Technicals - What We're Reading - StockBuz2024-03-29T10:40:59Zhttp://stockbuz.ning.com/articles/feed/category/TechnicalsFinding High Quality Companies 'Today'http://stockbuz.ning.com/articles/finding-high-quality-companies-today2017-06-07T23:36:11.000Z2017-06-07T23:36:11.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>We are having a hard time finding high-quality companies at attractive valuations.</p>
<p>For us, this is not an academic frustration. We are constantly looking for new stocks by running stock screens, endlessly reading (blogs, research, magazines, newspapers), looking at holdings of investors we respect, talking to our large network of professional investors, attending conferences, scouring through ideas published on value investor networks, and finally, looking with frustration at our large (and growing) watch list of companies we’d like to buy at a significant margin of safety. The median stock on our watch list has to decline by about 35-40% to be an attractive buy.</p>
<p>But maybe we’re too subjective. Instead of just asking you to take our word for it, in this letter we’ll show you a few charts that not only demonstrate our point but also show the magnitude of the stock market’s overvaluation and, more importantly, put it into historical context.</p>
<p>Each chart examines stock market valuation from a slightly differently perspective, but each arrives at the same conclusion: the average stock is overvalued somewhere between tremendously and enormously. If you don’t know whether “enormously” is greater than “tremendously” or vice versa, don’t worry, we don’t know either. But this is our point exactly: When an asset class is significantly overvalued and continues to get overvalued, quantifying its overvaluation brings little value.</p>
<p>Let’s demonstrate this point by looking at a few charts.</p>
<p>The first chart shows price-to-earnings of the S&P 500 in relation to its historical average. The average stock today is trading at 73% above its historical average valuation. There are only two other times in history that stocks were more expensive than they are today: just before the Great Depression hit and in the1999 run-up to the dotcom bubble burst.</p>
<p align="center"><img alt="" src="http://ggc-mauldin-images.s3.amazonaws.com/uploads/newsletters/Image_1_20170607_OTB.jpg" style="width: 630px; height: 457px;" /><br />
(dshort.com)</p>
<p>We know how the history played in both cases – consequently stocks declined, a lot. Based on over a century of history, we are fairly sure that, this time too, stock valuations will at some point mean revert and stock markets will decline. After all, price-to-earnings behaves like a pendulum that swings around the mean, and today that pendulum has swung far above the mean.</p>
<p>What we don’t know is how this journey will look in the interim. Before the inevitable decline, will price-to-earnings revisit the pre-Great Depression level of 95% above average, or will it maybe say hello to the pre-dotcom crash level of 164% above average? Or will another injection of QE steroids send stocks valuations to new, never-before-seen highs? Nobody knows.</p>
<p>One chart is not enough. Let’s take a look at another one, called the Buffett Indicator. Apparently, Warren Buffett likes to use it to take the temperature of market valuations. Think of this chart as a price-to-sales ratio for the whole economy, that is, the market value of all equities divided by GDP. The higher the price-to-sales ratio, the more expensive stocks are.</p>
<p align="center"><img alt="" src="http://ggc-mauldin-images.s3.amazonaws.com/uploads/newsletters/Image_2_20170607_OTB.jpg" style="width: 630px; height: 459px;" /></p>
<p>This chart tells a similar story to the first one. Though neither Mike nor Vitaliy were around in 1929, we can imagine there were a lot of bulls celebrating and cheerleading every day as the market marched higher in 1927, 1928, and the first eleven months of 1929. The cheerleaders probably made a lot of intelligent, well-reasoned arguments, which could be put into two buckets: first, “This time is different” (it never is), and second, “Yes, stocks are overvalued, but we are still in the bull market.” (And they were right about this until they lost their shirts.)</p>
<p>Both Mike and Vitaliy were investing during the 1999 bubble. (Mike has lived through a lot of more bubbles, but a gentleman never tells). We both vividly remember the “This time is different” argument of 1999. It was the new vs. the old economy; the internet was supposed to change or at least modify the rules of economic gravity – the economy was now supposed to grow at a new, much faster rate. But economic growth over the last twenty years has not been any different than in the previous twenty years – no, let us take this back: it has actually been lower. From 1980 to 2000 real economic growth was about 3% a year, while from 2000 to today it has been about 2% a year.</p>
<p>Finally, let’s look at a Tobin’s Q chart. Don’t let the name intimidate you – this chart simply shows the market value of equities in relation to their replacement cost. If you are a dentist, and dental practices are sold for a million dollars while the cost of opening a new practice (phone system, chairs, drills, x-ray equipment, etc.) is $500,000, then Tobin’s Q is 2. The higher the ratio the more expensive stocks are. Again, this one tells the same story as the other two charts: Stocks are very expensive and were more expensive only twice in the last hundred-plus years.</p>
<p align="center"><img alt="" src="http://ggc-mauldin-images.s3.amazonaws.com/uploads/newsletters/Image_3_20170607_OTB.jpg" style="width: 630px; height: 457px;" /></p>
<p>What will make the market roll over? It’s hard to say, though we promise you the answer will be obvious in hindsight. Expensive markets collapse by their own weight, pricked by an exogenous event. What made the dotcom bubble burst in 1999? Valuations got too high; P/Es stopped expanding. As stock prices started their decline, dotcoms that were losing money couldn’t finance their losses by issuing new stock. Did the stock market decline cause the recession, or did the recession cause the stock market decline? We are not sure of the answer, and in the practical sense the answer is not that important, because we cannot predict either a recession or a stock market decline.</p>
<p>In December 2007 Vitaliy was one of the speakers at the Colorado CFA Society Forecast Dinner. A large event, with a few hundred attendees. One of the questions posed was “When are we going into a recession?” Vitaliy gave his usual, unimpressive “I don’t know” answer. The rest of the panel, who were well-respected, seasoned investment professionals with impressive pedigrees, offered their well-reasoned views that foresaw a recession in anywhere from six months to eighteen months. Ironically, as we discovered a year later through revised economic data, at the time of our discussion the US economy was already in a recession.</p>
<p>We spend little time trying to predict the next recession, and we don’t try to figure out what prick will cause this market to roll over. Our ability to forecast is very poor and is thus not worth the effort.</p>
<p>An argument can be made that stocks, even at high valuations, are not expensive in context of the current incredibly low interest rates. This argument sounds so true and logical, but – and this is a huge “but” – there is a crucial embedded assumption that interest rates will stay at these levels for a decade or two.</p>
