Thanksgiving Week Seasonality – An Updated Look

By Rob Hanna

The time around Thanksgiving has shown some strong tendencies over the years – both bullish and bearish. I have discussed them a number of times over the years. In the updated table below I show SPX performance results based on the day of the week around Thanksgiving. The bottom row is the Monday of Thanksgiving week. The top row is the Monday after Thanksgiving.

2018-11-19

Monday and Tuesday of Thanksgiving week do not show a strong, consistent edge. But the data for both Wednesday and Friday looks quite strong. Both of those days have seen the S&P 500 rise over 70% of the time between 1960 – 2017. The average instance managed to gain about 0.3% for each of the 2 days. (This is shown in the Avg Profit/Loss column where $300 would equal a 0.3% gain.) That is a hearty 1-day move. Meanwhile, the Monday after Thanksgiving has given back over half the gains that the previous 2 days accumulated. It has declined 66% of the time and the average Monday after Thanksgiving saw a net loss of 0.37%.

Continue reading Thanksgiving Week Seasonality – An Updated Look

Frightful Possibilities

By Tim Knight

[biiwii comment: it’s a Slope of Hope 2-fer this morning… ]

A Santa Claus rally. A trade deal between China and the U.S. A straight shot to 3,200 on the S&P 500. The bullish stories are flooding the airwaves. After all, the vast majority of “traders” and “investors” have never experienced a bear market before. Equities dipped a little in October, and people don’t like it. So they’re trying to wish it away.

Maybe they will. Maybe the won’t. We remain at a crucial juncture. Last week was largely a waste of time. We did get a nice selloff on Monday, but after that, it was a circle jerk, with desperate rumors from D.C. about a trade deal attempting to prop things up.

On the ES, the two tinted areas are all I care about right now. If, God forbid, we cross above the yellow tint at about 2757, the bulls are going to grab the baton. It wouldn’t take much in the way of news to make it happen. Another plausible rumor about China would do the trick, although the way Pence is handling it, maybe I shouldn’t worry so much. A failure of the green line at 2711 would shove a silver stake through the pattern’s heart.

Continue reading Frightful Possibilities

One Fund’s Instant Destruction

By Tim Knight

This is a cautionary tale. A tale of a fund of nearly 300 clients and nearly $80 million which blew up in the span of hours from a market move that was, in the grand scheme of things, not that big a deal. It illustrates how excessive leverage can completely torch the risk-taker (and, in this case, his clients). And it just happened.

The person in question is James Cordier, who is a bestselling author of books about options. One glance at Amazon, and you can see the myriad of volumes he’s written on the topic:

He parlayed his knowledge and media appearances into a thriving fund named, appropriately enough, OptionSellers.com which, until quite recently, had a beautifully-crafted website touting the virtues and profitability for selling options for high net worth investors. Here is what the site used to look like:

Continue reading One Fund’s Instant Destruction

Canary in the Credit Market’s Coal Mine

By Doug Noland

What ever happened to “Six Sigma”? GE was one of the most beloved and hyped S&P500 stocks during the late-nineties Bubble Era. With “visionary” Jack Welch at the helm, GE was being transformed into a New Age industrial powerhouse – epitomizing the greater revolution of the U.S. economy into a technology and services juggernaut.

GE evolved into a major financial services conglomerate, riding the multi-decade wave of easy high-powered contemporary finance and central bank backstops. GE Capital assets came to surpass $630 billion, providing the majority of GE earnings. Wall Street was ecstatic – and loath to question anything. GE certainly had few rivals when it came to robust and reliable earnings growth. Street analysts could easily model quarterly EPS (earnings per share) growth, and GE would predictably beat estimates – like clockwork. Bull markets create genius.

It’s only fitting. With a multi-decade Credit Bubble having passed a momentous inflection point, there is now mounting concern for GE’s future. Welch’s successor, Jeffrey Immelt, announced in 2015 that GE would largely divest GE Capital assets. These kinds of things rarely work well in reverse. Easy “money” spurs rapid expansions (and regrettable acquisitions), while liquidation phases invariably unfold in much less hospitable backdrops. Immelt’s reputation lies in tatters, and GE today struggles to generate positive earnings and cash-flow.

Continue reading Canary in the Credit Market’s Coal Mine

Nasty Financial Events, Worsened By Politics

By Bob Hoye

[biiwii comment: We disclaim all political views in this essay because frankly, they interfere with effective market management. But we’ve committed to publishing Bob Hoye, so here he is in all his politically infused glory.]

Click for PDF…

hoye

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Slowly We Turn… Gold vs.

