Bond yields started to spike yesterday, which took a little steam out of the stock market rally. But today markets are sharply lower on what looks like continued fear about rising rates. Bond yields rose in Asian markets as well as Europe as well. And trading in closed end bond funds yesterday really showed the skittishness among investors.
Interest rate sensitive sectors are down the most. Trading in some of the REITs is showing extreme volatility, while utilities are the weakest sector so far. I think this is likely an overreaction, and when the dust settles yield-hungry investors and those with cash still on the sidelines will look to come in and buy beaten down REITs and utes.
Asian markets were mixed overnight. The Bank of Thailand became the latest central bank to lower interest rates, cutting their key rate 25 basis points to 2.50%. The IMF lowered its forecast for Chinese GDP growth to 7.75% from 8.00% in 2013 and cut the 2014 outlook to 7.75% from 8.20%.
European markets are also lower today, as sovereign bond yields are on the rise. Germany's unemployment rate held steady at 6.9%.
The dollar is lower this morning but commodities are mixed. Gold prices are higher near $1388 while oil prices are lower to $94.63. Copper prices are lower as well.
The 10-year yield is higher to 2.14%. It last touched these levels in early April, but next major resistance doesn't come into play until around the 2.40% level.
The volatility index is nearly 8% higher this morning, above the 15 level we have been watching to 15.65 currently. A couple of closes above the 15 level would increase the chances of a further pullback in the stock market, while a reversal back below the 15 level would likely embolden the bulls to do more buying.
Trading comment: The S&P 500 has erased yesterday's gains but is still above the lows from last week. The SPX touched 1635 last week, so that is a short-term level worth watching. A break below those levels would be a rare lower low on the weekly chart, at least in recent months. We are still looking for one last spurt higher by the market closer to the SPX 1700 level before quarter end, though the short-term timing is always difficult. If that rally materializes, and if it brings out more bullish sentiment that would certainly increase the odds for a summer correction. I think most strategists are only looking for a mild pullback, but as the herd is often wrong we would not be surprised to see something that rattles investors confidence a bit more. But let's not put the cart before the horse.
29 Mayıs 2013 Çarşamba
28 Mayıs 2013 Salı
Bullish Sentiment On The Rise
After a 3-day pause in the markets, stocks are back in rally mode this morning. This isn't all that surprising given that this has been the pattern all year. We used the weakness Thursday and Friday morning to do some buying for this reason.
In economic news, consumer confidence for May rose to 76.2, well above expectations and above the prior month's reading of 68.1. Also, the Case-Shiller Home Price index rose 10.9% on top of the prior months 9.3% increase.
Asian markets were higher across the board overnight. And European markets are also higher today. An ECB board member said the possibility of further easing remains on the table despite the recent rate cut.
The dollar is higher today and commodities are mixed. Oil is higher near $95.50 while gold prices are lower around $1377.
Bond yields are moving higher today with the 10-year yield spiking to 2.11%. These levels mark the highest yields in over a year, since April 2012.
Trading comment: Bullish sentiment has been slow to rise, but is now getting to levels that raise a yellow flag for this market. We could certainly still see investor sentiment grow more bullish in the near-term, but if that were to happen it would likely increase the odds of a more meaningful correction this summer.
Here are some of the indicators nearing extreme levels: The Investor's Intelligence survey is showing the spread between bulls and bears at +36% (55% bulls, 19% bears). That is a 2-year high for this indicator. The AAII individual investor survey spread is at +27%, which is the second highest reading this year and also near an 18-month high. And last week the Market Vane survey showed bulls hit 70%. That is the highest reading this entire bull market! You have to go all the way back to 2007 to find another reading in the 70s. So investor sentiment is no longer skeptical, and is now getting more complacent.
In the short-term, the CBOE put/call ratio topped 1.0 in each of the last 3 trading days. So it's not surprising to see the market rally off that short bout of pessimism. I think bullish sentiment can continue to build for awhile, possibly thru June into quarter. But I continue to think it raises the odds for a summer correction. Stay tuned--
In economic news, consumer confidence for May rose to 76.2, well above expectations and above the prior month's reading of 68.1. Also, the Case-Shiller Home Price index rose 10.9% on top of the prior months 9.3% increase.
Asian markets were higher across the board overnight. And European markets are also higher today. An ECB board member said the possibility of further easing remains on the table despite the recent rate cut.
The dollar is higher today and commodities are mixed. Oil is higher near $95.50 while gold prices are lower around $1377.
Bond yields are moving higher today with the 10-year yield spiking to 2.11%. These levels mark the highest yields in over a year, since April 2012.
Trading comment: Bullish sentiment has been slow to rise, but is now getting to levels that raise a yellow flag for this market. We could certainly still see investor sentiment grow more bullish in the near-term, but if that were to happen it would likely increase the odds of a more meaningful correction this summer.
Here are some of the indicators nearing extreme levels: The Investor's Intelligence survey is showing the spread between bulls and bears at +36% (55% bulls, 19% bears). That is a 2-year high for this indicator. The AAII individual investor survey spread is at +27%, which is the second highest reading this year and also near an 18-month high. And last week the Market Vane survey showed bulls hit 70%. That is the highest reading this entire bull market! You have to go all the way back to 2007 to find another reading in the 70s. So investor sentiment is no longer skeptical, and is now getting more complacent.
In the short-term, the CBOE put/call ratio topped 1.0 in each of the last 3 trading days. So it's not surprising to see the market rally off that short bout of pessimism. I think bullish sentiment can continue to build for awhile, possibly thru June into quarter. But I continue to think it raises the odds for a summer correction. Stay tuned--
27 Mayıs 2013 Pazartesi
STOCK BUBBLE: WAIT FOR IT TO POP
I'm going to start off today and show you what Fed policy has given us over the last decade and a half. What the Fed has accomplished has been one bubble after another.
We are obviously in the final euphoric parabolic phase of a third stock market bubble. When viewed with the benefit of the 200 day moving average as a mean regression line, it's glaringly obvious just how dangerous this market has become. As history has shown, anytime the market stretches too far above the mean the forces of gravity eventually collapse price back to and often considerably below the mean.
Yet despite thousands of years of evidence that parabolas are never sustainable, investors invariably get suckered into buying into these moves and get caught when they inevitably crash.
This I can say with 100% certainty, this parabolic move in stocks is going to crash, just like every other parabolic move in history.
The smart investor will wait patiently on the sidelines and once the crash occurs the low risk trade will be to go long as the Fed will attempt to reflate the market. This is a virtually guaranteed strategy to make money, although very few people will have the patience to wait for the trade to develop.
The vast majority of traders will ignore the extremely risky environment, because his emotions make him think that he is getting left behind. He will buy into the parabola assuming that it will continue indefinitely (Does this sound familiar to the tech bubble and real estate bubble?).
History however has shown that this is never the case, and buying any asset this stretched above the 200 day moving average always turns out to be a gamble as to whether or not you can exit ahead of the crash. If you miss time the exit, and most people do, you end up paying a heavy price for following the herd into a trade that you logically know is too risky.
Once the stock market parabola collapses then the Fed's endless money machine will generate another bubble in another asset class.
I strongly believe the next bubble will be in the precious metals market.
We are obviously in the final euphoric parabolic phase of a third stock market bubble. When viewed with the benefit of the 200 day moving average as a mean regression line, it's glaringly obvious just how dangerous this market has become. As history has shown, anytime the market stretches too far above the mean the forces of gravity eventually collapse price back to and often considerably below the mean.
Yet despite thousands of years of evidence that parabolas are never sustainable, investors invariably get suckered into buying into these moves and get caught when they inevitably crash.
This I can say with 100% certainty, this parabolic move in stocks is going to crash, just like every other parabolic move in history.
The smart investor will wait patiently on the sidelines and once the crash occurs the low risk trade will be to go long as the Fed will attempt to reflate the market. This is a virtually guaranteed strategy to make money, although very few people will have the patience to wait for the trade to develop.
The vast majority of traders will ignore the extremely risky environment, because his emotions make him think that he is getting left behind. He will buy into the parabola assuming that it will continue indefinitely (Does this sound familiar to the tech bubble and real estate bubble?).
History however has shown that this is never the case, and buying any asset this stretched above the 200 day moving average always turns out to be a gamble as to whether or not you can exit ahead of the crash. If you miss time the exit, and most people do, you end up paying a heavy price for following the herd into a trade that you logically know is too risky.
Once the stock market parabola collapses then the Fed's endless money machine will generate another bubble in another asset class.
I strongly believe the next bubble will be in the precious metals market.
We interrupt usual blogging to inform you of a presentation I'm giving, for those of you in the area:
"Living Without Money"
7:00 to 9:00PM
Friday, May 31st
at Unitarian Universalist Society: East
153 Vernon Street West,
Manchester, Connecticut
Thanks to my friend Kay for initiating setting this up. I'm staying with Kay, Gordon, and their little girl Mazzie right now.
Then I'm heading west to the Rainbow Gathering in Montana, for the launch of the moneyless tribe, inshallah.
"Living Without Money"
7:00 to 9:00PM
Friday, May 31st
at Unitarian Universalist Society: East
153 Vernon Street West,
Manchester, Connecticut
| Phone | (860) 646-5151 |
| uuse153@sbcglobal.net | |
| Website | http://uuse.org |
Thanks to my friend Kay for initiating setting this up. I'm staying with Kay, Gordon, and their little girl Mazzie right now.
Then I'm heading west to the Rainbow Gathering in Montana, for the launch of the moneyless tribe, inshallah.
24 Mayıs 2013 Cuma
A Rare 3-Day Losing Streak?
The market is currently lower for a 3rd day in a row. Normally that wouldn't be very surprising, but this year has been anything but normal. Over the last 5 months of trading, there has only been one 3-day losing streak in the S&P 500. Today could be the second occurrence, although its still early in the day.
The above doesn't hold too much significance, imo. Rather it is just an interesting market anecdote. The market had simply become too extended, trading at levels more than 6% above the 50-day average, which is rare. So a pullback was in the cards and well overdue. That said, we don't expect this pullback to be more than just a garden variety pause that relieves the overbought condition. We expect underinvested portfolios managers to buy the dip going into quarter end. If we are due for a larger correction, we would look to the summer timeframe to get more worried.
