Pardon Him

By Heisenberg

Markets gave Trump the benefit of the doubt to start the new week after a weekend that found the President spending what certainly seemed like an inordinate amount of time assailing various (and in some cases entirely imaginary) foes on Twitter.

Seemingly oblivious to the optics, Trump regaled the world on Monday morning with his thoughts on farmers, soybean taxes, “all sorts of trade barriers”, deficits, the constitutionality of the special counsel probe, his power to pardon himself and “Witch Hunts” that he says are being conducted by “conflicted” Democrats and unnamed “others” who he says are “angry” at him for reasons he didn’t specify.

That went on for nearly three hours.

Despite that, stocks were fine, seemingly content to ignore the incessant rantings of a guy who is now openly suggesting that he’d absolve himself of responsibility for crimes he committed on the off chance anyone actually ends up producing proof of those crimes and seemingly resigned to the notion that, as Goldman put it over the weekend, “US trade policy is a conundrum.”

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This Bullish Signal Never Occurred During the 2000-02 And 2007-09 Bear Markets

By Chris Ciovacco

2000-02 BEAR MARKET

In late 1999, several months before the S&P 500 peaked, monthly RSI dropped below 70, which was a sign of waning momentum.  Monthly RSI never recaptured 70 during the entire 2000-02 bear market.

short-takes-ciovacco-ccm-6-4-2018-a.png

2007-09 BEAR MARKET

After the S&P 500 peaked in October 2007, monthly RSI never recaptured 70, which was a sign of waning bullish momentum.  Monthly RSI remained below 70 for the entire 2007-09 bear market.
Continue reading This Bullish Signal Never Occurred During the 2000-02 And 2007-09 Bear Markets

Stock Market Superheroes

By Tim Knight

Whenever someone argues against short-selling, they often bring up two very scary words: Infinite Risk. In other words, the most you could lose on a long position is 100%. But there is no mathematical limit to short losses. You could short a stock at $10 and it opens the next day at – – what – – let’s say $500,000. Shriek, right?

Well, yeah, but that doesn’t happen. I think the most horrendous wipeout I ever suffered was a 50% gap up, and since my positions are typically 1% of my portfolio, it wasn’t devastating. If someone is going to argue against short selling, I think a far better and more realistic argument is not that losses are unlimited but that profits are limited.

In other words, the most you can possibly make on a short is 100% and, let’s face it, stocks never go to zero. Hell, I think even Lehman Brothers is still trading in some form to this day. A gain or 20% or 30% – – maybe 50% once in a blue moon – – is a terrific success.

However, the profits on long positions are unlimited. Making more than 100% – – be it 500%, 1000%, 5000%, or even 100,000% – – is absolutely possible, and it’s been done by people all over the world. The main ingredient is timing and patience.

I’ve used SlopeCharts to create some percentage charts below, to illustrate some long-term winners as Intel……

…..Netflix…….

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Sentiment Snapshot: Vol Rising

By Callum Thomas

This week in the sentiment snapshot I take a look at volatility.  For context, in the sentiment snapshot series I look at some of the charts from the weekly survey on Twitter, which asks respondents to indicate whether they are bullish or bearish for primarily technical or fundamental rationale. On that note, the overall net-bullish sentiment has now made almost a full recovery so it leads us into a question of whether this is well-placed optimism… which leads into a series of charts on the VIX and volatility.

The key takeaways from the weekly sentiment snapshot are:

-Net bullish sentiment recovered to the strongest point since the correction began, with fundamentals sentiment reaching a new high.

-Sentiment has diverged from the VIX to the bullish side.

-Volatility is likely to stay higher from here, but with a positive fundamentals backdrop it may well be the more virtuous form of volatility.

1. Equity Sentiment – Fundamentals vs Technicals:  A new survey high was reached this week for “fundamentals” net-bullish equity sentiment. This along with a tickup in technicals sentiment has brought the overall net-bulls to an almost full recovery since the correction began (more about that in the next chart).  On the all important question of whether we see a new high in the S&P500 this year, it’s all going to come down to the fundamentals i.e. the earning/macro pulse, and that there is such optimism on the fundamentals is a positive sign in this respect.  Albeit my inner contrarian is saying ‘hmmm’…

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Sleep Walking Into the Next Crisis?

By Kevin Muir

Quick – the United States suddenly backtracks on half century of globalization and enters a trade war with almost all of its trading partners – do you buy or sell equities? And how about bonds?

Don’t mistake this question as me going full tinfoil-hat – I know we are far from a trade war – but it is an interesting exercise to contemplate.

I don’t have an answer how a trade war would affect financial markets. The reality is that “it depends”. I know, I know – the old joke about the one-handed economist is probably applicable here, but the financial repercussions from a trade war are not as obvious as they might seem at first.

Trade wars cause rising prices – no denying that point. But whether that causes stock and bond prices to rise or fall depends a lot on the reaction function of the central bank.