By NFTRH

Let’s take an in-day snapshot of gold vs. several key competitors (for your investment dollars/euros/yen, etc.) and check the progress in turning the macro from risk ‘on’ to risk ‘off’, cyclical to counter-cyclical.

Gold/Commodities motors along above the SMA 200. The move has been hysterical, and thus looks impulsive. That could mean something as we look back in hindsight one day.

gld.dbc

Gold/Oil has been the driver of the above.

Continue reading Slowly We Turn… Gold vs.

Why Bother?

By Tim Knight

I noticed on a different site someone mentioned the fund SHE, the “gender diversity fund“, and I thought they were just doing a politically correct joke. Sort of a riff on all the virtue signaling going on these days. Nope. This is real. There is seriously a fund based only on having more women than usual in senior management positions. And as you can see below, comparing SHE to the male-dominated SPY, those women sure do make a gigantic difference in investment returns. I’m sure it makes the lack of liquidity and wider bid/ask spreads totally worth it.

Support 100% ad-free Biiwii.com by making a donation of your choice!

Or better yet, subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas to get even more bang for your buck. You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar. Or follow via Twitter @BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

M&A Could Be an Enema for Crappy Sector Performance

By Rob Bruggeman

Yesterday saw another significant M&A transaction being announced in the mining sector, with Pan American Silver acquiring Tahoe Resources.  This deal comes less than two months after the merger announcement between Barrick and Randgold, which was well received by the market.

Drain the Swamp!
I’d like to see a lot more of these deals announced because hopefully they will help clean up the mining sector and provide investors with some long overdue returns.  While the broader market has seen a tremendous bull market over the past decade, the mining sector has been stuck in a quagmire.  Not because of metal prices and not because of demand factors, but because the sector has done an extremely poor job of creating value.  In large part, this is because some companies or management teams have been exceptionally good at destroying value.  Public companies are supposed to make investors money and the mining sector has been atrocious in this regard.

Continue reading M&A Could Be an Enema for Crappy Sector Performance

General Electric Caution Signs Are Flashing in Credit Markets

By Anthony B. Sanders

5Y CDS Rises To Near 200 As Earnings Continue To Sag

Too much debt?  Declining earnings per share? All of the above??

(Bloomberg) — General Electric Co. may still have a relatively solid investment-grade rating, but investors aren’t taking their chances. They’re snapping up derivatives that protect against losses on the company’s debt.

The cost to insure against a default by GE for five years climbed to as high as 211 basis points in early trading, credit-default swaps prices from CMA show. That’s almost double what it cost just two weeks ago, and it’s the kind of level that hasn’t been seen for the company since the waning days of the global financial crisis.

That’s still well below the peak crisis levels for GE’s finance unit back then (GE Capital CDS surged to more than 1,000 basis points in March 2009). But the pace of the increase has been rapid, particularly when compared with the broader investment-grade market. Yields on some of GE’s bonds have also reached levels that are in line with junk-rated bonds, Bloomberg Barclays index data show.

gecds

This is not surprising given the performance of GE’s equity and 5% perpetual bonds.

Continue reading General Electric Caution Signs Are Flashing in Credit Markets

Oil’s Drop Bigger Than Called For, But Right On Schedule

By Tom McClellan

Gold prices lead crude oil

Crude oil prices reached a new multi-year high on October 3, and then started a dramatic drop.  It has just now fallen for 12 straight trading days to reach the lowest close since December 2017.  There are various theories about why this has happened, attributing it to comments from President Trump, OPEC chicanery, Iranian oil exports, falling demand, fracking overproduction, and all manner of other explanations.  But few of those explanations address the “when” question, concerning why this is happening now.

Continue reading Oil’s Drop Bigger Than Called For, But Right On Schedule

The Final Blow

By Tim Knight

[biiwii comment: per my comment to this post at Slope of Hope…]

I once asked Bruno if I could publish his posts @ biiwii.com and he responded in such a humble way. As if it were an honor for HIM that I would consider publishing him. It was actually the other way around. He was an idealist and as honest as the day is long. But the humility; that is a thing I respected most. Thank you Tim for this post. I am very sad to hear this.

I have sad news to share with everyone. Our beloved brother-in-arms, Bruno de Landevoisin, has passed to the eternal realm. For those of you who don’t know to whom I’m referring, Bruno was a very long-time member of the Slope community, writing more posts here than anyone except myself, and doing so with a fastidious attention to detail. He went by many names – – Idiot Wind, BDI (which meant “Bob Dylan Idiot”, since he was a huge fan) – -but we all knew him as the loveable Frenchman, descended from royalty, who was a tireless and lovingly combative member of this community.

Continue reading The Final Blow