In economic news, April durable goods rose 3.3% after a -5.9% decline in March. Ex-transportation, durable goods still rose 1.3%.
Asian markets were mixed overnight. The BoJ governor said that they don't have a specific target for stocks or currency rates. But reports out overnight suggest the BoJ was again providing liquidity to the Japanese bond market.
Europe is also trading mixed to lower today. The second estimate of Germany's Q1 GDP held at 0.1%. Not very good for the country that is supposed to be the glue of the Eurozone.
Commodities are lower again. Gold prices are down near $1386, and silver and copper are lower as well. Oil prices are weaker to $93.50 and ag prices are lower.
The 10-year yield is slightly below the 2.00% level. And the volatility index is 4% higher today at 14.65 but still below the 15 level that we have been watching.
Trading comment: We are using this 3-day dip to continue to add to equities. We trimmed more of our fixed income ETFs and have added to stocks such as ARCP, EOG, and URI this week. Should the market continue lower next week we would look to do more of the same. Our forecast is that the market will pause and consolidate here but will stage another advance into the quarter end timeframe.
KAM Advisors has long positions in ARCP, EOG, and URI
The above doesn't hold too much significance, imo. Rather it is just an interesting market anecdote. The market had simply become too extended, trading at levels more than 6% above the 50-day average, which is rare. So a pullback was in the cards and well overdue. That said, we don't expect this pullback to be more than just a garden variety pause that relieves the overbought condition. We expect underinvested portfolios managers to buy the dip going into quarter end. If we are due for a larger correction, we would look to the summer timeframe to get more worried.
In economic news, April durable goods rose 3.3% after a -5.9% decline in March. Ex-transportation, durable goods still rose 1.3%.
Asian markets were mixed overnight. The BoJ governor said that they don't have a specific target for stocks or currency rates. But reports out overnight suggest the BoJ was again providing liquidity to the Japanese bond market.
Europe is also trading mixed to lower today. The second estimate of Germany's Q1 GDP held at 0.1%. Not very good for the country that is supposed to be the glue of the Eurozone.
Commodities are lower again. Gold prices are down near $1386, and silver and copper are lower as well. Oil prices are weaker to $93.50 and ag prices are lower.
The 10-year yield is slightly below the 2.00% level. And the volatility index is 4% higher today at 14.65 but still below the 15 level that we have been watching.
Trading comment: We are using this 3-day dip to continue to add to equities. We trimmed more of our fixed income ETFs and have added to stocks such as ARCP, EOG, and URI this week. Should the market continue lower next week we would look to do more of the same. Our forecast is that the market will pause and consolidate here but will stage another advance into the quarter end timeframe.
KAM Advisors has long positions in ARCP, EOG, and URI
23 Mayıs 2013 Perşembe
Is The Japanese Rally Over?
Markets are lower this morning on some panic selling overseas which weighed on stocks here in the US for a second day. This overshadowed some positive economic data with jobless claims lower than expected and new homes sales for April coming in well above expectations.
Last night Japan saw a huge 7.3% plunge in the Nikkei. The selling started after trading in the Japanese Govt bonds had to be halted. The strengthening yen exacerbated the pressure and the Nikkei saw a drop of 1500 points from high to low. It also probably didn't help that China's HSBC manufacturing index fell back into contraction (49.6) for the first time in seven months. The Bank of Japan finally moved in and injected 2 trillion yen to calm markets.
Of course, Japan's stock market has enjoyed a huge rally since the BoJ announced its massive quantitative easing program there. At some point you expect some profit taking, but this large decline shows what happens when stocks get extended and everyone tries to hit the sell button at the same time.
Europe had some positive data in the form of higher than expected PMI manufacturing readings, but overall he region is still in contraction. Spain auctioned off 3-year and 5-year debt at higher yields than its previous sale.
The dollar is surprisingly lower today and commodities are mixed. Gold is higher near $1385 as is silver. Copper prices are lower and oil prices are also weaker to $92.65.
The 10-year yield is above the 2.00% level after a big upside reversal yesterday following the Fed minutes.
The volatility index hit the 15 level this morning for the first time in a month. If it closes above 15, I would expect more selling. But below that level is likely more of the same.
Trading comment: We already did some trading this morning, taking advantage of the dip for a second day. So far this year, the S&P 500 has only had one 3-day losing streak. That means the odds favor buying day 2 of the weakness, if only for a bounce. That streak could be broken tomorrow, but we are taking advantage of a few stocks that have pulled back to attractive levels. Some of the REITs had very sharp 2-day pullbacks also.
Last night Japan saw a huge 7.3% plunge in the Nikkei. The selling started after trading in the Japanese Govt bonds had to be halted. The strengthening yen exacerbated the pressure and the Nikkei saw a drop of 1500 points from high to low. It also probably didn't help that China's HSBC manufacturing index fell back into contraction (49.6) for the first time in seven months. The Bank of Japan finally moved in and injected 2 trillion yen to calm markets.
Of course, Japan's stock market has enjoyed a huge rally since the BoJ announced its massive quantitative easing program there. At some point you expect some profit taking, but this large decline shows what happens when stocks get extended and everyone tries to hit the sell button at the same time.
Europe had some positive data in the form of higher than expected PMI manufacturing readings, but overall he region is still in contraction. Spain auctioned off 3-year and 5-year debt at higher yields than its previous sale.
The dollar is surprisingly lower today and commodities are mixed. Gold is higher near $1385 as is silver. Copper prices are lower and oil prices are also weaker to $92.65.
The 10-year yield is above the 2.00% level after a big upside reversal yesterday following the Fed minutes.
The volatility index hit the 15 level this morning for the first time in a month. If it closes above 15, I would expect more selling. But below that level is likely more of the same.
Trading comment: We already did some trading this morning, taking advantage of the dip for a second day. So far this year, the S&P 500 has only had one 3-day losing streak. That means the odds favor buying day 2 of the weakness, if only for a bounce. That streak could be broken tomorrow, but we are taking advantage of a few stocks that have pulled back to attractive levels. Some of the REITs had very sharp 2-day pullbacks also.
22 Mayıs 2013 Çarşamba
Market Cheers Bernanke Comments
Many investors were concerned about today's testimony before Congress by Fed Chairman Bernanke. Most figured his comments about how soon the Fed would end its quantitative easing program would unnerve the market and stocks could be vulnerable to a selloff.
But in this market, any news is good news. Bernanke reiterated that the decision to slow purchases would be dependent on incoming economic data. He said that he believes the Fed could also allow current assets on its balance sheet to run off (or mature) without having to engage in outright sales. This might be less disruptive to markets. Although the market is fading as I write this post, the Dow was up more than 100 points after Bernanke's comments were televised.
There has also been quite a bit of volatility in the bond markets. The 10-year yield started off the day around the 1.90% level, but recently spiked back above the 2.00% level. So it should be interesting to see where the stock and bond markets settle out by the close. Stocks are certainly short-term overbought, but have been this way for roughly a week now.
In other economic news, April existing home sales hit a rate of 4.97 million units which is up from last month's rate of 4.94 million units. Homebuilders are rallying on the data.
Asian markets were mostly lower overnight. But Japan rose again after the latest Bank of Japan meeting where the central bank noted that the "economy has begun to pick up".
Europe's markets are mixed today. The Bank of England saw a vote on maintaining its asset purchase program split with 3 members in favor and 3 members opposed to it.
The dollar is higher this morning, and commodities are mixed. But trading is volatile and prices are moving around quickly. Gold was near $1400 earlier but has given back $25. And oil prices are back below $95.
Trading comment: I know it has been a losing game to look for a market pause, but the recent action has caused the indexes to become highly extended vs. their 50-day and 200-day moving averages. The SPX hit the 1675 level today, and I do think we should see some consolidation in the averages before another run to the 1700 level. In the meantime we continue to find individual situations where stocks have pulled back to offer attractive entry points.
But in this market, any news is good news. Bernanke reiterated that the decision to slow purchases would be dependent on incoming economic data. He said that he believes the Fed could also allow current assets on its balance sheet to run off (or mature) without having to engage in outright sales. This might be less disruptive to markets. Although the market is fading as I write this post, the Dow was up more than 100 points after Bernanke's comments were televised.
There has also been quite a bit of volatility in the bond markets. The 10-year yield started off the day around the 1.90% level, but recently spiked back above the 2.00% level. So it should be interesting to see where the stock and bond markets settle out by the close. Stocks are certainly short-term overbought, but have been this way for roughly a week now.
In other economic news, April existing home sales hit a rate of 4.97 million units which is up from last month's rate of 4.94 million units. Homebuilders are rallying on the data.
Asian markets were mostly lower overnight. But Japan rose again after the latest Bank of Japan meeting where the central bank noted that the "economy has begun to pick up".
Europe's markets are mixed today. The Bank of England saw a vote on maintaining its asset purchase program split with 3 members in favor and 3 members opposed to it.
The dollar is higher this morning, and commodities are mixed. But trading is volatile and prices are moving around quickly. Gold was near $1400 earlier but has given back $25. And oil prices are back below $95.
Trading comment: I know it has been a losing game to look for a market pause, but the recent action has caused the indexes to become highly extended vs. their 50-day and 200-day moving averages. The SPX hit the 1675 level today, and I do think we should see some consolidation in the averages before another run to the 1700 level. In the meantime we continue to find individual situations where stocks have pulled back to offer attractive entry points.
21 Mayıs 2013 Salı
Stocks Pause For Second Day
The markets are slightly lower this morning. Yesterday stocks finished slightly lower also, but after such a big rally one might expect to see a larger pullback or more profit taking ensue. But this has not been the case for months now. It's still early today, but the odds favor more of the same.
There is no economic news of note. There have been a handful of earnings reports. Stocks rising on earnings include AZO, DKS, HD, and SKS. Two stocks lower after reporting are URBN, and BBY.
In other corporate news, JPMorgan stock is leading the financials today after the vote to split the Chairman and CEO role for Jamie Dimon has been voted down. Dimon threatened to leave the company if the Chairman role was taken away from him.