<p>Hopefully by this point you are convinced of our ignorance, at least when it comes to predicting the future. As you can imagine, we don’t know when interest rates will go up or by how much (nobody does). When interest rates rise, then stocks’ appearance of cheapness will dissipate as mist on the breeze.</p>
<p>And there is another twist: If interest rates remain where they are today, or even decline, this will be a sign that the economy has big, deflationary (Japan-like) problems. A zero interest rate did not protect the valuations of Japanese stocks from the horrors of deflation – Japanese P/Es contracted despite the decline in rates. America maybe an exceptional nation, but the laws of economic gravity work here just as effectively as in any other country.</p>
<p>Finally, buying overvalued stocks because bonds are even more overvalued has the feel of choosing a less painful poison. How about being patient and not taking the poison at all?</p>
<p>You may ask, how do we invest in an environment when the stock market is very expensive? The key word is <em>invest.</em> Merely buying expensive stocks hoping that they’ll go even higher is not investing, it’s gambling. We don’t do that and won’t do that.</p>
<p>Courtesy of <a href="http://www.mauldineconomics.com/outsidethebox/finding-high-quality-companies-today" target="_blank">Mauldin</a></p>
</div>Is The Stock Market Rally Over?http://stockbuz.ning.com/articles/is-the-stock-market-rally-over2016-11-05T22:00:58.000Z2016-11-05T22:00:58.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffff99;">As technicians battle over whether our "<em>hated"</em> seven year rally still has legs, I continue to return and ask myself "<em>has anything truly blown up?".  I do personally believe the US Dollar will continue it strength and that will continue to put pressure on commodities, dividend payers and discretionary.  Financials and insurers will push higher.  Can the rest of the boat survive?  Are earnings guidance showing a 'rosey' picture of the future?  Will Trump win?  Too many unknowns for me. </em> This post, using monthly charts, brings me back to earth.  While I have no need to catch the absolute top, it gives me specific areas which need to be defined.  I remain cautious and yes, have numerous short positions as well as longs.  That doesn't mean, however, that I'm willing to give up just yet.  I hope you enjoy-</span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;">While the technicians usually write about the short tem, I want to zoom out a little and use a monthly chart of the New York Composite ($NYA). For those who follow my webinars, we are following the charts very closely as the market conditions are frail in my opinion. We could rally from here, but the long term charts continue to disappoint in my work. This <strong>New York Composite chart ($NYA)</strong> shows the close Friday, November 4th, 2016.</span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;">While the October 31st close did not close below the 10-month Moving average or give a MACD sell signal, it only took a pullback of one more day (November 1) to generate a sell signal on both the MACD and the 10 month moving average. That is a fine detail on a monthly chart. These can be seen looking at the Zoombox on the far right. By the Friday close shown below, the picture was getting a little more difficult. Martin Pring's Monthly KST is below zero as well.</span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;"><a target="_blank" href="http://stockchartscom.cmail19.com/t/r-l-yhthkjuk-bjyittruk-o/"><span style="color: #ffffff;"><img style="padding: 10px 0px 20px 0px; display: block; border: 0; margin: 0 auto; width: 100%; height: auto;" src="http://i8.cmail19.com/ei/r/2C/518/1A3/074942/csimport/1478291778294799949101_7.png" /></span></a></span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;">The note I wrote on this chart above back in August 2016 as the $SPX made it's high is extremely important now. We actually did cross above the signal line but so far this month we are below. We will need to wait for the November close and the level of 10414, but it is very important to realize how frail the market setup is. There were only 3 times on this chart that a monthly sell signal reversed higher. One was the coordinated central bank move in September 2012. The other was the brief rally in 1999 before the tech top. The current one is in play. If we close below 10414, we have an important signal.</span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;">Why is this so important? The real problem is understanding what has happened through the passage of time from the high on the MACD in 2014. As oil plummeted from June 2014 and the energy sector was decimated, it slowly affected other industries and sectors. By the spring of 2015, the $NYA chart above made marginal new highs over the 2014 level. As the industry dominoes started to fall, the market pulled back most of 2015 with a final low in January/February 2016 coinciding with Crude Oil's final low. As oil rallied, GDP numbers started to improve and recently we just had a GDP print of 2.9%.</span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;">My position is if energy (Oil, Natural Gas, Wind, Solar, Coal, Nuclear, Ethanol) fails to hold up, we could see more pressure on the economy. Since the market top of May 22,2015, three groups have gained meaningfully from that day, three are close to flat and three declined heavily.</span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;"><img style="padding: 10px 0px 20px 0px; display: block; border: 0; margin: 0 auto; width: 100%; height: auto;" src="http://i9.cmail19.com/ei/r/2C/518/1A3/074942/csimport/14782932931621646324954_8.png" />However, zooming in on the markets for the last 3 months after the initial rally off the floor in February 2016, we have a different picture. While energy and financials are marginally positive, big sectors like consumer discretionary, industrials and materials are down. As well, Biotech within Healthcare has been crushed. Technology has been relatively flat, even with Apple, Google, Amazon, Facebook and Netflix.</span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;"><img style="padding: 10px 0px 20px 0px; display: block; border: 0; margin: 0 auto; width: 100%; height: auto;" src="http://i10.cmail19.com/ei/r/2C/518/1A3/074942/csimport/1478293586406439420757_9.png" />In a nutshell, for my way of thinking, we need Energy to continue to rebound. If that doesn't happen, it is a global sector that slowed the MACD from the highs of 2014 to the very low levels we saw in the first chart. If Energy rolls over again, which it appears to be doing now, this could be the major derailment that gives our global markets negative momentum. The other sectors don't look strong enough to carry the economy forward in my mind. The monthly charts are warning us. It could break out to the upside, but I think it is important to understand what a sell signal in November and confirmation in December could mean for the longer term. We don't usually get two whipsaws on monthly charts.</span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;">Lastly, some of the webinars over the last two weeks have set the stage for how close this market is to a major reversal. If you are not aware of how fine that picture is, I would encourage you to watch <a target="_blank" href="http://stockchartscom.cmail19.com/t/r-l-yhthkjuk-bjyittruk-b/"><span style="color: #ffffff;">Commodities Countdown 2016-10-27</span></a> and then the <a target="_blank" href="http://stockchartscom.cmail19.com/t/r-l-yhthkjuk-bjyittruk-n/"><span style="color: #ffffff;">Commodities Countdown 2016-11-03</span></a>. I have been bullish until late September so I am not quick to jump on the bear bandwagon. But when the time comes, keeping your capital becomes more important than making money.</span></p>
