The bears are nipping at our heels.
The market may have other ideas.
Prepare yourselves.
It's likely to be a wild ride.
Wednesday, August 31, 2011
Happenstance
In my continual quest to see what's right with the markets (as opposed to the Karl Denninger's of the world who only seek out that which is wrong with the markets) I came up with this tidbit of a chart a couple of weeks ago, I found an interesting correlation between the price of gold vs the price of oil and how it all tied into the S&P 500.
Stop complaining and start looking. The more we look, the more we find, and even if the chart above was all happenstance, it worked.
That's the bottom line (I think).
Tuesday, August 30, 2011
Looking for Clues
What's wrong with the markets?
According to Karl Denninger, no one is playing the stock market anymore but computerized, high frequency algorythm programs (aka HFT's). It's human-free.
Karl Denninger says the markets are rigged
I have the utmost respect for Mr Denninger .... most of the time. He has been responsible for some of the most enlightening youtube videos on trading the stock market that I have ever encountered; nevertheless, he often comes across as an individual who has simply failed to adapt to the "new world order" of trading. He seems to trade on what he thinks is right rather than what the charts are telling him. Obviously, there's a time and place for fundamental analysis, and many an astute trader has reaped the rewards based on this primary concept.
There are times, however, when a trader simply has to "tune out" the news, look at the charts and get on with it. If the fundamentals fail (and fundamentals have failed miserably for two plus years now) either we change our approach or change our careers. Those are our only options.
Trading is not an exact science. If it were, it would be an easy game to play. Perhaps this is why so many people take to blaming the powers-that-be on their unsuccesful trading. I've done it myself a time or two. For example, I simply could not understand why the trading methods I was taught that worked so well when I first started ceased to stop working a couple of years ago, and it was convenient enough to blame the Plunge Protection Team for my own trading ineptitude.
But ...... failures are failures are failures! Pointing fingers at anyone other than ourselves is not going to get our money back.
So we either deal with it or go back to being a waitress or an accountant or a ditch digger.
That's the stock market.
It's not supposed to be easy, despite what all those books you'll find at Chapters with the glossy covers tell you.
Adapt or Die.
It's the one rule of trading that isn't going to go away.
As for Mr Denninger's assumption no one human is trading ......
I'm trading, and if you're reading this, you probably are, too.
Always perform your own due diligence. These are only my opinions.
Sunday, August 14, 2011
FAZ the Financial Bear
It didn't take long for inexperienced perma bears to get an expensive lesson in triple ETF's when the markets started to rebound two and a half years ago. Those who held on to FAZ, convinced that the Peter Schiff's of the world were right about the coming financial implosion (and Schiff was and is right, it was his timing that comes into question), learned first-hand that greed and common sense are two entirely different things.
Many newcomers didn't take the hint when the rally began earnestly in 2009 and held steadfastly onto FAZ until their losses were so great they had no other choice but capitulate. Welcome to the big leagues, kid.
Today, FAZ is trading at less than 1% of the highs it set in 2008. Only a quick trigger finger would have allowed the average investor to make any money on this ETF the past couple of years; nevertheless, there is some potential on the daily chart to take advantage of a triple ETF's power, providing greed doesn't overtake common sense once again.
One Year, Daily
The daily chart has turned bullish (and how many times have we been able to say that about a bearish ETF over the last couple of years?) surpassing five previous peaks on its latest leg up. That FAZ managed to rebound slightly below the 61.8 Fibonacci retracement is also a good sign, at least for the bears among us.
Two Year, Weekly
The weekly chart still has some work ahead of it. Ideally, a thrust above $88.75 should be enough to send even the bravest of bulls into retreat, paving the way for an ABCD pattern somewhere in the neighbourhood of $93.00.
A financial tornado looms.
In the balance are millions of investors who believe all is right with the world and that good will ultimately prevail.
Sunday, August 7, 2011
Two Bank Stocks Hold the Key
US bank stocks (Goldman Sachs and Bank of America in particular) may be at the heart of this most recent setback in the markets. They've performed terribly when measured against the S&P 500. Institutional and retail investors have fled US bank stocks in droves and this - more than anything - could be the real reason behind the market "fear" investors have been feeling of late.
There was a time when bank stocks were looked upon as the safe haven in the investing world. Even more so than the US dollar.
Banking Index vs SPY
What does it say, then, when Goldman Sachs can't keep pace with the stock market or even when pitted against the under-achieving Philadelphia Bank Index?
Goldman Sachs vs SPY
The "People's Bank," has lost ground to a basket of US bank stocks, despite all the tax payer's money the US government has thrown at it. How is this possible and why has it happened?
Goldman Sachs vs Phildadelphia Bank Index
As bad as Goldman Sachs has performed, another US government fave, Bank of America, has fared even worse.
Bank of America vs Philadelphia Bank Index
All that tax payer money and it seems investors still want nothing to do with either of these two US banking icons.
That doesn't bode particularly well for the US banking sector - or the stock market - as a whole.
Saturday, August 6, 2011
Friday, August 5, 2011
So You Want to Buy Gold Stocks?
GDX (aka Big Gold) closed at its lowest point vs physical gold since April of 2009.
Manipulation?
Perhaps.
It might be a simple matter that bankers hold our paper investments, and paper is all gold stocks really are.
Tuesday, August 2, 2011
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