Also, Apple's CEO is testifying before Congress about its tax policies and international tax shelters. As a shareholder, I want the CEO to minimize taxes. If Congress is opposed to it, they should either close any loopholes or revise tax treatments to make repatriation more favorable. That would generate billions in tax revenues and create more jobs and investment in the US. Current policies are destructive and uncompetitive.
Asian markets were mixed overnight. Malaysia's unemployment rate rose to 3.3%. Europe's markets are mostly lower. The European summit is set to begin tomorrow, and Germany's Merkel is considering a treaty that would give more power to Brussels.
Among sector ETFs, healthcare and financials are leading so far while tech and utilities are lagging.
The 10-year yield touched 2.00% this morning but has pulled back slightly from those levels.
The dollar is higher and commodities are weak again. Gold staged a bug upside reversal yesterday, but so far there has been no follow through and gold prices are once again lower and testing the $1365 level. Oil prices are weaker near $96.30. Silver and copper prices are down also.
Trading comment: The more the market runs up, the greater than chance of a sharp correction at some point. But at what point remains the $64,000 question. Investor sentiment has grown more bullish, but it is still far from extreme levels as many investors continue to view this rally with skepticism. So the market continues to climb the wall of worry. If I had to guess, I would say a true correction probably won't hit until summer. But that doesn't mean we should get complacent. It just means that there are still opportunities in this market.
KAM Advisors has long positions in AAPL and JPM
There is no economic news of note. There have been a handful of earnings reports. Stocks rising on earnings include AZO, DKS, HD, and SKS. Two stocks lower after reporting are URBN, and BBY.
In other corporate news, JPMorgan stock is leading the financials today after the vote to split the Chairman and CEO role for Jamie Dimon has been voted down. Dimon threatened to leave the company if the Chairman role was taken away from him.
Also, Apple's CEO is testifying before Congress about its tax policies and international tax shelters. As a shareholder, I want the CEO to minimize taxes. If Congress is opposed to it, they should either close any loopholes or revise tax treatments to make repatriation more favorable. That would generate billions in tax revenues and create more jobs and investment in the US. Current policies are destructive and uncompetitive.
Asian markets were mixed overnight. Malaysia's unemployment rate rose to 3.3%. Europe's markets are mostly lower. The European summit is set to begin tomorrow, and Germany's Merkel is considering a treaty that would give more power to Brussels.
Among sector ETFs, healthcare and financials are leading so far while tech and utilities are lagging.
The 10-year yield touched 2.00% this morning but has pulled back slightly from those levels.
The dollar is higher and commodities are weak again. Gold staged a bug upside reversal yesterday, but so far there has been no follow through and gold prices are once again lower and testing the $1365 level. Oil prices are weaker near $96.30. Silver and copper prices are down also.
Trading comment: The more the market runs up, the greater than chance of a sharp correction at some point. But at what point remains the $64,000 question. Investor sentiment has grown more bullish, but it is still far from extreme levels as many investors continue to view this rally with skepticism. So the market continues to climb the wall of worry. If I had to guess, I would say a true correction probably won't hit until summer. But that doesn't mean we should get complacent. It just means that there are still opportunities in this market.
KAM Advisors has long positions in AAPL and JPM
20 Mayıs 2013 Pazartesi
Monday Morning Musings
Markets are slightly higher this morning after another rally Friday to record levels. Last Thursday the market started to pull back, and many folks were hoping for at least a little correction. But stocks came roaring back on Friday continuing to frustrate those hoping for a better buying opportunity.
There isn't much in the way of market moving news out this morning. The big news this week will be Bernanke's testimony before Congress. Many investors are wondering when the Fed will begin to taper off their asset purchases and will be paying close attention to Bernanke's comments in that regard.
There was some M&A news this am with Yahoo buying social network Tumblr for $1.1 billion. That's a pretty nice price tag. To be honest, I've heard of Tumblr but never looked at the site.
Asian markets were higher overnight. China new home prices rose 4.9% yr/yr. Hong Kong's unemployment rate held at 3.50%. And Japan said its economy is "gradually improving".
Europe's markets are mixed today with peripheral markets lower. Anti-austerity protests were staged in Rome over the weekend.
The dollar is lower today after a big spike Friday, but commodities remain challenged. Gold prices are a little lower near $1352, back down near April lows. Oil prices are a bit weaker to $95.85. But ag prices are breaking down to new multi-year lows.
The 10-year yield is down a bit to 1.94%. And the VIX is up 5% but still hovering near this 13 level where it has been bouncing above and below for most of the month of May.
Trading comment: I feel like I have been saying the same thing about the market for weeks now. While the indexes never seem to pull back in any meaningful way, there continues to be some group rotation beneath the surface. Today for example, consumer stocks are pulling back while energy issues are rallying. So there are trading opportunities around these rotations as certain sectors get overbought. Also, stocks breaking to new highs from recent consolidations also are working well in this market.
There isn't much in the way of market moving news out this morning. The big news this week will be Bernanke's testimony before Congress. Many investors are wondering when the Fed will begin to taper off their asset purchases and will be paying close attention to Bernanke's comments in that regard.
There was some M&A news this am with Yahoo buying social network Tumblr for $1.1 billion. That's a pretty nice price tag. To be honest, I've heard of Tumblr but never looked at the site.
Asian markets were higher overnight. China new home prices rose 4.9% yr/yr. Hong Kong's unemployment rate held at 3.50%. And Japan said its economy is "gradually improving".
Europe's markets are mixed today with peripheral markets lower. Anti-austerity protests were staged in Rome over the weekend.
The dollar is lower today after a big spike Friday, but commodities remain challenged. Gold prices are a little lower near $1352, back down near April lows. Oil prices are a bit weaker to $95.85. But ag prices are breaking down to new multi-year lows.
The 10-year yield is down a bit to 1.94%. And the VIX is up 5% but still hovering near this 13 level where it has been bouncing above and below for most of the month of May.
Trading comment: I feel like I have been saying the same thing about the market for weeks now. While the indexes never seem to pull back in any meaningful way, there continues to be some group rotation beneath the surface. Today for example, consumer stocks are pulling back while energy issues are rallying. So there are trading opportunities around these rotations as certain sectors get overbought. Also, stocks breaking to new highs from recent consolidations also are working well in this market.
18 Mayıs 2013 Cumartesi
Red Cry
I'm still in Vermont, planning to start heading west in June to the Rainbow Gathering in Montana, where I am committed to be for the launch of the moneyless tribe, inshallah. I'll probably either hitch or find a ride with somebody already going. I'm hoping to be at the Gathering at least by July 1st, and plan to put up a sign of our location, saying "Moneyless Tribe" at the Welcome Home spot. It's not really a "Rainbow" thing. That's just the best place I know of to launch the tribe - the best place, perhaps the perfect place, to show up without money. The moneyless tribe is open to anybody who will give up all money to their name and take the plunge with me, in a wandering, ecumenical concensus-led community for the purpose of doing free service as well as raising awareness. Having no house and no money to fall back on should select out the non-committed, and instill what faith really feels like. It could be a big group, or small. We don't know, and that's what makes this exciting. If your inspiration turns out to be greater than your fear, you will come, and it is for you. More details later.
Red Cry
I'm not blogging much this post. I want to devote it to our Lakota Truth Tour documentary, Red Cry (1 hour, 52 min.)
Another Moneyless Guy You Ought to Know About
As a bonus, I'm posting a link to the delightful video (5 min. 25 sec.) about my money-free friend across the pond, elf Pavlik:
elf Pavlik - Strictly Moneyless
(It's a vimeo video, so I haven't figured out how to embed it here)
15 Mayıs 2013 Çarşamba
Any News Is Good News
The markets started out lower this morning on some disappointing data, but quickly found their footing and so far have reversed higher back into positive territory. I can't remember ever seeing this type of market resilience. It's as if any news gets treated as good news, even when it shouldn't.
This morning's economic data was not great. The Empire manuf. survey for May fell to -1.3 from last month's reading of 3.1. Expectations were for it to rise to 3.5. April industrial production fell -0.5%, below expectations. And capacity utilization came in at 77.8% vs. 78.3% consensus.
Also, European data came out this morning wasn't great. The Eurozone remains in contraction with Q1 GDP down -0.2%. Germany ticked up to +0.1% while France was down -0.2% and Italy contracted -0.5%.
Asian markets were higher overnight, with Japan adding to its QE-inspired gains. The Nikkei is up some 75% from its November lows, prompting the former vice-minister of finance to say the current move in Japanese equities is "somewhat bubbly".
The dollar is higher again today and that is weighing on commodities. Oil prices are weaker near $92.35. Gold prices are back below $1400 to $1395. Silver and copper prices are lower as well.
The 10-year yield is steady at 1.95%, after reversing higher yesterday. And the VIX continues to hover near that 13 level, implying continued low expectations for near-term volatility.
Trading comment: It's hard to find much to say with the indexes creeping to new highs everyday. But beneath the indexes we do sense a small rotation out of the highly defensive dividend stocks like utilities and into more growthier type names. Financials continue to perform well also. It will be interesting to see if the investor sentiment surveys show any increase in bullishness this week or if folks continue to view this rally with skepticism.
This morning's economic data was not great. The Empire manuf. survey for May fell to -1.3 from last month's reading of 3.1. Expectations were for it to rise to 3.5. April industrial production fell -0.5%, below expectations. And capacity utilization came in at 77.8% vs. 78.3% consensus.
Also, European data came out this morning wasn't great. The Eurozone remains in contraction with Q1 GDP down -0.2%. Germany ticked up to +0.1% while France was down -0.2% and Italy contracted -0.5%.
Asian markets were higher overnight, with Japan adding to its QE-inspired gains. The Nikkei is up some 75% from its November lows, prompting the former vice-minister of finance to say the current move in Japanese equities is "somewhat bubbly".
The dollar is higher again today and that is weighing on commodities. Oil prices are weaker near $92.35. Gold prices are back below $1400 to $1395. Silver and copper prices are lower as well.