<p style="font-family: 'Source Sans Pro', Helvetica, Arial, sans-serif; font-size: 15px; line-height: 20px; color: #414141; text-align: left; padding: 20px 50px 0px 50px; margin: 0;"><span style="color: #ffffff;">Courtesy of <a href="http://stockcharts.com/articles/chartwatchers/2016/11/the-monthly-close-for-october-couldnt-have-been-closer-to-a-sell-signal.html" target="_blank"><span style="color: #ffffff;">StockCharts.com</span></a></span></p>
</div>The Market Deteriorates Further. 'Bout Timehttp://stockbuz.ning.com/articles/the-market-deteriorates-further-bout-time2016-10-30T18:07:13.000Z2016-10-30T18:07:13.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>The stock market continues to weaken, as evidenced by these ETF charts. If you zero in on a sector you wish to short, I would bear in mind that ETFs are comprised of market leaders. I would look for names <em>"outside"</em> of the ETF components; consider them leaders and you want the weaklings to short.</p>
<p><span class="font-size-5">The reasons for weakness are numerous.</span> </p>
<p>Consider the election weight (a Trump win would weigh on equities but Clinton weighs on pharma pricing). Then there are flat-to-dropping sales. Of course the USD movement (up will weigh on commodities and large caps with overseas exposure). Then there's those who feel we are already at or above maximum value and they're not buying here. They're hedged, short some and long financials ahead of the Fed rate hike. Then there's that Fed hike itself. High dividend is flushing down the toilet (SDY) in September. Overseas weakness with China not helping boost confidence for demand. And we also have more failure at the <a href="http://www.reuters.com/article/us-opec-meeting-idUSKCN12T083?feedType=RSS&feedName=businessNews" target="_blank">OPEC talks</a> with no offer from outside countries to participate. They've definitely lost their 'power' over us and crude should continue to weaken.</p>
<p>Consider however, that the weakness has been <strong>growing</strong>, sector by sector. When you accept we have weakness in housing, some retail, some restaurants, small caps, mid caps, pharma, healthcare and now oil. With energy being the second largest sector, this weighs heavily. Banks can't do it all on their own.</p>
<p>Well here they go and there are <strong>many, many</strong> more out there; you'll see. Possibly you can use one here and/or search for more. Cover above the upper trend lines. Targets are all equal to the high/low of the pattern with a partial taken along the way. I usually leave a small piece on the table as well. You never know where the markets heading next. <strong>NOTE</strong>: Most are daily views but there are a few weekly charts. Take note.</p>
<p>You're welcome</p>
<p>(Click on any chart to enlarge)</p>
<p><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291347?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291347?profile=RESIZE_1024x1024" class="align-full" width="750"></a><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291393?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291393?profile=RESIZE_1024x1024" class="align-full" width="750"></a><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291434?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291434?profile=RESIZE_1024x1024" class="align-full" width="750"></a><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291492?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291492?profile=RESIZE_1024x1024" class="align-full" width="750"></a><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291558?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291558?profile=RESIZE_1024x1024" class="align-full" width="750"></a><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291566?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291566?profile=RESIZE_1024x1024" class="align-full" width="750"></a><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291582?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291582?profile=RESIZE_1024x1024" class="align-full" width="750"></a><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291587?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291587?profile=RESIZE_1024x1024" class="align-full" width="750"></a><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291592?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291592?profile=RESIZE_1024x1024" class="align-full" width="750"></a><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291599?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291596?profile=RESIZE_1024x1024" class="align-full" width="750"></a></p></div>Buyers Stay Home; See You Next Fallhttp://stockbuz.ning.com/articles/buyers-stay-home-see-you-next-fall2016-05-15T01:14:12.000Z2016-05-15T01:14:12.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_blank" href="https://stockbuz.files.wordpress.com/2016/05/markets.png"><img class="align-full" src="https://stockbuz.files.wordpress.com/2016/05/markets.png?width=750" width="750" /></a></p>
<p>(Click image to enlarge)</p>
<p>There's nothing here that even remotely makes me want to make a purchase. These are weekly shots of the main indexes so what do you see?</p>
<p>We rallied up over weeks like crazy madmen, squeezing out weak shorts and even had the heaviest shorted sectors help out with a short covering rally; getting the weekly into 'overbought' levels. We came up right against the long term column trend line resistance, hit overbought levels...........the weekly is rolling over. Another failure. Sorry boys. So much for that.</p>
<p>Certainly day traders and short-term swing traders will make their long plays but who has time for that............and why go against the trend of 'this' market......which is <span style="text-decoration: underline;"><em><strong>down</strong></em></span>. That's rhetorical.</p>
<ul>
<li>We know the market is stretched on a valuation basis.</li>
<li>Don't even throw out the strange valuation approaches.</li>
<li>We know there's no more QE coming out of Washington.</li>
<li>We know earnings are a disappointment and guidance has for the most part been completely uninspiring.</li>
<li>Things of concern lie ahead: China has data coming out (retail sales, producer price figures, and the consumer sentiment survey) over the weekend which could inspire or deflate the market. Where's the growth we need?</li>
<li>Brexit and FOMC loom.</li>
<li>Our own bad news has been wide spread: Retail has been completely disappointing with big losses, Shell spilled oil in the Gulf a la BP (here we go again). AAPL wants "into" the auto driving business (say what?), BIDU is under investigation, BABA has been suspended from an anti-counterfeiting group (I have to laugh at that one) and FB swears their unbiased, they think and of course there's politics weighing on biotech and healthcare. Did you see hospitals last week?  Ouch!  If there's good news out there, it doesn't last long.  See how that changed? </li>
