating these sharp bear market rallies and transition into the wall of worry type rally that characterizes a bull market. So far that is exactly what is happening. The miners are rallying very hesitantly, and as long as this continues it will camouflage the move and keep sentiment depressed. That's exactly what we need to happen to drive a long sustained rally back up to the old highs.
The problem with the rocket launch type rallies we've seen over the last year and a half is that they swing sentiment very quickly to the bullish side and we run out of buyers.
As long as the bottoming process proceeds gradually I think there's a very good chance the HUI could break back above the 200 day moving average, and possibly test the 600 level by mid-July.
So far all of the pieces are starting to fall in place to initiate the very early stages of what I think will eventually become another huge momentum move similar to what happened in silver and gold last year. Ultimately culminating in a parabolic blowoff top sometime in late 2014 as the dollar moves down into its next three year cycle low.
Now is the time to invest in this sector as it struggles to transition from a bear market back to the secular bull trend. The time to enter is at the very beginning when no one believes. This is when the really big money is made. If you wait till your emotions give you the all clear, half the move will be over.
Most traders are going to jump back into the general stock market, or tech stocks. You have to be smarter than that. The stock market, including tech, have already generated a massive move out of the October bottom. That kind of move usually leads to a multiweek, or month, consolidation. The odds of another 20 to 30% rally in the stock market are very slim.
The odds of a 20 to 30% rally as the mining stocks resume the secular bull trend are extremely high.
The combination of extreme downside momentum, and irrational human nature has created the kind of oversold conditions and extreme undervaluation that generates an opportunity that only comes around once or twice a decade.
The $10 one-week trial for the premium newsletter will be available for the rest of the week. Click on the subscribe link on the right hand side of the homepage.
1st Day Of The Month Effect
The market is nicely higher in early trading. There was a strong manufacturing report this morning which helped boost the market, the strong reactions to earnings reports were also helping. Does it feel like the first day of the month is always an up day in the market?
In economic news, the latest ISM Manufacturing index came in above expectations at 54.8, which is higher than the 53.4 reading last month.
In earnings news, I am seeing more stocks going up after reporting than falling. Here are some examples:
Stocks rising on earnings reports:
The dollar is slightly higher, and commodities are mixed. Oil prices are above the $106 level, while gold prices are a tad weaker near $1663.
The 10-year yield is getting a boost today to 1.95%; and the VIX is down -4.6% to 16.35.
Trading comment: The market continues to act well technically. We'll have to see if today's early rally lasts into the close and if is accompanied by any volume to speak of. The S&P mid-cap 400 index is very near breaking to new highs again. I had expected the market to remain in a trading range for a bit longer, which is still possible. But remember the old saying that you have to accept the market as it is, and not how you wish it to be.
In economic news, the latest ISM Manufacturing index came in above expectations at 54.8, which is higher than the 53.4 reading last month.
In earnings news, I am seeing more stocks going up after reporting than falling. Here are some examples:
Stocks rising on earnings reports:
- ADM, APC, MPC, CCJ, ECL, IPGP, HCP, FWLT, MAS
- BP, CMI, DPZ, AVP, VPHM
The dollar is slightly higher, and commodities are mixed. Oil prices are above the $106 level, while gold prices are a tad weaker near $1663.
The 10-year yield is getting a boost today to 1.95%; and the VIX is down -4.6% to 16.35.
Trading comment: The market continues to act well technically. We'll have to see if today's early rally lasts into the close and if is accompanied by any volume to speak of. The S&P mid-cap 400 index is very near breaking to new highs again. I had expected the market to remain in a trading range for a bit longer, which is still possible. But remember the old saying that you have to accept the market as it is, and not how you wish it to be.
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