The 10-year yield is steady at 1.95%, after reversing higher yesterday. And the VIX continues to hover near that 13 level, implying continued low expectations for near-term volatility.
Trading comment: It's hard to find much to say with the indexes creeping to new highs everyday. But beneath the indexes we do sense a small rotation out of the highly defensive dividend stocks like utilities and into more growthier type names. Financials continue to perform well also. It will be interesting to see if the investor sentiment surveys show any increase in bullishness this week or if folks continue to view this rally with skepticism.
14 Mayıs 2013 Salı
The Tepper Rally
There really wasn't much news this morning to account for this rally. Overseas markets were mostly lower overnight, and there was no big economic reports out today to speak of. But hedge fund manager David Tepper made very bullish comments on CNBC this morning and that seems to have emboldened the bulls and put them in a buying mood.
Financials and biotechs are leading the early action. Techs are lagging so far, as AAPL is having a down morning so far.
Asian markets were mostly lower overnight. India's inflation rate cooled to 4.89%, its lowest level since late 2009. China's National Petroleum Corp. believes resource demand may wane in the medium-term. That would seem to hint of an economic slowdown.
Europe's markets are also lower this morning. Eurozone industrial production rose 1.0%. Germany's ZEW economic sentiment ticked up to 36.4 from 36.3. And ECB member Asmussen said he favors a swift creation of a "single European resolution regime".
The dollar is higher today, and that is weighing on precious metals. Copper prices and silver prices are lower, while gold is mostly flat. Oil prices are also flat near $95.
The 10-year yield is pausing today near 1.91% after a big multi-day spike. And the volatility index is 5% higher today, which is odd given the rally. But it is still only at 13.19.
Trading comment: We sound like a broken record, but this stair-step market continues apace. After breaking above SPX 1600 around May 3rd, the market has shot up pretty quickly to reach the 1650 level (almost). Folks calling for an imminent correction continue to be perplexed. Who knows how long this rally can last? But buying good market leading stocks on fresh breakouts or tests of support levels continues to work. We continue to shy away from trying to pickups laggard stocks in hopes that they play catch up.
KAM Advisors has long positions in AAPL
Financials and biotechs are leading the early action. Techs are lagging so far, as AAPL is having a down morning so far.
Asian markets were mostly lower overnight. India's inflation rate cooled to 4.89%, its lowest level since late 2009. China's National Petroleum Corp. believes resource demand may wane in the medium-term. That would seem to hint of an economic slowdown.
Europe's markets are also lower this morning. Eurozone industrial production rose 1.0%. Germany's ZEW economic sentiment ticked up to 36.4 from 36.3. And ECB member Asmussen said he favors a swift creation of a "single European resolution regime".
The dollar is higher today, and that is weighing on precious metals. Copper prices and silver prices are lower, while gold is mostly flat. Oil prices are also flat near $95.
The 10-year yield is pausing today near 1.91% after a big multi-day spike. And the volatility index is 5% higher today, which is odd given the rally. But it is still only at 13.19.
Trading comment: We sound like a broken record, but this stair-step market continues apace. After breaking above SPX 1600 around May 3rd, the market has shot up pretty quickly to reach the 1650 level (almost). Folks calling for an imminent correction continue to be perplexed. Who knows how long this rally can last? But buying good market leading stocks on fresh breakouts or tests of support levels continues to work. We continue to shy away from trying to pickups laggard stocks in hopes that they play catch up.
KAM Advisors has long positions in AAPL
13 Mayıs 2013 Pazartesi
Monday Morning Musings
The markets were mostly lower in the first hour of trading but are now more mixed as the Nasdaq has recouped its early losses.
In economic news, April retail sales surprised to the upside with an increase of 0.1% after declining -0.5% last month. Also, in March business inventories were unchanged vs. expectations for a 0.3% increase.
Overnight, Asian markets ended on a mixed note. Japan hits new 5-year highs while China and Hong Kong were lower. Over the weekend the G7 meetings failed to point the finger at Japan for weakening the yen to gain a competitive advantage. In China, industrial production rose 9.3% from 8.9% the prior month. And Australian home loans rose 5.2%.
In Europe most markets are lower today. The German finance minister said he opposes purchases of asset-backed securities by the ECB. Swiss retail sales slipped -0.9%.
So far, defensive sectors like healthcare and consumer staples are bucking the weakness, while materials, energy, and industrials are lagging.
The 10-year yield is a little higher again to 1.92%. The volatility index is up 1% but still at very low absolute levels of 12.75.
Commodities are mostly lower. Gold prices are lower near $1432 and oil prices are also down around $94.75.
Trading comment: Its still early in the session, but for the last few days the markets have been doing more of the same. The indexes are consolidating recent gains in a sideways fashion without really declining in any big way. And underneath the indexes the rotation out of formerly defensive areas like utilities and into more growth areas continues. So far, the 'Sell in May' folks have been sorely mistaken on thinking that pattern would show up in spades this year. Calling tops in the market are even more difficult that calling bottoms. One reason is that tops in the market are often more of a process, with several test of the markets highs while lows often times are more of a one-time event where the market plunges to new lows and then reverses from there on a surge in volume. But for now we remain in that stair-step rally we have been describing all year. Don't fight the tape.
In economic news, April retail sales surprised to the upside with an increase of 0.1% after declining -0.5% last month. Also, in March business inventories were unchanged vs. expectations for a 0.3% increase.
Overnight, Asian markets ended on a mixed note. Japan hits new 5-year highs while China and Hong Kong were lower. Over the weekend the G7 meetings failed to point the finger at Japan for weakening the yen to gain a competitive advantage. In China, industrial production rose 9.3% from 8.9% the prior month. And Australian home loans rose 5.2%.
In Europe most markets are lower today. The German finance minister said he opposes purchases of asset-backed securities by the ECB. Swiss retail sales slipped -0.9%.
So far, defensive sectors like healthcare and consumer staples are bucking the weakness, while materials, energy, and industrials are lagging.
The 10-year yield is a little higher again to 1.92%. The volatility index is up 1% but still at very low absolute levels of 12.75.
Commodities are mostly lower. Gold prices are lower near $1432 and oil prices are also down around $94.75.
Trading comment: Its still early in the session, but for the last few days the markets have been doing more of the same. The indexes are consolidating recent gains in a sideways fashion without really declining in any big way. And underneath the indexes the rotation out of formerly defensive areas like utilities and into more growth areas continues. So far, the 'Sell in May' folks have been sorely mistaken on thinking that pattern would show up in spades this year. Calling tops in the market are even more difficult that calling bottoms. One reason is that tops in the market are often more of a process, with several test of the markets highs while lows often times are more of a one-time event where the market plunges to new lows and then reverses from there on a surge in volume. But for now we remain in that stair-step rally we have been describing all year. Don't fight the tape.
11 Mayıs 2013 Cumartesi
10 Mayıs 2013 Cuma
Will The Market Ever Go Down?
Markets are up slightly again in early trading. Overseas markets were higher overnight as well. Yesterday, the market actually had a small down day, but if you pull up a chart you basically have to squint to see the pullback. This has some investors scratching their heads and asking, "Will the market ever go down?"
I have been saying that with so many portfolio managers waiting for the proverbial pullback, that it was less likely we would see one. In its perverse nature Mr. Market rarely likes to accommodate the masses. More often it prefers to frustrate the majority. And on that scale I would have to give Mr. Market an A+ so far this year. I think few managers were overweight equities coming into the year, and thus not prepared for the incessant rally we have witnessed. And I know this firsthand.
If this were a stock we were talking about, one would expect that the prolonged run-up might end in a climax run where the stock goes straight up over a short-time period as everyone throws in the towel and just says "get me in!". I don't know if that is what we will see in the market as a whole or not. The possibility of a melt-up is certainly being discussed, but the ongoing group rotation amongst the different S&P sectors makes it more likely that we will just see more of the same.
There wasn't a ton of news overnight or this morning. The dollar is rallying hard as the yen falls to its lowest level since 2008. That is weighing on the commodity complex with gold falling nearly $50 to $1420. Oil prices are lower near $93.75. Copper, silver, and ag prices are also down today.
The 10-year yield is getting another boost to 1.90%. That's a pretty quick spike from the 1.65% level it hit last week.
The volatility index is flattish so far still around the 13.15 level.
Trading comment: No changes to our recent comment strategy. We continue to look for spots to add to stocks that haven't run too far yet. Overall we are trimming those stocks like consumer staples and REITs that have had outsized runs and adding to growth stocks that could do better going forward. Yesterday we trimmed some more GLD.
KAM Advisors has long positions in GLD
I have been saying that with so many portfolio managers waiting for the proverbial pullback, that it was less likely we would see one. In its perverse nature Mr. Market rarely likes to accommodate the masses. More often it prefers to frustrate the majority. And on that scale I would have to give Mr. Market an A+ so far this year. I think few managers were overweight equities coming into the year, and thus not prepared for the incessant rally we have witnessed. And I know this firsthand.
If this were a stock we were talking about, one would expect that the prolonged run-up might end in a climax run where the stock goes straight up over a short-time period as everyone throws in the towel and just says "get me in!". I don't know if that is what we will see in the market as a whole or not. The possibility of a melt-up is certainly being discussed, but the ongoing group rotation amongst the different S&P sectors makes it more likely that we will just see more of the same.
There wasn't a ton of news overnight or this morning. The dollar is rallying hard as the yen falls to its lowest level since 2008. That is weighing on the commodity complex with gold falling nearly $50 to $1420. Oil prices are lower near $93.75. Copper, silver, and ag prices are also down today.
The 10-year yield is getting another boost to 1.90%. That's a pretty quick spike from the 1.65% level it hit last week.
The volatility index is flattish so far still around the 13.15 level.
Trading comment: No changes to our recent comment strategy. We continue to look for spots to add to stocks that haven't run too far yet. Overall we are trimming those stocks like consumer staples and REITs that have had outsized runs and adding to growth stocks that could do better going forward. Yesterday we trimmed some more GLD.
KAM Advisors has long positions in GLD
9 Mayıs 2013 Perşembe
Lost Porcupine Returns
I'm in Vermont, now, camping in the woods near Montpelier, where my friends, Michael, Sarika, and my Goddaughter, Satya, live.