<li>If it weren't for the tar sands oil fire in Canada, crude oil wouldn't be helping market hold what we have........and the winners are <em>shrinking</em>; make no doubt about it.</li>
</ul>
<p><br />
The daily charts show a small head-and-shoulders top formed and we're perched right at the neckline; probably waiting for Yellen's FOMC on Wednesday........but will it matter?</p>
<p>Me, I am short various names such as BIDU, NFLX, CAT, COH, TXT, just to name a few. </p>
<p>Have any setups or plays to share? Bring 'em on!  I'll play the short side..........<span style="text-decoration: underline;">unless Janet changes the game.</span></p>
</div>Bear Market? Yes It Ishttp://stockbuz.ning.com/articles/bear-market-yes-it-is2016-01-17T21:17:03.000Z2016-01-17T21:17:03.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>The latest market selloff can be blamed on any number of things. China slowdown or a possible hard landing in China, basic profit taking after a six-year run, declining earnings, no further QE in the US, a uptick in rates in the US, weak US economy, commodity (including crude oil) collapse, weakening of 'risk' currencies due to the commodity selloff, disappearance of buybacks, dividends being lowered, strong US dollar pressuring balance sheets, bear markets in pc sales, rail fees,.........the list goes on and on. Bottom line: we need something <em>solid</em> to rally on and I fear any earnings pops will be given back. Netflix will be a good example tomorrow after the close. We simply cannot justify going higher without a catalyst.</p>
<p>The <a href="http://www.wsj.com/articles/why-this-market-meltdown-isnt-a-repeat-of-2008-1452892357" target="_blank">Wall Street Journal</a> reminds us that this is not 2008 redux but just 'where' we bottom is open to speculation. So I'll just sit back with my hedges and wait it out. Here I'll note a few things I haven't seen plastered across the internet. </p>
<p>Although the monthly isn't complete, we already have a bear cross in major moving averages. .</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291242?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291242?profile=RESIZE_1024x1024" width="750"></a></p>
<p>The 20 month moving average now becomes my "prove me wrong" area of resistance unless I hear something bullish out of the Fed.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291277?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291277?profile=RESIZE_1024x1024" width="750"></a></p>
<p>We <span style="text-decoration: underline;">decisively</span> lost the 30month EMA (the 20month now becomes resistance). By the way, did you notice the selling along the way up? Rate of Change definitely showed it as the market crawled higher. A divergence right there if you were watching.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291319?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291319?profile=RESIZE_1024x1024" width="750"></a></p>
<p>So now we watch for possible supports. Will we retrace off the 2011 low?</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291351?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291351?profile=RESIZE_1024x1024" width="750"></a></p>
<p>Or something much further off the 2009 low?</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291417?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291417?profile=RESIZE_1024x1024" width="750"></a></p>
<p>Of course, by the time the pundits on CNBC or elsewhere admit we're in a <a href="http://www.msn.com/en-us/money/savingandinvesting/a-bear-market-in-stocks-will-be-over-before-you-know-it/ar-BBoet4R" target="_blank">Bear market</a> defined by a correction of at least 20%, then we'll be nearing the bottom but more and more seem to be accepting that <a href="http://www.cnbc.com/2016/01/16/bear-market-is-here-expect-another-15-plunge-technician.html" target="_blank">it's here.</a> Small caps who tend to perform well this time of year, are already down 22%. </p>
<p>Stay in cash or have a hedge. "Buy time" will come. You just need to sit on hands and be patient. The market's not going to disappear. Trust me.</p></div>And They Crawl Out Of The Woodworkhttp://stockbuz.ning.com/articles/and-they-crawl-out-of-the-woodwork2015-08-22T23:46:31.000Z2015-08-22T23:46:31.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291273?profile=original"><img class="align-left" style="padding: 10px;" src="http://storage.ning.com/topology/rest/1.0/file/get/1291256?profile=RESIZE_320x320" width="300"></a>You know it's coming and it won't be any easier to take than when you were small and your Mother said "<em>I told you so"</em>. The blogisphere will now erupt with the force of an annoying snaggle tooth emphatically screaming "<em>I warned you"</em> and <em>"I said it was coming</em>.........<em>now buy my plan so you're prepared" </em> and <em>ca-ching</em>, you cough up the coin like a kid at the carnival freak show. Every smidiot and hack will now attack your inbox on how <em>they</em> could have prevented your losses and how (via in their premier plan) you would have benefited this week.......if you had only listened.</p>
<p><em>Puhlease</em>. </p>
<p>Markets correct. On occasion, they correct <span style="text-decoration: underline;"><strong><em>more</em></strong></span> than mere pullbacks but the essential thing to remember is, they recover. </p>
<p>No, it's not a master plot against <a href="http://www.912communique.com/forum/topics/the-big-boys-are-playing-with-the-market-yet-again" target="_blank">Donald Trump</a>. His over-swept hair is safe and........seriously? Who would even dream up that scenario (smh) but the heavy-selling picture last week certainly backed up a <a href="http://www.marketwatch.com/story/a-dow-theory-sell-signal-is-upon-us-2015-08-20" target="_blank">Dow sell-signal</a> and have many wondering, just where we'll stop or is the <a href="http://www.ritholtz.com/blog/2015/08/is-the-bull-dead/" target="_blank">bull run dead</a>. Are the men out there stating we'll see an enormous <a href="https://www.youtube.com/watch?t=20&v=sFDbl7G9QdQ" target="_blank">crash in October</a> have a leg to stand on? Then again some have much <a href="https://pugsma.files.wordpress.com/2010/06/pug-sp-500-monthly-chart-6-23-15.jpg" target="_blank">more credibility</a> than others, calling the top and sitting back. Those are the ones to watch.</p>
<p>fwiw I see next support at the 100 week EMA near $1945, assuming that Friday's low doesn't hold. We're oversold daily and (just about) on the weekly. Will it hold? We shall see.</p>
<p>Still looking around at all of the emails and blogs, I felt <a href="http://realmoney.thestreet.com/articles/08/21/2015/10-reasons-market-tanked-and-what-may-lie-ahead" target="_blank">TheStreet</a> actually did a good job of sorting out what has occurred around the globe and taking a view of what may lie ahead.........no fee required young man.</p>
