Tag Archives: Stock Market

Debt vs. Equity

By Tom McClellan

Corporate Debt vs. Equity in the Stock Market

Credit Market Debt as a Percentage of the Market Value of Corporate Equities, corporate debt
November 27, 2015

I came across this chart this week on FRED.  For the uninitiated, FRED is the Federal Reserve Economic Database, operated by the St. Louis Federal Reserve Bank.  It is a genuine treasure trove for those who are into economic or financial data.

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Pivotal Events

By Bob Hoye


pivotal events by bob hoye
Pivotal Events from Bob Hoye, click for full PDF

Anatomy of a Correction

By NFTRH.com

US Stock Market: Anatomy of a Correction

Over the last week we (NFTRH) have used market sentiment indicators and index charts to gauge the prospects of finding a high on the post-September relief ‘bounce’ rally.

During August and September market sentiment had become brutally over bearish and this was very dangerous from the bears’ perspective. We set upside bounce targets for the SPX at 2020, 2040, 2060 and 2100. The first three were resistance levels (broken support) and the last was the general measurement of the ‘W’ bottom that formed in August and September. With the extremes in bearish sentiment, it was not so surprising that SPX climbed all the way to just above 2100.

Well, as we have noted in weekly reports and in-week updates recently, that problem for the bears was methodically eliminated by the rally as bulls’ backbones firmed up very well to the point of strenuous (though not hideously extreme) over bullishness. Here is one chart (courtesy Sentimentrader.com) among many sentiment graphics and data points we used in an NFTRH update on November 4. We had been watching pessimism dissipate quite nicely, but now the other component – rapidly growing optimism – was kicking in as well. This would pave the way for a correction from a sentiment standpoint.

sentiment indicators

As a ‘look ahead’ we then used and continually updated this 60 minute chart of the SPX beginning with an update called What to Look for w/ Respect to the 1st Signs of a Market Breakdown in order to be prepared to view the very first inkling of what a correction might look like, now that sentiment was coming in line. The ensuing string of updates also included daily charts of SPX for viewing forward-looking support parameters in the event that the market did have an initial breakdown (per the 60 minute view).

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‘Bonus Indicator’ Turning Negative

By Bob Hoye

Christmas Bonus Indicator: Turning Negative

bob hoye

Rut Way is the Market Going to Go?

By Biiwii

Well, there are way too many tools whirring along readying their signals to just depend on a single market or indicator, but I think the Small Caps are a good one none the less.  Earlier in the week we looked at this daily of the Russell 2000.  It is still holding the key 1180 area.  A successful hold of support targets 1280.

russell 2000 daily chart

Here is a weekly view using a chart of IWM (RUT ETF) that was posted a while back.  It is a little less reassuring as it has not made a weekly close above resistance and is pausing at the EMA 45, which used to support the bull and resisted the bounce most recently.

iwm weekly chart

The Russell 2000 used to be a post-2012 leader.  Now, not so much.  So what’s next, catch up move with manic bulls taking the market higher or the other thing (you know, the thing that fewer and fewer participants have been considering likely lately)?  Eh Bueller?

Looks Like a Hag to Me

By Michael Ashton

Suddenly, things are just swell!

Over the last month, stocks have absolutely blasted off with one of the most powerful moves in years. More precisely, in this century the only months with bigger gains in the S&P than last month’s 8.3% were March 2000, October 2002, March 2009, April 2009, September 2010 and October 2011.

There is no ‘because’ – as far as I can tell, there is little coherent reasoning behind the rally. Economic data has been generally weak; there have been positive signs too but the bad signs have been getting worse faster than economists have been expecting. Nothing is collapsing, but we are talking about a market that is overvalued on most major metrics. “The economy is not collapsing” is not a strong argument for why we’ve added 10% since the beginning of October.

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Bear Market Meter is Running

By Elliott Wave International

The Bear Market Meter is Running

Taxicab medallions and margin debt: A similar reversal in the making

As a native New Yorker, I can say with complete confidence: It’s true; there’s no place on earth like The Big Apple. It’s also true that, until recently, most New Yorkers would trip a nun if it meant hailing a Yellow cab first.

Fact is, the NYC Yellow cab used to be the hottest commodity in the five boroughs. When you needed a ride, spotting a cab with its service light on was like finding the last pair of Manolo Blahnik shoes in your size at a Manhattan Sample Sale.

But those days are over in NYC (and nearly every major U.S. metropolis). In the past year alone, street hail vehicles have suffered a series of crippling blows — including plummeting demand, fleet changes, sliding medallion values, and the “Taxi King” himself — Gene Freidman — filing for bankruptcy.

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RUT2k; Momo’s on Your Marks, Get Set…

By Biiwii

From NFTRH 367 as RUT sat around 1160:  “This pattern targets 1280 if resistance is exceeded. So for all you momo bull traders out there, watch 1180 but be nimble.”

That is only the most tentative of support right now, but so far so good for the momo’s.

russell 2000 daily chart

Happy Halloween

By Biiwii

Hey look, anyone can post a jack-o-lantern with a scary face on Halloween, but how many sites are treating you to a traditional Irish Halloween Turnip?  Hmmm… ?

irish halloween turnip

And so October has come and (almost) gone.  We got what we expected, which was a mother of a bounce, now probing the high extremes of the upside range.  Why is it extreme?  Because if it goes past certain levels it morphs from ‘bounce’ to ‘bears hand it over on downs’, and another opportunity lost to croak this market.

October was so very positive and now the bulls have some good tech earnings and a period that everybody knows is favorable.  I mean, they sold in May right?  Right??  Sure they did; a lot of them sold in August (and some bought back in October).  So it’s the bullish November-April cycle beginning on Monday.

All I can say is don’t swallow the bromides, promos and infomercials coming from people who manage other peoples’ money for a living (i.e. the mainstream financial services industry and its associated media).

While I am not net short yet, I sold a little Apple here, added an EM short there and am skulking my way to the door.  I have had some great trades and some real goofs on this bounce but it is time to realize that play time is ending and now only the true believers are going to take this market higher or going the other way, lower.

There is a very real possibility that the wonder bounce has been a last chance to sell.  I am not saying that because I want the market to drop, which I do (because I find it easier to manage when people are spooked), but because the balance of the indicators (technical and macro) still say that the intermediate trend is changing to down.

[edit] Work done in NFTRH 367’s first 6 pages implies there could be an opportunity for one more small pop higher, though none of the above is altered materially if that plays out.

Over in precious metals, the spooks came on cue, 10 HUI points below our ‘bounce’ target zone.  This was completely view-able in advance through the CoT structure.  It’s confirmation was in the reversal in silver vs. gold, post FOMC.  While for the moment I am net short the PM’s, I have a few quality miners tucked away in my pocket.  This is not because of some idealistic viewpoint but rather, because my view of a coming macro change has not been eliminated by the market bounce.

Speaking of FOMC, it was really interesting that they decided to put a little pin prick in the fabric of things with that ‘at its next meeting’ wording.  Meanwhile, another sign of manufacturing degradation has burped up in the economy.  You won’t find it on financial TV where some guy jumps around like a gorilla on crack to entertain the investing masses.  But you will find it faithfully chronicled each month by a guy formerly in the medical device manufacturing industry.

The market road map has been loss of momentum → downside resolution → bounce attempt → downside retest → mother of a bounce…  all very manageable and logical.  Now it gets interesting again because irrationally bearish sentiment is fixed, technical limits are upcoming and market/economic indicators are questionable at best.

Happy Halloween!