New Video Interview
A woman from Turkey, Filiz Telek, did his interview with me last autumn in the wetlands near Moab. She randomly ran into me in Moab, not knowing anything about me. And she decided to do this interview. She happened to complete this video and post it on my 52nd birthday a few days ago.
"The man who quit money" video interview by Filiz Telek
http://vimeo.com/sacredresonance/suelo
(I'm not cyber-savvy enough to embed a vimeo video in this blog)
Trickster Mind F---
A bit of notoriety is a funny thing. Every up is met with down, every yang with a yin. My ego has gone to great heights with praise and great humiliation with negative criticism. The extreme highs and lows can tear up a person. Both are illusion. The middle path of reality and wisdom is affected by neither, straying "neither to the right nor to the left." Canupa put me into great touch with the lows. In this way I can find my Strong Heart, between praise and blame.
Canupa, the Lakota Strongheart Society headman, and our main "leader", badgered me over and over in the past few weeks, and played continual, intense head games with me, crashing my confidence to zero. He badgered most everybody. Some days I loved him, some days I hated him. Some days I felt I was in some weird, abusive cult. I still don't get it, sometimes. Sometimes I totally get it. The wounds of the Lakotas and of all indigenous people run so deep it's overwhelming. That's part of the point. But the greatest point, hardest to grasp (or hardest to admit, I should say) are that the wounds of white people run just as deep, with the exception that ours are covered up and whitewashed. We, as all humans, were once indigenous, and lost it to occupation (e.g., Rome). But the Roman Empire continues to this day, and we continue the abuse until we face up to our wounds and our intense fear, hidden under our false show of confidence and power and domination of other cultures, with our condescending "love" and "spirituality".
Am I validating his methods? A horse can be trained with extreme hurt, which is the usual accepted tradition, or with gentle kindness, as the horse whisperer Buck Brannaman showed us. From his own abusive upbringing he knew one could learn through abuse, but much healthier learning through kindness and respect. A valid human baby can be born through rape, or can be born through loving kindness.
Confession: I reluctantly used money
One thing that happened at a fuel stop on our trip was Canupa told me to get him a couple Monster energy drinks, handing me money to buy them for him. He'd be the first to admit he is addicted to those things, along with constant junk food. He told me to get one for myself, too. He knew I didn't use money. I also had zero desire for a Monster energy drink, both because the thought of it sickened me and because it supported the ridiculous corporations that cause the damage we were supposed to be against. But I used his money to buy his two drinks. He asked me where mine was, and told me to go back and buy one for myself. Silly me, I did, not to please myself, but Canupa. Giving my power away, as he liked to point out in me. I said to Canupa, "Kind of ironic, that it's an Indian who gets me to use money again, huh?" Naomi told me it was a lesson that money is just an illusion that doesn't matter, to neither love it or hate it, both of which give it credence. But deep inside my heart, I knew I gave into bullshit, letting myself be duped. I drank a third of that venom, thinking I should at least enjoy it. But I didn't, and its obscene amount of caffeine gave me a headache, so I threw the rest out, feeling weak and stupid. Another head game.
One thing Canupa likes to say is to not trust anyone, not even him. Trust only your heart, he'd say. After leaving him, I start really getting it. Stop being weak. Follow your heart, what you know to be true. You're not the strong wise guy you might think you are.
We could throw it back and look at Canupa's faults or motives. And this is part of the trick. As my friend Michael just told me, when you're stabbed with a dagger, what good does it do to analyze the motives of the one who stabbed you?
Second Money Test
The official Lakota Truth Tour ended in Washington DC on April 16th, and we were heading back west, I had my friends drop me off in Pennsylvania so I could hitch-hike up to Vermont. (In reality, the Truth Tour is still happening).
Yes, I decided to have them drop me off at I-99 in Pennsylvania to hitch north. As we all hugged and said our goodbyes, Canupa handed me a wad of money and said, "buy yourself some food." This time he seemed genuinely worried about me, and he told me so, as if he were letting a lost little boy wander off alone, as if I hadn't been wandering unscathed like this for 13 years. I told him he knew I didn't use money, but he pressed it into my hand anyway, so I took it. Naomi asked me if I had enough, and I looked at her in astonishment, then said, "I don't usually use money", thinking of the Monster drink episode.
I put the wad in my back pocket and waved at them as they drove off with worried looks. Right or wrong, it felt to me like parents who had no clue what I'm about. But I did feel utter lack of confidence and feeling stupid in their presence, until they left. Then, when they were out of sight, I started feeling free and powerful again, intermittently with throbbing weakness and low self-worth.
A mid-aged man who happened intermittently go to Ecuador to do Christian mission work (Ecuador was where I was in the Peace Corps and where missionary friends of my family were stationed) gave me a ride to the next exit 15 miles up the highway. It started pouring rain, so I took shelter at the underpass. After the rain died a bit, I was back at the on ramp and a mid-aged woman with a Jesus card hanging from her mirror and Christian pop music playing on the radio picked me up and brought me to Altoona. She then handed me a wad of money and told me to buy a train ticket to Vermont at the station there. I didn't say anything, except thanking her profusely, took the money and stuffed it in my pocket to keep the other wad company. I never looked to see how much each was, but could see it was now $70 or $80.
For those of you familiar with my lifestyle, you know I agree to take money sometimes, to acknowledge people's generosity, and then I get rid of it usually by sun-up the next morning, either by giving it away or leaving it in a public place.
But this time something was happening to me. I was actually considering buying that train ticket, though I had zero intentions of buying any food. I was exhausted and disheartened, and the thought of a comfy train soothed me.
So I walked to the transit station. I went up to the counter, money in hand, and then I caught myself. "Listen to your heart." My Strong Heart would go deeper into hiding if I bought that ticket. A sense of powerful exhilaration hit me, I turned on my heel and walked past some homeless chaps to a bench and stuffed all that money into a crack in the bench and walked freely and joyfully back out to the highway, with a new sense of power. It's amazing how happy I felt.
And it felt like the Universe's blessings were showering down on me again.
More Good Samaritans
The next morning a young Christian youth pastor immediately picked me up. He was an ex-marine Iraq- and Afghan- war veteran who now worked with the homeless, and talked about wanting to simplify his life even more. He let me off in Philipsburg, PA.
By this time I was pretty amazed how many Christians were stopping for me, and all of them were fairly quiet and didn't seem to have any of the usual agendas except to help me. They only told me what I gleaned from them, and I felt a brotherhood with them.
In Philipsburg I found some nice wetlands and set up camp. I found lots of food in the dumpsters, including tons of Easter chocolate. Sleeping with the chirping frogs and singing birds, surrounded by trees, felt so luxurious and healing and full of gratitude. Nature is utterly non-judgmental, and nobody was scrutinizing my every move. The next morning I decided to stay and heal, feeling so exhausted. Between meditation and playing the guitar and listening to the red-wing blackbirds and frogs, I played the guitar and intermittently slept all day.
A man my age, who'd camped near me, came by, carrying his beer, to chat and listen to guitar. He was hurting from a divorce, and had lost his house and most his money. Amazing how much I hear that. He gave me a pouch of tobacco, though I don't smoke.
A 60-something man took me to I-80. I stood on that ramp for an hour and only 3 or 4 cars had gone by. Just when I picked up my backpack to walk to another ramp, a young woman stopped, got out of her car and gave me a hug! Some would classify her as a hippy. Her name was Kate and she was heading to Ithaca, NY, and said could probably find me a place to stay with her friends. We talked and sang with the guitar the whole way. That night she took me to a drumming/music jam. I met a 20-something Dine (Navajo) guy there who was planning to go on the Natives' Long Walk from Washington DC to Alcatraz in San Francisco in July. he needed some tobacco, so I passed the tobacco on to him.
Vermont Friends
I got to Montpelier, Vermont the next day in two rides. I stayed with Michael, Sarika, and Satya for about a week and then started camping. It's been wonderful and healing. Satya is the cutest baby in the world and my God-daughter, and Michael and Sarika are among my best friends (Michael is in the book).
Finding my Totem Animal
I still felt I needed to process my post-Canupa PTSD, so I went on a 4-day vision quest on a mountain ridge, inside a vision circle 12-feet in diameter, with a two trees inside it. I wondered if a totem animal would come. The third day I was feeling exhausted, with a headache, filled with doubts, wanting to quit. That night my headache broke and I started feeling energized and centered in meditation. Between sleeping I'd sit up and meditate. Then I had an intense epiphany, a feeling of oneness with God and the purity of God, of total trust. It felt like light streaming into me. And right at that moment, an outward confirmation: an owl hooted so loud it scared me. The hair on my neck stood up. "Maybe that's my totem!" I thought. The owl hooted again, and with it, the thought, "No, silly, I'm not even in your vision circle. You're totem is coming tomorrow!" So I went to sleep, with my head against the center tree, feet faced west (till then I had slept with feet faced east).
At dawn, I awoke to see a shadowy animal inches from my head! A raccoon? No, maybe a badger. I lifted my head for a better look, but the light was still dim. He wasn't scared. Then he slowly walked to the other tree in the circle and climbed it. He actually looked like a kind of sloth! He started chewing on bark on branches, then bedded down on one. He stayed there inside my vision circle all day! He mostly slept, waking up now and then to scratch and stretch and chew bark. That afternoon, it felt time to go, so I said goodbye to him and left him in the vision circle.
Nest day, I looked up Vermont wildlife and realized he was a porcupine. I'd never before seen a porcupine without its quills bristled up, making him look sloth or koala-like.
Everything I look up on the porcupine totem is eerily fitting. Everything about porcupines is what Canupa loved to "make fun" of in me. Not even a bear or wolf or puma can mess with a porcupine, despite appearances! I just couldn't feel worry when Canupa said I was vulnerable and scared and could be a target for danger. I knew with all my heart I had my protection. It's been here for 52 years, after all, despite my aimless wandering around. I'm sure Canupa, that jiver, already knows that. If not, who the hell cares?
I learned so much in that Vision circle. But there's enough words here already.