<p><em>A number of conditions have been developing for a few months that have conspired and have formed a toxic cocktail that led to this week's risk aversion and market schmeissing. Risk happens fast. As some of these conditions were much different than the past events, during which selloffs were modest and contained, we should be concerned. Below are the adverse developments that led to the sharp market drop -- and in italics is a look forward to possible outcomes over the balance of the year and into early 2016:</em></p>
<p><em><strong>1.) </strong><strong>Technical Deterioration</strong>: The first development that we have to be mindful of has been the narrowing market leadership and market divergences -- a consistent theme and concern of mine. Transports had already fallen despite lower oil, and, of course, cyclical (especially of an energy kind), commodities based companies and industrial stocks already had entered their own bear markets. The recent stunning upheaval in media stocks, threatened by fundamental business threats, has been a nail in the market's coffin this week and turned many great charts -- e.g., <strong>Disney </strong>(DIS) -- into very bad charts. The technical erosion has recently accelerated. As BTIG's Dan Greenhaus noted in his commentary last evening, "Among the S&P 500, nearly 30% of the index is now down 20% or more from respective 52- week highs ... while a staggering 57% of stocks are down 10% or more. Less than half the index is now above its 200-day moving average."</em></p>
<p><em>The bad news is that with many broken charts it will take time for a base building. The good news is that the decline in industrials and cyclical could be entering the final phase -- at least judged by the magnitude of the drops and what seems like a discounting of a global recession. A recovery in the stocks that are already in a Bear Market will be dependent upon global economic growth expectations.</em></p>
<p><em><strong>2.) </strong><strong>The Increased Role of Momentum-Based Portfolio and Trading Strategies and ETFs</strong>: Trend-following strategies and leveraged ETFs took the market to new heights and are now taking the market to recent lows. They care not of balance sheets and income statements and are agnostic as to where value lies. They aren't greedy, don't panic and pain is unknown to them -- they simply accentuate and exaggerate market trends and direction. </em></p>
<p><em>It is near to impossible to forecast when the quants reverse direction as they are totally dependent upon price momentum. As I have written, "Kill the Quants Before They Kill Our Markets."</em></p>
<p><em><strong>3.) </strong><strong>Widening Credit Spreads</strong>: Credit spreads widened dramatically. High yield has moved from about 225 over to 525 over Treasuries. We shouldn't lose sight that the investment-grade and high-yield markets have had record issuances in recent years and the substitution of debt for equity has been an important fuel for corporate share buybacks. That window of issuances -- or more costly issuances of debt -- have closed some of that window and was the basis for my "<a href="http://realmoneypro.thestreet.com/dougs-daily-diary?published[value][date]=2015-04-08#were-likely-app-20150408">Peak Buybacks</a>" thesis . </em></p>
<p><em>I suspect the widening of credit spreads will subside with greater confidence in global economic growth.</em></p>
<p><em><strong>4.) </strong><strong>China, the Engine of Global Growth, Has Stalled</strong>: We didn't need another weak purchasing managers index (as <a href="http://www.theguardian.com/business/2015/aug/21/global-stocks-in-a-tailspin-as-chinese-factory-slump-drags-on-markets" target="_blank">was released</a> last night in China) to stoke concerns that an ongoing and sharp deceleration in the rate of growth in that region is at hand. And so is the speculative character of the Chinese stock market. Russia, Brazil and Venezuela are experiencing recession, and Greece, Italy and Spain are not far behind.</em></p>
<p><em>In the case of China, that country has more tools to halt the economic slide --and I wouldn't be surprised if some "shock and awe" is introduced over the coming weekend. Other areas of concern around the globe are either doomed or will extend and pretend, but <a href="http://abcnews.go.com/Business/wireStory/eurozone-economy-resilient-face-greece-survey-shows-33222506" target="_blank">Europe's manufacturing data </a>last night could provide some relief. </em></p>
<p><em><strong>5.) </strong><strong>Slowing Global Economic Growth Prospects</strong>: With overall global economic growth prospects diminishing, the chasm between the real economy and financial asset prices has grown ever wider. This led to this week's selling.</em></p>
<p><em>I remain concerned that global growth expectations are still too optimistic, but the consensus is now moving toward more realistic forecasts after being high for the last few years. Moreover, the sharp dive in commodities should, at some point, fuel an improved economy. </em></p>
<p><em><strong>6.) </strong><strong>Slowing Profit Prospects</strong>: Until recently the market has ignored a material lower revision in S&P earnings-per-share expectations for 2015 (from $134 a share to about $115 a share).</em></p>
<p><em>The good news is that most of the forecasters have now adjusted their expectations down to more reasonable levels. Investors are now paying less for growth (as described by <a href="http://realmoneypro.thestreet.com/articles/08/21/2015/symptoms-multiple-contraction-are-out-there">Jim "El Capitan" Cramer</a> this morning). And, while the commodities' schmeissing hurts some important components of the S&P, lower rates and lower commodities could sustain profit margins and profits.</em></p>
<p><em><strong>7.) </strong><strong>Confidence in Central Bankers Has Been Waning</strong>: Enough said.</em></p>
<p><em>The good news here is that, again, there is growing recognition that the Fed and its brethren have done all they can accomplish for now.</em></p>
<p><em><strong>8.) </strong><strong>Bullish Investor Sentiment Had Moderated</strong>: Retail investors have consistently shed investments as outflows have continued.</em></p>
<p><em>While individual market enthusiasm has been muted, corporations (through buybacks) have taken up that slack. Retail investors will likely continue to shun stocks, but corporations should provide continued market support, albeit perhaps not as enthusiastically as in the past.</em></p>
<p><em><strong>9.) </strong><strong>The Bull Market in Complacency Has Been in Full Force</strong>: Again, enough said.</em></p>
<p><em>Up until recently investors have been complacent-- as measure by a low volatility index -- but the recent market drop, which has been severe in many sectors, have increased the recognition that (1) not all dips are buys, and (2) that a larger correction is possible. The later was something not considered prior to this month. The good news is that the VIX rose by more than 25% yesterday as complacency has been attacked. The CNN Fear Index is back to 2009 levels. In other words, we are now seeing the early signposts of possible capitulation.</em></p>
<p><em><strong>10.) </strong><strong>A U.S. Rate Rise is Imminent</strong>: Stop us if you've heard that one before.</em></p>
<p><em>The debate over Fed uncertainty has become a bit hyperbolic. My view is that the erosion in financial conditions coupled with current market chaos and uncertainty have provided the ammo for "<a href="http://realmoneypro.thestreet.com/dougs-daily-diary?published[value][date]=2015-08-11#ammo-for-one-an-20150811">one and done</a>" in December is in place. That's probably a good thing.</em></p>
