Articles

From the February 23rd Issue

Editor — Fri, 24 Feb 2012 15:58:04 +0000

London Financial Times Gets It Right, While Morgan Stanley Shows Us the Quality of Work that Led to the Financial Crisis

Sky Rocketing!

Editor — Fri, 27 Jan 2012 17:06:25 +0000

From its most recent major swing low in November, the S&P 500 has had a nine-week rally, including the last four weeks in a row. It is time for a pullback, but the market remains stubbornly bullish. We are also concerned that the last several weeks have seen flat or decreasing volume, which is bearish when prices are moving up.

Mild Good News

Editor — Sat, 14 Jan 2012 06:00:00 +0000

Trust the Model

Editor — Sat, 24 Dec 2011 06:00:00 +0000

Lions & Tigers and Bulls & Bears

Editor — Sat, 17 Dec 2011 06:00:00 +0000

Last week we made a tactical decision to step aside and not publish a short-term portfolio. In our view the cross currents in the news-driven situation did not give us an 'edge.' The timing turned out to be excellent. The market put in a head fake for the bulls and corrected more than 4%.

All that Doom & Gloom?...ooops.

Editor — Sat, 10 Dec 2011 06:00:00 +0000

Last week six of the world's major central banks made a coordinated effort to reassure European bond market investors that in the event of a severe liquidity crisis, the banks are willing and able to provide emergency U.S. dollar loans. Global equities breathed a huge sigh of relief.

The End is Nigh!...

Editor — Sat, 03 Dec 2011 06:00:00 +0000

... and other mistaken prognostications.

Fear Factor? - China Factor!

Editor — Sat, 26 Nov 2011 06:00:00 +0000

Our short-term model is designed to identify oversold conditions. Basic materials has been one of the worst performing sectors over the last 8-10 months, but particularly since August. That was when the world began to seriously worry about a recession in Europe and a hard landing in China.

Like a Sad Little Balloon

Editor — Sat, 19 Nov 2011 06:00:00 +0000

The most important factor of the current market from a trading perspective is the sudden

Super Mario?

Editor — Sat, 05 Nov 2011 05:00:00 +0000

Another round of asset purchases (mortgage-backed securities) is a viable option for the Fed. Bernanke reassured the audience that “We are prepared to do more and we have the tools to do more.” Here's the good news and the bad news. When the Fed starts its third round of quantitative easing (QE III), the ECB is likely to follow.

Indecision

Editor — Sat, 29 Oct 2011 05:00:00 +0000

After a few days of indecision last week, the market decided that Europe was no longer a problem. Despite a lack of detail, the major indices managed to rally almost 4% ahead of last night's EU announcement. Clearly, the market has a tendency to buy the rumor. Will it sell the news? Probably not.

Economic Asteroid?

Editor — Sat, 22 Oct 2011 05:00:00 +0000

On Wednesday (October 12) the U.S. equity market posted its sixth advance in seven sessions.

Q4 Relief

Editor — Sat, 08 Oct 2011 05:00:00 +0000

During August and September, the equity market bounced around wildly in a wide trading range driven mostly by news from Europe. This week the lower boundary of that trading range was tested once again. Our prediction, stated in SpearChat on Monday, was that this support level would hold one more time. So far, so good.

Euro-Schmuro

Editor — Mon, 03 Oct 2011 19:26:29 +0000

In the Buy Zone

Editor — Mon, 26 Sep 2011 19:22:33 +0000

Same Old, Same Old

Editor — Mon, 19 Sep 2011 05:00:00 +0000

The more things change the more they stay the same. Today (9/15) the S&P is trading about where it was last week at this time. Volatility, however, remains elevated. The Volatility Index is oscillating between 30 and 40 as the market is being held hostage to the events (mostly rumors) emanating from Europe. The violent swings, which can be as much as 3% in one day, wreck havoc with short-term trading systems. Ours is no exception.

Semi-Good

Editor — Mon, 12 Sep 2011 05:00:00 +0000

Last week we discussed the rather wide discrepancy between the U.S. economy (muddling through) and the highly volatile U.S. equity indices, which have been pricing in a reprise of the 2008-2009 financial collapse. Investors are worried, withdrawing more than $60 billion from equity mutual funds this summer.

Apocolypse Redux

Editor — Mon, 05 Sep 2011 05:00:00 +0000

Last week we discussed the rather wide discrepancy between the U.S. economy (muddling through) and the highly volatile U.S. equity indices, which have been pricing in a reprise of the 2008-2009 financial collapse. Investors are worried, withdrawing more than $60 billion from equity mutual funds this summer.

Testing, one, two...

Editor — Wed, 31 Aug 2011 05:00:00 +0000

U.S. markets tested their recent lows on Tuesday and used the technical floor to push off for a sharp rally. The Dow was up 322 points that day alone, adding another 1% on Wednesday. Don't forget that the largest one-day rallies always occur during bearish conditions.

Fun, fun, fun

Editor — Mon, 08 Aug 2011 16:09:32 +0000

The confidence boost from the Fed's message was short-lived, as expected. We anticipate a few more weeks of highly volatile action before things settle down.

Buying the Mega Dip

Editor — Mon, 08 Aug 2011 05:00:00 +0000

Last week we discussed the reasons for anticipating future outperformance by the BRIC economies and indices. As the developed world prepares for a double dip or an extended period of muddling through, growth in emerging markets has not been much affected. The global PMI index set a 4-month high last month.