Glenn
A random magical hiker named Glenn came to my new camp twice. He brought me food, without my asking, today. An amazing person with amazing stories, still part of the vision quest. Lots more I could say, but there's enough words here already.
Strong Heart
Yes, I'm finding my Strong Heart that got lost.
I'm Porcupine.
New Video Interview
A woman from Turkey, Filiz Telek, did his interview with me last autumn in the wetlands near Moab. She randomly ran into me in Moab, not knowing anything about me. And she decided to do this interview. She happened to complete this video and post it on my 52nd birthday a few days ago.
"The man who quit money" video interview by Filiz Telek
http://vimeo.com/sacredresonance/suelo
(I'm not cyber-savvy enough to embed a vimeo video in this blog)
Trickster Mind F---
 | |
| Lakota Trickster Iktomi |
Canupa, the Lakota Strongheart Society headman, and our main "leader", badgered me over and over in the past few weeks, and played continual, intense head games with me, crashing my confidence to zero. He badgered most everybody. Some days I loved him, some days I hated him. Some days I felt I was in some weird, abusive cult. I still don't get it, sometimes. Sometimes I totally get it. The wounds of the Lakotas and of all indigenous people run so deep it's overwhelming. That's part of the point. But the greatest point, hardest to grasp (or hardest to admit, I should say) are that the wounds of white people run just as deep, with the exception that ours are covered up and whitewashed. We, as all humans, were once indigenous, and lost it to occupation (e.g., Rome). But the Roman Empire continues to this day, and we continue the abuse until we face up to our wounds and our intense fear, hidden under our false show of confidence and power and domination of other cultures, with our condescending "love" and "spirituality".
Am I validating his methods? A horse can be trained with extreme hurt, which is the usual accepted tradition, or with gentle kindness, as the horse whisperer Buck Brannaman showed us. From his own abusive upbringing he knew one could learn through abuse, but much healthier learning through kindness and respect. A valid human baby can be born through rape, or can be born through loving kindness.
Confession: I reluctantly used money
One thing that happened at a fuel stop on our trip was Canupa told me to get him a couple Monster energy drinks, handing me money to buy them for him. He'd be the first to admit he is addicted to those things, along with constant junk food. He told me to get one for myself, too. He knew I didn't use money. I also had zero desire for a Monster energy drink, both because the thought of it sickened me and because it supported the ridiculous corporations that cause the damage we were supposed to be against. But I used his money to buy his two drinks. He asked me where mine was, and told me to go back and buy one for myself. Silly me, I did, not to please myself, but Canupa. Giving my power away, as he liked to point out in me. I said to Canupa, "Kind of ironic, that it's an Indian who gets me to use money again, huh?" Naomi told me it was a lesson that money is just an illusion that doesn't matter, to neither love it or hate it, both of which give it credence. But deep inside my heart, I knew I gave into bullshit, letting myself be duped. I drank a third of that venom, thinking I should at least enjoy it. But I didn't, and its obscene amount of caffeine gave me a headache, so I threw the rest out, feeling weak and stupid. Another head game. One thing Canupa likes to say is to not trust anyone, not even him. Trust only your heart, he'd say. After leaving him, I start really getting it. Stop being weak. Follow your heart, what you know to be true. You're not the strong wise guy you might think you are.
We could throw it back and look at Canupa's faults or motives. And this is part of the trick. As my friend Michael just told me, when you're stabbed with a dagger, what good does it do to analyze the motives of the one who stabbed you?
Second Money Test
The official Lakota Truth Tour ended in Washington DC on April 16th, and we were heading back west, I had my friends drop me off in Pennsylvania so I could hitch-hike up to Vermont. (In reality, the Truth Tour is still happening).
Yes, I decided to have them drop me off at I-99 in Pennsylvania to hitch north. As we all hugged and said our goodbyes, Canupa handed me a wad of money and said, "buy yourself some food." This time he seemed genuinely worried about me, and he told me so, as if he were letting a lost little boy wander off alone, as if I hadn't been wandering unscathed like this for 13 years. I told him he knew I didn't use money, but he pressed it into my hand anyway, so I took it. Naomi asked me if I had enough, and I looked at her in astonishment, then said, "I don't usually use money", thinking of the Monster drink episode.
I put the wad in my back pocket and waved at them as they drove off with worried looks. Right or wrong, it felt to me like parents who had no clue what I'm about. But I did feel utter lack of confidence and feeling stupid in their presence, until they left. Then, when they were out of sight, I started feeling free and powerful again, intermittently with throbbing weakness and low self-worth.
A mid-aged man who happened intermittently go to Ecuador to do Christian mission work (Ecuador was where I was in the Peace Corps and where missionary friends of my family were stationed) gave me a ride to the next exit 15 miles up the highway. It started pouring rain, so I took shelter at the underpass. After the rain died a bit, I was back at the on ramp and a mid-aged woman with a Jesus card hanging from her mirror and Christian pop music playing on the radio picked me up and brought me to Altoona. She then handed me a wad of money and told me to buy a train ticket to Vermont at the station there. I didn't say anything, except thanking her profusely, took the money and stuffed it in my pocket to keep the other wad company. I never looked to see how much each was, but could see it was now $70 or $80.
For those of you familiar with my lifestyle, you know I agree to take money sometimes, to acknowledge people's generosity, and then I get rid of it usually by sun-up the next morning, either by giving it away or leaving it in a public place.
So I walked to the transit station. I went up to the counter, money in hand, and then I caught myself. "Listen to your heart." My Strong Heart would go deeper into hiding if I bought that ticket. A sense of powerful exhilaration hit me, I turned on my heel and walked past some homeless chaps to a bench and stuffed all that money into a crack in the bench and walked freely and joyfully back out to the highway, with a new sense of power. It's amazing how happy I felt.
And it felt like the Universe's blessings were showering down on me again.
More Good Samaritans
The next morning a young Christian youth pastor immediately picked me up. He was an ex-marine Iraq- and Afghan- war veteran who now worked with the homeless, and talked about wanting to simplify his life even more. He let me off in Philipsburg, PA.
By this time I was pretty amazed how many Christians were stopping for me, and all of them were fairly quiet and didn't seem to have any of the usual agendas except to help me. They only told me what I gleaned from them, and I felt a brotherhood with them.
In Philipsburg I found some nice wetlands and set up camp. I found lots of food in the dumpsters, including tons of Easter chocolate. Sleeping with the chirping frogs and singing birds, surrounded by trees, felt so luxurious and healing and full of gratitude. Nature is utterly non-judgmental, and nobody was scrutinizing my every move. The next morning I decided to stay and heal, feeling so exhausted. Between meditation and playing the guitar and listening to the red-wing blackbirds and frogs, I played the guitar and intermittently slept all day.
A man my age, who'd camped near me, came by, carrying his beer, to chat and listen to guitar. He was hurting from a divorce, and had lost his house and most his money. Amazing how much I hear that. He gave me a pouch of tobacco, though I don't smoke.
Vermont Friends
Finding my Totem Animal
I still felt I needed to process my post-Canupa PTSD, so I went on a 4-day vision quest on a mountain ridge, inside a vision circle 12-feet in diameter, with a two trees inside it. I wondered if a totem animal would come. The third day I was feeling exhausted, with a headache, filled with doubts, wanting to quit. That night my headache broke and I started feeling energized and centered in meditation. Between sleeping I'd sit up and meditate. Then I had an intense epiphany, a feeling of oneness with God and the purity of God, of total trust. It felt like light streaming into me. And right at that moment, an outward confirmation: an owl hooted so loud it scared me. The hair on my neck stood up. "Maybe that's my totem!" I thought. The owl hooted again, and with it, the thought, "No, silly, I'm not even in your vision circle. You're totem is coming tomorrow!" So I went to sleep, with my head against the center tree, feet faced west (till then I had slept with feet faced east).
At dawn, I awoke to see a shadowy animal inches from my head! A raccoon? No, maybe a badger. I lifted my head for a better look, but the light was still dim. He wasn't scared. Then he slowly walked to the other tree in the circle and climbed it. He actually looked like a kind of sloth! He started chewing on bark on branches, then bedded down on one. He stayed there inside my vision circle all day! He mostly slept, waking up now and then to scratch and stretch and chew bark. That afternoon, it felt time to go, so I said goodbye to him and left him in the vision circle.
Everything I look up on the porcupine totem is eerily fitting. Everything about porcupines is what Canupa loved to "make fun" of in me. Not even a bear or wolf or puma can mess with a porcupine, despite appearances! I just couldn't feel worry when Canupa said I was vulnerable and scared and could be a target for danger. I knew with all my heart I had my protection. It's been here for 52 years, after all, despite my aimless wandering around. I'm sure Canupa, that jiver, already knows that. If not, who the hell cares?
I learned so much in that Vision circle. But there's enough words here already.
Glenn
A random magical hiker named Glenn came to my new camp twice. He brought me food, without my asking, today. An amazing person with amazing stories, still part of the vision quest. Lots more I could say, but there's enough words here already.
Strong Heart
Yes, I'm finding my Strong Heart that got lost.
I'm Porcupine.
Is The Labor Market Really Improving?
The market is a bit lower in early trading, but the S&P 500 has been up for 5 straight days so a down day here would not be surprising at all.
In economic news, weekly jobless claims fell to 323,000 last week. That marks the lowest claims level since January 2008, a pretty surprising statistic. What is unclear is that although the unemployment rate has been falling recently, a big driver as been the declining labor force participation rate. This begs the question, if the economy continues to improve will more people re-enter the labor force and slow the decline in the unemployment rate?
Overnight, Asian markets were modestly lower. China's CPI rose 2.4% which was a bit higher than expected. The Chinese press expects the govt. to enact plans aimed at curbing overcapacity. The Bank of Korea cut rates 25 basis points to 2.50%. Australia's unemployment rate fell to 5.5%.
In Europe, markets are also lower today. The Bank of England kept its interest rates and asset purchase plans unchanged. The ECB released its Monthly Report which pointed to downside risks and weak global demand as factors that could delay the recovery.