<p><em><strong>Bottom Line</strong></em></p>
<p><em>Where do we go from here? I am less than certain, and those with extreme and self-confident views are "<a href="http://realmoneypro.thestreet.com/dougs-daily-diary?published[value][date]=2015-08-04#attention-getter-20150804">attention getters, not money makers</a>."</em></p>
<p><em>While a lot of damage has occurred and some groups are likely close to bottoming, much will depend on the evolving economic data around the world in the time ahead.</em></p>
<p><em>As I have consistently written, the only certainty is the lack of certainty, and rarely have there been so many possible economic and market outcomes, many of which are aren't good. </em></p>
<p><em>On a more positive note, with the S&P flirting with 2000 we are already closing in on my Fair Market Value Calculation of 1995. Here is the basis of this calculation:</em></p>
<ul>
<li><em>Scenario #1: Economic Acceleration Above Consensus (Probability: +10%) – +3% Real U.S. GDP growth, +2.0% to +3.0% inflation and +8% to +12% profit growth. Stocks climb by 7.5% over the next 12 to 18 months. S&P target is 2245.</em></li>
<li><em>Scenario #2: Status Quo (Probability: 25%) – +2% to +3% Real U.S. GDP growth, +1.5% to +2.0% inflation and +5% to +9% profit growth. Stocks climb by 5% over the next 12 to 18 months. S&P target is 2195.</em></li>
<li><em>Scenario #3: Muddle Along (Probability: 25%) – +2% Real U.S. GDP growth, +1.5% inflation and +3% to +5% profit growth. Stocks climb by 0% to 5% over the next 12 to 18 months. S&P target is 2140.</em></li>
<li><em>Scenario #4: A Garden Variety Recession (Probability: 25%) – Negative Real U.S. GDP growth, less than +0.5% inflation and a decline in profits: Stocks drop by 13% to 17% over the next 12 to 18 months. S&P target is 1775.</em></li>
<li><em>Scenario #5: A Deep Recession (Probability: 15%) – Negative Real US GDP growth, deflation and a large drop in profits: Stocks drop by more than 20% over the next 12 to 18 months. S&P target is 1625.</em></li>
</ul>
<p><em>When I combined the scenarios' probabilities against my S&P targets for each scenario, I come to a "Fair Market Value" for the S&P at about 1995 compared to Friday's close of 2090 – a decline of about 5% from current levels.</em></p>
<p><em>--Kass Diary (August 2015)</em></p>
<p><em>My guess is that somewhere between Scenario Three and Four (above) is the most likely scenario for the economy and markets over the next six to nine months.</em></p>
<p><em>This would be consistent with my view that a broad and important market top was indeed put in place during the first six months of 2015.</em></p>
<p><em>I still see a "saw tooth" pattern lower as my baseline expectation.</em></p>
<p><em>However, some stocks and sectors -- many of which have been shattered in recent months and have already experienced a Bear Market -- are now moving towards reasonable value and more attractive buy levels.</em></p>
<p><em>As to the broader market: For now I prefer to pay heed to Warren Buffett's thoughts of waiting for the right pitch, as stated at the beginning of today's opening missive.</em></p>
<p><em>We can never pick (with certainty) where the market's drop will stop and it is unreasonable to expect to buy at the bottom.</em></p>
<p><em>Though it might be still too early to significantly raise long exposure as reward versus risk is still unattractive, I can envision a developing opportunity in the months ahead. For as The Oracle wrote, "Long ago, Ben Graham taught me that 'Price is what you pay; value is what you get.' Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."</em></p>
<p><em>There will be a time to go shopping as (stock) merchandise will likely be on sale over the next three to six mon</em>ths.</p>
<p>A number of conditions have been developing for a few months that have conspired and have formed a toxic cocktail that led to this week's risk aversion and market schmeissing.</p>
<p>Risk happens fast.</p>
<p>As some of these conditions were much different than the past events, during which selloffs were modest and contained, we should be concerned.</p>
<p>Below are the adverse developments that led to the sharp market drop -- and in italics is a look forward to possible outcomes over the balance of the year and into early 2016:</p>
<p><strong>1.) </strong><strong>Technical Deterioration</strong>: The first development that we have to be mindful of has been the narrowing market leadership and market divergences -- a consistent theme and concern of mine. Transports had already fallen despite lower oil, and, of course, cyclical (especially of an energy kind), commodities based companies and industrial stocks already had entered their own bear markets. The recent stunning upheaval in media stocks, threatened by fundamental business threats, has been a nail in the market's coffin this week and turned many great charts -- e.g., <strong>Disney </strong>(DIS) -- into very bad charts. The technical erosion has recently accelerated. As BTIG's Dan Greenhaus noted in his commentary last evening, "Among the S&P 500, nearly 30% of the index is now down 20% or more from respective 52- week highs ... while a staggering 57% of stocks are down 10% or more. Less than half the index is now above its 200-day moving average."</p>
<p><em>The bad news is that with many broken charts it will take time for a base building. The good news is that the decline in industrials and cyclical could be entering the final phase -- at least judged by the magnitude of the drops and what seems like a discounting of a global recession. A recovery in the stocks that are already in a Bear Market will be dependent upon global economic growth expectations</em>.</p>
<p><strong><em>2.) </em></strong><strong>The Increased Role of Momentum-Based Portfolio and Trading Strategies and ETFs</strong>: Trend-following strategies and leveraged ETFs took the market to new heights and are now taking the market to recent lows. They care not of balance sheets and income statements and are agnostic as to where value lies. They aren't greedy, don't panic and pain is unknown to them -- they simply accentuate and exaggerate market trends and direction.<em> </em></p>
<p><em>It is near to impossible to forecast when the quants reverse direction as they are totally dependent upon price momentum. As I have written, "Kill the Quants Before They Kill Our Markets."</em></p>
<p><strong>3.) </strong><strong>Widening Credit Spreads</strong>: Credit spreads widened dramatically. High yield has moved from about 225 over to 525 over Treasuries. We shouldn't lose sight that the investment-grade and high-yield markets have had record issuances in recent years and the substitution of debt for equity has been an important fuel for corporate share buybacks. That window of issuances -- or more costly issuances of debt -- have closed some of that window and was the basis for my "<a href="http://realmoneypro.thestreet.com/dougs-daily-diary?published[value][date]=2015-04-08#were-likely-app-20150408">Peak Buybacks</a>" thesis . </p>
<p><em>I suspect the widening of credit spreads will subside with greater confidence in global economic growth</em>.</p>
