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Five Reasons To Fear Deflation

The deflation scare is back, as Jon Hilsenrath and Brian Blackstone report on the front page of The Wall Street Journal. It’s worth taking a moment to contemplate why deflation is such a bad thing. After all, falling prices sound appealing to consumers, especially compared with the alternative of higher prices.

So why worry?

Here are…

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Admin

Solar Short Worth A Shot

The right shoulder of a possible head-and-shoulders top in CSIQ seems to have formed, rebuffed at the 200d with a dropping 20d SMA (a sign of sellers there).  Risk is defined with a cover alert (I don't use stops) above this weeks high.  (click chart to enlarge)

Based on weak economic conditions both here and abroad, I don't see solar sales taking off anytime soon......without further government subsidies.  Even then consider stagnating wages and new jobs being at the high and low end of the spectrum, I just don't see a catalyst for these names to go higher at this juncture.

They're already ridiculously cheap right now.  Can you get any cheaper than free?

Already heavily shorted, your broker may have to track down shares to short - or…

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Admin

Guilty Until Proven Innocent

Just like a civil courts case, the market is now guilty until it can prove itself innocent.  Just as in January/February 2014, we are trading below a falling 20d, which to many, represents sellers there.

As the cases of Ebola continue in Africa, residents down here in Dallas are nervously watching the news for any indication of further spread from the Dallas infected.  It's tragic and unsettling.  While I prepare to fly to Chicago tomorrow for my daughters wedding, I must admit to already having thoughts "what if the infection spreads further here while I am gone?".  I've never been an alarmist however those in voluntary quarantine continue to take risks, going on airplanes and cruise ships, placing others at risk.  If more Ebola cases spout up in other cities, will people begin to stay in their homes and venture out less to theaters, malls, restaurants, bars, etc.?

The ECB announced they will begin their …

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Admin

Is It A Correction Or Bear Market?

“Is the S&P in a correction or Bear market Mom?” is the question I received from my daughter last night. She’s been learning the stock market slowly over the last five or so years and I cringe at times with the questions she poses however no question is a bad question. I’d rather she come to me than blindly follow some pundit or supposed guru to $99/month subscription. After all, if he/she is so smart – why do they even need to charge for anything?  Just sit back and enjoy the wealth.

While the big boys and their algorithms have their calculated strategy, this is how I explained it to her in my simple, 'laywomans' terms.  In my mind big money typically buys at major supports during a correction. They sit back and salivate at an opportunity to, not buy the dip, buy buy on the cheap and define their risk.

For me, I consider the monthly 20 SMA as you can see from my prior post on the subject…

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Admin

Roasted NFLX

You mean when you raise prices, it affects subscriber levels?  No one told Reed Hastings and nor did he forewarn the market of the drop which was coming.  NFLX already has streaming competition from HBO (TWC) and talk is being bandied about that CBS will be joining that pool as well = more competition.  NFLX is no longer 'unique'.  Yes I am short this pos based off the technical divergences on the daily chart.  Burnt popcorn anyone?……

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Admin

The State Of Buyback Programs

Stock repurchase programs as well as dividends, are a great way to "return value to the shareholder" and also a way to "prop up" a stock price or keep funds in the game.  Unfortunately, nothing lasts forever and repurchase programs are unsustainable longer term.  At some point the market must heed the fundamentals, earnings growth and if margins contract, the positive effect of buybacks is lessened.   This from one of my favs, Variant Perception

Stock buybacks have been an important feature of the equity rally.  Companies have used low rates and easy credit to borrow money and used it to buy their own shares back.  An identity for a company’s share price is: S = (revenues * margins * P/E) / # of…

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Admin

Ribbon Study And $SPX Expansion

A Ribbon Study consists of 8 or more Simple Moving Average plots having different lengths thus forming a "ribbon". The lengths of those averages are in an arithmetic progression relation: the increment of the progression is defined by the initial and the final Moving Average lengths.

The way I view a moving average, especially a large one, is that is the average price of stockholders who have held since "that" point in time.  So if you're looking at a 50d, it's the average price of shareholders who purchased in the last 50 days.  If it's a MONTHLY moving average............NOW you're talking funds who have skin in the game and HAVE had skin in the game for months or years.  I want to be one of them if I'm a long/hold investor.  I want to "buy" when they buy.

I've always felt, that from a long/holding investing point of view, this study can also be an interesting way to view a coming expansion, after a long market consolidation.  View these…

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Admin

S&P500 Monthly Supports

Merely my observation of the S&P500 based on it's 20 year monthly chart.  It would appear most 'dips' were bought heavily at the 20month SMA with the 20month (off the low) SMA being the line in the sand..........at least on the last two 'bubbles'.

The 20m (off the low) then became overhead resistance. 

Just food for thought.  I have sent an alert for SPX at both levels in an effort to "buy like the big boys".  At least buying 'there' is limiting my downside risk (wink wink).  We could definitely bounce before then but the MACD looks to be rolling over somewhat and let's face it; October is a tough month.  I'm sincerely anticipating further volatility as even semiconductors and rails are exhibiting signs of selling.  I look forward to buying cheaper; aren't you?…

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Admin

Headlines And Risk Appetite

Very quickly some morning headlines.  While a few of the geopolitical risk headlines may be behind us (Brazil election, Russian border, etc) I believe markets are waiting for this quarters earnings (and guidance) to set the stage.  Multi-nationals with exposure overseas may struggle going forward if one believes the headlines below:

  • IMF revises and raises growth for the US BUT lowers prospects for the world (4.0 to 3.0%)
  • IMF says some valuations are "frothy"
  • SODA warns of miss and citing lower US demand (stick a fork in it)
  • Women's apparel mfgr CBK warns of lower sales; blames low mall traffic.
  • Hong Kong retailers experience sharp sales decline (blames protests of course because happy people would be spending)
  • AGCO cuts forecast, shares down 6% premarket
  • Taiwan's exports…

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