The dollar is higher today, which is weighing on most commodities. Gold prices are weaker near $1465. Oil prices are down slightly to $95.94. Silver and copper prices are also lower, but ag prices are higher.
The 10-year yield is getting a boost today back to the 1.80% level. It's overhead 50-day average resides near 1.82%.
The volatility index is +4% higher today to a still low overall level of 13.15.
Trading comment: Market commentators continue to call for a market correction, but they have been calling for one all the way up. It continues to make more sense to take advantage of stocks and ETFs breaking out to new highs or showing good relative strength. If a correction comes, it will be an opportunity to put more cash to work in a quicker fashion, or to shift some allocations out of fixed income into equities. But sitting on the sidelines waiting for the "correction" has been a bit more costly this time around, at least in terms of opportunity costs.
In economic news, weekly jobless claims fell to 323,000 last week. That marks the lowest claims level since January 2008, a pretty surprising statistic. What is unclear is that although the unemployment rate has been falling recently, a big driver as been the declining labor force participation rate. This begs the question, if the economy continues to improve will more people re-enter the labor force and slow the decline in the unemployment rate?
Overnight, Asian markets were modestly lower. China's CPI rose 2.4% which was a bit higher than expected. The Chinese press expects the govt. to enact plans aimed at curbing overcapacity. The Bank of Korea cut rates 25 basis points to 2.50%. Australia's unemployment rate fell to 5.5%.
In Europe, markets are also lower today. The Bank of England kept its interest rates and asset purchase plans unchanged. The ECB released its Monthly Report which pointed to downside risks and weak global demand as factors that could delay the recovery.
The dollar is higher today, which is weighing on most commodities. Gold prices are weaker near $1465. Oil prices are down slightly to $95.94. Silver and copper prices are also lower, but ag prices are higher.
The 10-year yield is getting a boost today back to the 1.80% level. It's overhead 50-day average resides near 1.82%.
The volatility index is +4% higher today to a still low overall level of 13.15.
Trading comment: Market commentators continue to call for a market correction, but they have been calling for one all the way up. It continues to make more sense to take advantage of stocks and ETFs breaking out to new highs or showing good relative strength. If a correction comes, it will be an opportunity to put more cash to work in a quicker fashion, or to shift some allocations out of fixed income into equities. But sitting on the sidelines waiting for the "correction" has been a bit more costly this time around, at least in terms of opportunity costs.
8 Mayıs 2013 Çarşamba
EUPHORIA PHASE TURNS INTO PARABOLIC PHASE
The euphoria phase of the bull market that I warned about months ago is now beginning its final parabolic phase.
I'm guessing we still have another month-month and a half before this runaway move finally ends. Depending on how far above the 200 day moving average it ends up stretching, I think there's a pretty good chance we will see the entire intermediate rally wiped out in a matter of days or even hours when this house of cards finally comes tumbling down.
That is how these runaway moves terminate. They crash! Parabolas always crash.
These things can go on and on for months and months with savvy investors becoming more and more nervous the longer the move persists. The longer the trend continues the more professional traders all position right next to the exit, until finally one day everybody tries to get out the door at the same time. It's that mass exodus to lock in profits that triggers the crash. The magnitude is determined by how far and how long the market stretches above the 200 day moving average.
Markets are no different than a pendulum. They oscillate back-and-forth above and below the median line, which in this case is the 200 day moving average. Bernanke is not doing anyone any favors by stretching the market unnaturally far to the upside. All it is going to do is guarantee an exceptionally violent move to the downside once the forces of regression to the mean break the parabola.
Again I would warn traders not to try and sell short as it's virtually impossible to determine when the parabola is going to fail. My best guess is late June or early July based upon the normal timing band for the dollar index to form its next intermediate degree bottom. As I expect the crash to correspond with a dollar rally that would seem to be as good a guess as any.
For savvy traders the play isn't to sell short, it's to go long once the crash has occurred as the Fed will almost certainly double down on QE in the attempt to reflate asset prices.
Of course the real play isn't going to be in the stock market. The stock market is in the topping phase of this cyclical bull market. Yes the Fed may be able to levitate stocks back to marginal new highs, but the real money is going to be in commodities as all that excess liquidity will inevitably make its way into the undervalued commodity markets where the potential return is many multiples greater than in a very mature cyclical bull market in stocks with a weakening global economy.
I'm guessing we still have another month-month and a half before this runaway move finally ends. Depending on how far above the 200 day moving average it ends up stretching, I think there's a pretty good chance we will see the entire intermediate rally wiped out in a matter of days or even hours when this house of cards finally comes tumbling down.
That is how these runaway moves terminate. They crash! Parabolas always crash.
These things can go on and on for months and months with savvy investors becoming more and more nervous the longer the move persists. The longer the trend continues the more professional traders all position right next to the exit, until finally one day everybody tries to get out the door at the same time. It's that mass exodus to lock in profits that triggers the crash. The magnitude is determined by how far and how long the market stretches above the 200 day moving average.
Markets are no different than a pendulum. They oscillate back-and-forth above and below the median line, which in this case is the 200 day moving average. Bernanke is not doing anyone any favors by stretching the market unnaturally far to the upside. All it is going to do is guarantee an exceptionally violent move to the downside once the forces of regression to the mean break the parabola.
Again I would warn traders not to try and sell short as it's virtually impossible to determine when the parabola is going to fail. My best guess is late June or early July based upon the normal timing band for the dollar index to form its next intermediate degree bottom. As I expect the crash to correspond with a dollar rally that would seem to be as good a guess as any.
For savvy traders the play isn't to sell short, it's to go long once the crash has occurred as the Fed will almost certainly double down on QE in the attempt to reflate asset prices.
Of course the real play isn't going to be in the stock market. The stock market is in the topping phase of this cyclical bull market. Yes the Fed may be able to levitate stocks back to marginal new highs, but the real money is going to be in commodities as all that excess liquidity will inevitably make its way into the undervalued commodity markets where the potential return is many multiples greater than in a very mature cyclical bull market in stocks with a weakening global economy.
7 Mayıs 2013 Salı
Japan Surges Near 5-year Highs
Our markets are mixed in early trading with the Nasdaq pulling back after leading yesterday. There is no economic data of note today but we do have another wave of earnings reports.
Asian markets were mostly higher overnight led by Japan. Japan's markets had been closed for 2 days but surged upon reopening 3.6% above the 14,000 level for the first time since June 2008. Also, the Reserve Bank of Australia surprised markets with a 25 basis point rate cut to 2.75%.
European indexes are also higher today. German factory orders rose 2.2%. Swiss unemployment held steady at 3.1%. And EC commissioner Olli Rehn said its too soon to determine if Slovenia needs a bailout.
Among stocks moving after reporting earnings:
Stocks rising on earnings: FOSL, HCN, DTV, DFT, STE, MELI, NSM
Stocks falling on earnings: MR, PRGO, TAP, TDG, DISCA, FSLR
The dollar is roughly flat today but commodities are broadly lower. Gold is down $20 to $1447. Oil prices are weaker near $95.44. Silver and copper prices are also weaker.
The 10-year yield is slightly higher to 1.78%. And the VIX is only up a touch and still at very low absolute levels at 12.75.
Trading comment: This market is really relentless. It does seem like in the short-term we are due for a bit of a pause, but other than that there are still no signs pointing to any change in character for the market. Obviously the market can't continue like this indefinitely, but the question is what levels do we climb to before we get any correction of substance. Certainly not worth sitting on the sidelines while so many stocks continue to perform well. We are taking a closer look at DVA, which is an example of a stock that reported good earnings but has pulled back since.
Asian markets were mostly higher overnight led by Japan. Japan's markets had been closed for 2 days but surged upon reopening 3.6% above the 14,000 level for the first time since June 2008. Also, the Reserve Bank of Australia surprised markets with a 25 basis point rate cut to 2.75%.
European indexes are also higher today. German factory orders rose 2.2%. Swiss unemployment held steady at 3.1%. And EC commissioner Olli Rehn said its too soon to determine if Slovenia needs a bailout.
Among stocks moving after reporting earnings:
Stocks rising on earnings: FOSL, HCN, DTV, DFT, STE, MELI, NSM
Stocks falling on earnings: MR, PRGO, TAP, TDG, DISCA, FSLR
The dollar is roughly flat today but commodities are broadly lower. Gold is down $20 to $1447. Oil prices are weaker near $95.44. Silver and copper prices are also weaker.
The 10-year yield is slightly higher to 1.78%. And the VIX is only up a touch and still at very low absolute levels at 12.75.
Trading comment: This market is really relentless. It does seem like in the short-term we are due for a bit of a pause, but other than that there are still no signs pointing to any change in character for the market. Obviously the market can't continue like this indefinitely, but the question is what levels do we climb to before we get any correction of substance. Certainly not worth sitting on the sidelines while so many stocks continue to perform well. We are taking a closer look at DVA, which is an example of a stock that reported good earnings but has pulled back since.
6 Mayıs 2013 Pazartesi
Monday Morning Musings
The market is slightly higher in early trading following Friday's big rally. There is no notable economic data out today and overseas action was mixed.
Overseas market action was mixed. Asian markets were mostly higher overnight. Hong Kong and China both gained over 1%. China's HSBC Services PMI declined to 51.1 from 54.3.
In Europe most markets are lower despite some improvement in the services PMI readings. German, France, and Italy all reported services PMI readings higher than the previous month. The overall Eurozone services PMI rose to 47.0 from 46.6. But it still needs to get above 50 to move back into an expansionary reading (not contraction).
Among the sector ETFs, financials are leading the early action while normally defensive utilities are down the most so far.
The Nasdaq is up a little more than the S&P 500, led by AAPL which has been acting better since reporting earnings. Growth stocks are starting to lead the market again. Google is breaking out to new highs, and 3D printing stocks like DDD are recovering nicely.
The dollar is higher today and commodities are mixed. Oil prices are a bit lower near $95.35. Gold prices are up a tad around $1467. But silver prices are lower as are copper.
The 10-year yield is roughly flat at 1.75%. And the volatility index is 2% higher but still at a very low absolute level of 13.12.