<p><strong><em>4.) </em></strong><strong>China, the Engine of Global Growth, Has Stalled</strong>: We didn't need another weak purchasing managers index (as <a href="http://www.theguardian.com/business/2015/aug/21/global-stocks-in-a-tailspin-as-chinese-factory-slump-drags-on-markets" target="_blank">was released</a> last night in China) to stoke concerns that an ongoing and sharp deceleration in the rate of growth in that region is at hand. And so is the speculative character of the Chinese stock market. Russia, Brazil and Venezuela are experiencing recession, and Greece, Italy and Spain are not far behind<em>.</em></p>
<p><em>In the case of China, that country has more tools to halt the economic slide --and I wouldn't be surprised if some "shock and awe" is introduced over the coming weekend. Other areas of concern around the globe are either doomed or will extend and pretend, but <a href="http://abcnews.go.com/Business/wireStory/eurozone-economy-resilient-face-greece-survey-shows-33222506" target="_blank">Europe's manufacturing data </a>last night could provide some relief</em>. </p>
<p><strong>5.) </strong><strong>Slowing Global Economic Growth Prospects</strong>: With overall global economic growth prospects diminishing, the chasm between the real economy and financial asset prices has grown ever wider. This led to this week's selling.</p>
<p><em>I remain concerned that global growth expectations are still too optimistic, but the consensus is now moving toward more realistic forecasts after being high for the last few years. Moreover, the sharp dive in commodities should, at some point, fuel an improved economy. </em></p>
<p><strong>6.) </strong><strong>Slowing Profit Prospects</strong>: Until recently the market has ignored a material lower revision in S&P earnings-per-share expectations for 2015 (from $134 a share to about $115 a share).</p>
<p><em>The good news is that most of the forecasters have now adjusted their expectations down to more reasonable levels. Investors are now paying less for growth (as described by <a href="http://realmoneypro.thestreet.com/articles/08/21/2015/symptoms-multiple-contraction-are-out-there">Jim "El Capitan" Cramer</a> this morning). And, while the commodities' schmeissing hurts some important components of the S&P, lower rates and lower commodities could sustain profit margins and profits.</em></p>
<p><strong>7.) </strong><strong>Confidence in Central Bankers Has Been Waning</strong>: Enough said.</p>
<p><em>The good news here is that, again, there is growing recognition that the Fed and its brethren have done all they can accomplish for now</em>.</p>
<p><strong>8.) </strong><strong>Bullish Investor Sentiment Had Moderated</strong>: Retail investors have consistently shed investments as outflows have continued.</p>
<p><em>While individual market enthusiasm has been muted, corporations (through buybacks) have taken up that slack. Retail investors will likely continue to shun stocks, but corporations should provide continued market support, albeit perhaps not as enthusiastically as in the past</em>.</p>
<p><strong>9.) </strong><strong>The Bull Market in Complacency Has Been in Full Force</strong>: Again, enough said.</p>
<p><em>Up until recently investors have been complacent-- as measure by a low volatility index -- but the recent market drop, which has been severe in many sectors, have increased the recognition that (1) not all dips are buys, and (2) that a larger correction is possible. The later was something not considered prior to this month. The good news is that the VIX rose by more than 25% yesterday as complacency has been attacked. The CNN Fear Index is back to 2009 levels. In other words, we are now seeing the early signposts of possible capitulation</em>.</p>
<p><strong>10.) </strong><strong>A U.S. Rate Rise is Imminent</strong>: Stop us if you've heard that one before.</p>
<p><em>The debate over Fed uncertainty has become a bit hyperbolic. My view is that the erosion in financial conditions coupled with current market chaos and uncertainty have provided the ammo for "<a href="http://realmoneypro.thestreet.com/dougs-daily-diary?published[value][date]=2015-08-11#ammo-for-one-an-20150811">one and done</a>" in December is in place. That's probably a good thing</em>.</p>
<p><strong>Bottom Line</strong></p>
<p>Where do we go from here? I am less than certain, and those with extreme and self-confident views are "<a href="http://realmoneypro.thestreet.com/dougs-daily-diary?published[value][date]=2015-08-04#attention-getter-20150804">attention getters, not money makers</a>."</p>
<p>While a lot of damage has occurred and some groups are likely close to bottoming, much will depend on the evolving economic data around the world in the time ahead.</p>
<p>As I have consistently written, the only certainty is the lack of certainty, and rarely have there been so many possible economic and market outcomes, many of which are aren't good. </p>
<p>On a more positive note, with the S&P flirting with 2000 we are already closing in on my Fair Market Value Calculation of 1995. Here is the basis of this calculation:</p>
<ul>
<li><em>Scenario #1: Economic Acceleration Above Consensus (Probability: +10%) – +3% Real U.S. GDP growth, +2.0% to +3.0% inflation and +8% to +12% profit growth. Stocks climb by 7.5% over the next 12 to 18 months. S&P target is 2245.</em></li>
<li><em>Scenario #2: Status Quo (Probability: 25%) – +2% to +3% Real U.S. GDP growth, +1.5% to +2.0% inflation and +5% to +9% profit growth. Stocks climb by 5% over the next 12 to 18 months. S&P target is 2195.</em></li>
<li><em>Scenario #3: Muddle Along (Probability: 25%) – +2% Real U.S. GDP growth, +1.5% inflation and +3% to +5% profit growth. Stocks climb by 0% to 5% over the next 12 to 18 months. S&P target is 2140.</em></li>
<li><em>Scenario #4: A Garden Variety Recession (Probability: 25%) – Negative Real U.S. GDP growth, less than +0.5% inflation and a decline in profits: Stocks drop by 13% to 17% over the next 12 to 18 months. S&P target is 1775.</em></li>
<li><em>Scenario #5: A Deep Recession (Probability: 15%) – Negative Real US GDP growth, deflation and a large drop in profits: Stocks drop by more than 20% over the next 12 to 18 months. S&P target is 1625.</em></li>
</ul>
<p><em>When I combined the scenarios' probabilities against my S&P targets for each scenario, I come to a "Fair Market Value" for the S&P at about 1995 compared to Friday's close of 2090 – a decline of about 5% from current levels</em>.</p>
<p>--Kass Diary (August 2015)</p>
<p>My guess is that somewhere between Scenario Three and Four (above) is the most likely scenario for the economy and markets over the next six to nine months.</p>
<p>This would be consistent with my view that a broad and important market top was indeed put in place during the first six months of 2015.</p>
<p>I still see a "saw tooth" pattern lower as my baseline expectation.</p>
<p>However, some stocks and sectors -- many of which have been shattered in recent months and have already experienced a Bear Market -- are now moving towards reasonable value and more attractive buy levels.</p>
<p>As to the broader market: For now I prefer to pay heed to Warren Buffett's thoughts of waiting for the right pitch, as stated at the beginning of today's opening missive.</p>
<p>We can never pick (with certainty) where the market's drop will stop and it is unreasonable to expect to buy at the bottom.</p>
