Post Tagged with: "stocks"
[Premium] Dow Transports lagging is a warning sign
There are still a lot of Dow Theory followers out there even after over 100 years. And the divergence between a bullish DJIA headline number and the lagging Dow Transports is bearish from a technical perspective
[PREMIUM]: 2012 an inflection point toward S&P500 margin compression
What I have been saying throughout 2011 is that margin compression is going to happen no matter what. The cuts have been made and so margins cannot grow any higher from cuts. It has to come from operating leverage that increases as a result of revenue growth
Jobs data highlight huge potential for capital loss in Treasuries
I have been making a big deal about strength in the household series of employment and the trend in IUCs. These are statistical series that do not get revised out of recognition. They often tell the tale at turning points. Given that past household survey employment and IUC trends have persisted, the current bond market rally will be even more insane and the stock market will probably continue to work higher, even though the favorable seasonable window has closed. I expect the recent trend of large outflows from stocks to bonds over the last year (and last five years) to be reversed in 2012. Not only are interest rates at generational lows but many high-quality companies are yielding (at 2.5% or even better) well above the yield on the 10-year U.S. note
The Unlikely Bull Market
This is not the time to be fully invested but neither is it the time to be side lined. We are in a nervous market where great opportunities present themselves at regular intervals. We recommend holding 25-50% in cash or cash like instruments (depending on your risk profile) which can be deployed at short notice when those opportunities arise
Dollar Mixed as Spain raises 4.5 bn euros in bond auction
The dollar is currently mixed against the majors and EMs as asset markets consolidate near recent highs. Spain raised 4.5 bn euros in a bond auction the upper end of their desired range. On the data front, Australia’s December trade surplus exceeded expectations increasing to A$1.71bln in December from a revised A$1.34 bln in November (was A$1.38 bln). Chinese markets outperformed the region closing nearly 2% higher, but the news flow was mixed, and even slightly contradictory
Chart of the Day: S&P500 Up 4.36% in January
Interesting couple of charts on the S&P500. The top shows the narrowing upward channel in which the index has traded since the beginning of the year relative to the wider medium-term channel. The collapse in volatility was the direct result of the massive liquidity injections of the ECB’s LTRO program, in our opinion
Dollar Pops Back
Dollar is broadly stronger against the majors and EM currencies after Greece rejected calls for direct budget control. Asian stocks fell, with the MSCI Asia Pacific index down 0.9%; EuroStoxx 600 is currently down 0.7%. Economic data saw Spanish Q4 GDP contract, EZ confidence rise less than expected; US personal income
[PREMIUM] More on the Fed – Obama stimulus plan
My last weekly said the hand-in-hand Fed activism and fiscal activism via Obama’s mortgage proposal is bullish. Let me add a bit of colour here
On the Collapse of the Shanghai Composite
Shanghai’s channel surfing Panda bears are speaking with a little higher pitch this weekend after getting their ‘hood caught in a vicious squeeze and reversal. The stock index has bounced 8.7 percent off its January 6th lows after falling 31 percent from last April’s 12-month high. The Shanghai was down 39 percent from its August ‘09 post-crash high before reversing earlier this month. Hugh Hendry nailed it
Grokking the Canadian Dollar in Three Correlations
The brief study presented here shows that over the past 60 days, the Canadian dollar has been more correlated with the S&P 500 than most currencies we looked at, and is also highly correlated with the euro, though in line with most of the other major currencies. It correlation with crude oil is considerably weaker than with the S&P 500 or the euro, but is also in line with most of the other currencies we looked at
Euro and S&P 500 Correlations Revisited
As of yesterday the 60-day correlation stands near 0.78 and the 30-day correlation has fallen from 0.81 in the middle of last month to 0.65. This gives additional evidence of some fracturing of the risk-on/risk-off rubric that has been such an important characteristic of the investment climate
Correction Tuesday?
China’s slew of economic data came in better than expected this coupled with successful bill auctions by Spain, Greece and Belgium and a very strong German ZEW (-21 v -53.8) is rekindling the appetite for risk today. The euro is up over a cent and is running into resistance near $1.28. More generally, major and emerging market currencies are trading broadly higher against the greenback. Equities and commodities are higher