Trading comment: With all of the major indices at new highs it's hard to fight this market. We still expect to see some rotation from the defensive dividend type stocks that led most of the year so far into more traditional growth stocks that have lagged. Our strategy hasn't changed there. In terms of asset allocation we have been looking for spots to add to overall equity exposure but the good buying opportunities have been few and far between. Not sure how long it can last in that fashion, but in the near-term it sure feels like more of the same.
KAM Advisors has long positions in AAPL, DDD, GOOG
Overseas market action was mixed. Asian markets were mostly higher overnight. Hong Kong and China both gained over 1%. China's HSBC Services PMI declined to 51.1 from 54.3.
In Europe most markets are lower despite some improvement in the services PMI readings. German, France, and Italy all reported services PMI readings higher than the previous month. The overall Eurozone services PMI rose to 47.0 from 46.6. But it still needs to get above 50 to move back into an expansionary reading (not contraction).
Among the sector ETFs, financials are leading the early action while normally defensive utilities are down the most so far.
The Nasdaq is up a little more than the S&P 500, led by AAPL which has been acting better since reporting earnings. Growth stocks are starting to lead the market again. Google is breaking out to new highs, and 3D printing stocks like DDD are recovering nicely.
The dollar is higher today and commodities are mixed. Oil prices are a bit lower near $95.35. Gold prices are up a tad around $1467. But silver prices are lower as are copper.
The 10-year yield is roughly flat at 1.75%. And the volatility index is 2% higher but still at a very low absolute level of 13.12.
Trading comment: With all of the major indices at new highs it's hard to fight this market. We still expect to see some rotation from the defensive dividend type stocks that led most of the year so far into more traditional growth stocks that have lagged. Our strategy hasn't changed there. In terms of asset allocation we have been looking for spots to add to overall equity exposure but the good buying opportunities have been few and far between. Not sure how long it can last in that fashion, but in the near-term it sure feels like more of the same.
KAM Advisors has long positions in AAPL, DDD, GOOG
5 Mayıs 2013 Pazar
BUY ONE GET ONE FREE
I know a great many people have gotten discouraged during the last 6 months. Many have probably gotten knocked off the bull, and some may even buy into the end of the bull market nonsense that many analysts have been spouting lately.
I can assure you the gold bull is not dead. Human nature hasn't changed. Bernanke's printing press hasn't stopped. The Dow:gold ratio hasn't reached 1:1 and the world hasn't solved it's ever growing debt problem.
Gold just suffered a minor manipulation event after QE4 that drove price back below $1700 and held it there until the dollar rallied out of it's intermediate cycle low. Then big money manufactured a stop run at the $1523 level to trigger a climax selling event. They used that panic to transfer I estimate somewhere between a quarter to a half trillion dollars worth of shares in ETF's, mining stock, and physical from weak hands to strong hands.
These players now have huge positions in preparation for either another leg up, or the final bubble phase of the secular bull market. If that's the case then gold should rally for about another year and a half with a final parabolic blowoff top sometime in late 2014 or early 2015.
A top in 2015 would culminate a 14-15 year trend which is about normal for a secular bull move.
As hard as it is to do right now this is the time traders need to be positioning for the next, or the last leg up in this bull market.
For the next couple of days I'm going to make an offer to any expired subscribers, buy one get one free. Buy a one month subscription and I will give you the second month free. This should be long enough to get you through the bottoming process and far enough along to convince everyone the bull market isn't finished. At that point you can decide whether to let your subscription expire or continue.
Make sure you let me know that you are a returning subscriber when you subscribe. I will email you instructions on how to turn off auto renew and get your second month free.
OFFER EXPIRED
I can assure you the gold bull is not dead. Human nature hasn't changed. Bernanke's printing press hasn't stopped. The Dow:gold ratio hasn't reached 1:1 and the world hasn't solved it's ever growing debt problem.
Gold just suffered a minor manipulation event after QE4 that drove price back below $1700 and held it there until the dollar rallied out of it's intermediate cycle low. Then big money manufactured a stop run at the $1523 level to trigger a climax selling event. They used that panic to transfer I estimate somewhere between a quarter to a half trillion dollars worth of shares in ETF's, mining stock, and physical from weak hands to strong hands.
These players now have huge positions in preparation for either another leg up, or the final bubble phase of the secular bull market. If that's the case then gold should rally for about another year and a half with a final parabolic blowoff top sometime in late 2014 or early 2015.
A top in 2015 would culminate a 14-15 year trend which is about normal for a secular bull move.
As hard as it is to do right now this is the time traders need to be positioning for the next, or the last leg up in this bull market.
For the next couple of days I'm going to make an offer to any expired subscribers, buy one get one free. Buy a one month subscription and I will give you the second month free. This should be long enough to get you through the bottoming process and far enough along to convince everyone the bull market isn't finished. At that point you can decide whether to let your subscription expire or continue.
Make sure you let me know that you are a returning subscriber when you subscribe. I will email you instructions on how to turn off auto renew and get your second month free.
OFFER EXPIRED
3 Mayıs 2013 Cuma
STRETCHING, STRETCHING, STRETCHING
The runaway move in the stock market that we have been watching over the last few months continues to stretch higher and longer. Let me emphasize again, these things always end badly. Usually in some kind of crash, or semi crash.
I strongly advise traders not to chase this move. It's way too late and risk is extremely high. If you don't time the exit perfectly you risk getting caught in the crash.
The way to correctly trade a runaway move like this, is to wait patiently for the crash to unfold, and then buy long as the Fed doubles down on QE in the attempt to reflate asset prices.
The crash could happen at any time, but based on the intermediate dollar cycle, which is due to bottom in late June or early July, I'm expecting the stock market swoon to correspond with the dollar rallying out of that major bottom. So my best guess is in late June or early July we will see this artificial rally come crumbling down.
Let me emphasize that while I think the crash is going to occur later this summer, there is no guarantee it can't happen sooner.
On a side note: I heard a commercial yesterday in Las Vegas for a seminar on how to get rich flipping houses. Seriously? Are we really stupid enough to go down that road again?
I strongly advise traders not to chase this move. It's way too late and risk is extremely high. If you don't time the exit perfectly you risk getting caught in the crash.
The way to correctly trade a runaway move like this, is to wait patiently for the crash to unfold, and then buy long as the Fed doubles down on QE in the attempt to reflate asset prices.
The crash could happen at any time, but based on the intermediate dollar cycle, which is due to bottom in late June or early July, I'm expecting the stock market swoon to correspond with the dollar rallying out of that major bottom. So my best guess is in late June or early July we will see this artificial rally come crumbling down.
Let me emphasize that while I think the crash is going to occur later this summer, there is no guarantee it can't happen sooner.
On a side note: I heard a commercial yesterday in Las Vegas for a seminar on how to get rich flipping houses. Seriously? Are we really stupid enough to go down that road again?
2 Mayıs 2013 Perşembe
Sell in May?
I got in late this morning as I was on kids duty, so I didn't post my usual market notes. But here is an article I just posted on Wall St. All-Starts about a hotly debated topic right now--
http://wallstreetallstars.com/my-2-cents-on-sell-in-may/
http://wallstreetallstars.com/my-2-cents-on-sell-in-may/
1 Mayıs 2013 Çarşamba
Stocks Retreat On Light Economic Data
The market is under selling pressure in early trading after a weaker than expected jobs report and some additional economic data that came in weaker than expected.
The April ADP Employment report showed the private sector added 119,000 jobs in April, but this was below expectations for 155,000 jobs. Additionally, construction spending declined -1.7% in March which was well below consensus.
The other concern was China's manufacturing PMI data which eased to 50.6 from 50.9 previously. It is still barely above the 50 level that marks the difference between expansion and contraction in the industry, but it highlights concerns over a slowdown there.
Another odd market indicator is the action in copper. The copper etf (JJC) is near 3-year lows today. Considering the forecasts for a pickup in 2H global economic activity, you sure wouldn't sense it from the action in copper (which is supposed to be very economically sensitive).
Most Asian markets as well as markets in Europe were closed for their Labor Day holiday.
The 10-year yield is falling further on the weak economic data. The yield is all the way back to 1.63%, near its December lows. For the last year or so the 10-year has basically traded in this 1.50% - 2.00% range. We think its likely the lower end of this range holds and the 10-year works its way higher.
The volatility index is 6% higher today to 14.30, but still below the 15 level we have been using as a key level to watch.
Trading comment: This is day 1 of a mild pullback so far. Odds favor more of the same action, despite the crowd who cites the 'Sell in May and Go Away' axiom. The market ramped up pretty rapidly from its recent test of the 50-day average to put it in position for new highs. But its likely we could see some sideways consolidation first as the markets internal energy gets rebuilt for a solid move above the SPX 1600 level.
The April ADP Employment report showed the private sector added 119,000 jobs in April, but this was below expectations for 155,000 jobs. Additionally, construction spending declined -1.7% in March which was well below consensus.
The other concern was China's manufacturing PMI data which eased to 50.6 from 50.9 previously. It is still barely above the 50 level that marks the difference between expansion and contraction in the industry, but it highlights concerns over a slowdown there.
Another odd market indicator is the action in copper. The copper etf (JJC) is near 3-year lows today. Considering the forecasts for a pickup in 2H global economic activity, you sure wouldn't sense it from the action in copper (which is supposed to be very economically sensitive).
Most Asian markets as well as markets in Europe were closed for their Labor Day holiday.
The 10-year yield is falling further on the weak economic data. The yield is all the way back to 1.63%, near its December lows. For the last year or so the 10-year has basically traded in this 1.50% - 2.00% range. We think its likely the lower end of this range holds and the 10-year works its way higher.
The volatility index is 6% higher today to 14.30, but still below the 15 level we have been using as a key level to watch.
Trading comment: This is day 1 of a mild pullback so far. Odds favor more of the same action, despite the crowd who cites the 'Sell in May and Go Away' axiom. The market ramped up pretty rapidly from its recent test of the 50-day average to put it in position for new highs. But its likely we could see some sideways consolidation first as the markets internal energy gets rebuilt for a solid move above the SPX 1600 level.
Kaydol:
Kayıtlar (Atom)