Continue reading Sleep Walking Into the Next Crisis?

Weakness and Strength

By Tim Knight

Well, “BTFD” has worked for the 1,730th time in a row. It’s no surprise people believe in that simple strategy so much.

The market continues to be a mixed bag. Utilities, for example, my favorite index short, is still looking picture perfect from a moving averages perspective (which is all I am showing in this post). The crossovers are exactly what I want to see.

The Major Market Index is just scraping right along – – we’ve already got a bearish crossover, and it might just hold – – but today’s powerful rally is putting it at-risk. It won’t be clear until day’s end to see if this crossover survives or not.

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What to Expect at a Critical Market Point: End of a Wave 2 Rally

By Elliott Wave International

“Most investors are convinced that the bull market never went away.”

The great game of Wall Street — where huge amounts of money are at stake every trading day.

Many speculators play this game by watching for events outside of the stock market that they believe will “trigger” the next big move in prices.

However, the real driver of all those green up arrows and red down arrows is nothing more or less than investor psychology. This famous Kal’s cartoon sums it up perfectly:

sellcartoonwithcopyright

First investor: “I’ve got a stock here that could really excel.”

Second investor: “Really excel?”

Fourth investor: “Sell?” — and the crowd goes, “Sell, sell, sell!”

First investor again: “This is madness! I can’t take it any more, good bye!”

Second investor: “Good bye?”

Third investor: “Buy?” — and the crowd goes: “Buy, buy buy!”

As random and unpredictable as this cartoon makes it look, EWI’s research reveals that investor psychology actually goes through similar phases during every market cycle. So, if you know the current psychological phase of the market, you can make a high-confidence prediction about the next phase.

Continue reading What to Expect at a Critical Market Point: End of a Wave 2 Rally

The Only Charts Investors Need This Memorial Day Weekend (video)

By Chris Ciovacco

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Subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas. 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.

Gold, US Stocks and Bonds

By NFTRH

I’ll try to keep things simple with this recap of the 3 of the 5 major food groups (leaving aside commodities and currencies) for investors. No confusing you today with too many inter-market ratios, overly technical language or cute metaphors like the 3 Amigos (although it is notable that Amigo #2 is stopping exactly as we’d forecast, as you’ll see in the Bonds segment below).

So let’s take a technical look at larger picture of the 3 groups using weekly charts for gold and SPX and a monthly for 30yr bond yields, along with some thoughts. We’ll reserve the shorter-term technical management for subscriber updates and weekly NFTRH reports.

Gold

For the sake of your financial well being, continue to tune out inflation, trade wars, shooting wars, Ebola, China demand and Indian wedding season as reasons to be bullish the relic, it’s wilder little brother, silver and the miners. Continue to tune in to gold’s standing vs. stocks and other risk ‘on’ assets along with investor confidence, the economy, interest rate dynamics (including the yield curve) and to an extent, the state of your local currency.

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23 Companies With The Most Buyback ‘Success’…

By Heisenberg

And 23 That Will Be The Most ‘Successful’ Going Forward

Ahhhh, buybacks. The equity-linked-compensation-inflating music to soothe a savage market beast.

Buybacks have of course been at the top of investors’ minds in 2018, as the windfall from the Trump tax cuts is generally expected to be plowed into shareholder-friendly initiatives (as opposed to, say, wage increases) thus putting between $600 billion and $840 billion (depending on whose estimates you’re inclined to believe) worth of plunge protection under the market at a time when geopolitical jitters and other concerns have conspired to weigh on sentiment.

Buybacks

We (and everyone else) have covered this exhaustively. Earlier this month, we highlighted a Bloomberg interview with SocGen’s Andrew Lapthorne, who regular readers know is no fan of companies borrowing money to repurchase their own inflated shares, an exercise he has variously characterized as “clearly nonsense”. Here’s the money quote from a note out last year:

Continue reading 23 Companies With The Most Buyback ‘Success’…

The Battle of the Bulls and the Bears (video)

By Chris Ciovacco

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

Subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas. 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.

What Happened to the Presidential Cycle?

By Tom McClellan

Presidential Cycle Pattern

If this were a “normal” 2nd year of a presidential term, we would now be in a corrective period due to last until just before the mid-term elections.  But as many in the press have noted, we do not have a “normal” presidency, and the market is not tracing out a perfect normal pattern.

Years ago, I first constructed a Presidential Cycle Pattern by averaging together multiple years’ worth of data on the SP500.  One difference I chose to make in this process, versus the work of others, is that I started each year on the anniversary of the November federal elections.

The reason for that difference is that the investing public tends to react right away to the news of whoever gets elected, rather than waiting for January 1st, or January 20th when inauguration takes place.  So we might as well accept the political annual cycle for what it is.

Continue reading What Happened to the Presidential Cycle?