<p>Though it might be still too early to significantly raise long exposure as reward versus risk is still unattractive, I can envision a developing opportunity in the months ahead. For as The Oracle wrote, "Long ago, Ben Graham taught me that 'Price is what you pay; value is what you get.' Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."</p>
<p>There will be a time to go shopping as (stock) merchandise will likely be on sale over the next three to six months.</p></div>TLT Signals Changing?http://stockbuz.ning.com/articles/tlt-signals-changing2015-08-02T21:25:45.000Z2015-08-02T21:25:45.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p style="margin-bottom: 1em;"><span style="font-family: Arial, sans-serif; font-size: 14px; line-height: 19px;">With the new Intermediate-<a style="color: #336699; text-decoration: underline;" target="_blank" href="http://stockchartscom.cmail1.com/t/r-l-fndydy-bjyittruk-yd/">Term Trend Model</a> (ITTM) BUY signal on TLT and the break out for second time above the March low, I decided it was definitely time to abort the bearish Adam and Eve double-top pattern that I have been watching in earnest. Instead, I'm now seeing a rounded bottom; also known as a saucer bottom, it is a reversal chart pattern representing a long period of consolidation that turns from a bearish bias to a bullish bias (ChartSchool article on Rounded Bottoms located <a style="color: #336699; text-decoration: underline;" target="_blank" href="http://stockchartscom.cmail1.com/t/r-l-fndydy-bjyittruk-yh/">here</a>). The <a style="color: #336699; text-decoration: underline;" target="_blank" href="http://stockchartscom.cmail1.com/t/r-l-fndydy-bjyittruk-yk/">Price Momentum Oscillator</a> (PMO) has also been making a case to move bullish on TLT, it has continued to rise and is now in positive territory. The <a style="color: #336699; text-decoration: underline;" target="_blank" href="http://stockchartscom.cmail1.com/t/r-l-fndydy-bjyittruk-yu/">SCTR</a> value is rising again and the <a style="color: #336699; text-decoration: underline;" target="_blank" href="http://stockchartscom.cmail1.com/t/r-l-fndydy-bjyittruk-jl/">On Balance Volume</a> (OBV) shows that volume is behind this move (thumbnail shows that best). The recent Long-Term <a style="color: #336699; text-decoration: underline;" target="_blank" href="http://stockchartscom.cmail1.com/t/r-l-fndydy-bjyittruk-jr/">Trend Model</a> (LTTM) SELL signal suggested the double-top would execute, but now it appears that signal is in jeopardy as the 50-EMA reaches out to crossover the 200-EMA.</span></p>
<p style="margin-bottom: 1em;"><a style="color: #336699; text-decoration: underline;" target="_blank" href="http://stockchartscom.cmail1.com/t/r-l-fndydy-bjyittruk-jy/"><img style="height: auto; line-height: 100%; outline-style: none; text-decoration: underline; display: block;" src="http://i7.cmail1.com/ei/r/C8/B21/2C6/025302/csimport/1438379293740904181984_16.png" /></a></p>
<p style="margin-bottom: 1em;">You can see the major double-top formation on the weekly chart, but we can also see that price has broken above the neckline which technically nullifies the pattern. The 17-EMA had a positive crossover the 43-EMA this week. The PMO bottomed which is always bullish. Had the double-top pattern fully executed, the minimum downside target was around $107.50. That could hold up as an area of support should price reverse, but at this point, I'm not looking for a serious decline. Price has only just popped above resistance, so a major decline could reintroduce the double-top pattern, but I believe the rounded bottom is going to override that possibility.</p>
<p style="margin-bottom: 1em;"><a style="color: #336699; text-decoration: underline;" target="_blank" href="http://stockchartscom.cmail1.com/t/r-l-fndydy-bjyittruk-jj/"><img style="height: auto; line-height: 100%; outline-style: none; text-decoration: underline; display: block;" src="http://i8.cmail1.com/ei/r/C8/B21/2C6/025302/csimport/14383793247931874991592_17.png" /></a></p>
<p style="margin-bottom: 1em;">The monthly PMO on the 30-Year Bond was ready to top in shorter-term overbought territory, but instead it turned up. It hasn't reached overbought extremes, so it could certainly back a longer rally.</p>
<p style="margin-bottom: 1em;"><a style="color: #336699; text-decoration: underline;" target="_blank" href="http://stockchartscom.cmail1.com/t/r-l-fndydy-bjyittruk-jt/"><img style="height: auto; line-height: 100%; outline-style: none; text-decoration: underline; display: block;" src="http://i9.cmail1.com/ei/r/C8/B21/2C6/025302/csimport/14383794050331031120533_18.png" /></a></p>
<p style="margin-bottom: 1em;"><strong>Conclusion:</strong> While the Adam and Eve double-top is still visible, the new rounded bottom pattern and the upside break above the neckline supersedes the bearish implications. A bearish outcome is possible as price has just barely closed above the old double-top neckline, but indicators and EMAs suggest otherwise.</p>
<p style="margin-bottom: 1em;"><em>Note:  If he's correct, what does this imply for equities in the near term?</em></p>
<p style="margin-bottom: 1em;">Courtesy of <a href="http://stockchartscom.cmail1.com/t/r-e-fndydy-bjyittruk-dl/" target="_blank">Erin Helm @ DecisionPoint</a></p>
</div>Market Pause. Would You Buy Here?http://stockbuz.ning.com/articles/market-pause-would-you-buy-here2015-06-08T16:07:05.000Z2015-06-08T16:07:05.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>With all of America's 401k's flowing into equities and with CNBC continually saying bonds are the worst trade around, one has to determine if continuing to buy here is the smartest way to go or take partials, roll up your stops and raise cash rather than buying this top.</p>
<p>Technically the monthly chart shows MACD posed to bear cross although the month is far from over. The bollinger band is flattening out which does not say to "buy" here but remain cautious and sit on hands.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291184?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291184?profile=RESIZE_1024x1024" width="750"></a></p>
<p></p>
<p>Here TLT for a quick glance at the monthly and yeah, it's still selling. Could see a temporary bounce (here or there) but overall, the trend is still down so equities (or cash) it is.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291253?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291253?profile=RESIZE_1024x1024" width="750"></a></p>
<p>I believe traders are taking profits at this fibonacci extension <em>ahead</em> of the June FOMC meeting and why not. The 10 year Treasury has been on a move and if the Fed doesn't raise (which most don't think it will) it can return to oversold and ramp up again before September.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291307?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291307?profile=RESIZE_1024x1024" width="750"></a>QE is over. I repeat; QE is over. The market must find a way to stand on it's own ahead of Fed tightening. Are we growing enough to sustain a rate hike w/o QE assistance? This makes you wonder...........idc what Jim Cramer says. (he is noise - not news)</p>
<p>We have not seen any 'failures' or widespread fear to make one believe a top is truly in. Yes Greece is a concern but on a scale of size, this represents a tiny blip on the world map. The largest overall effect would (imo) be confidence in the Euro but one must wonder, is it baked in at this point? Some fear that if Greece fails, is Italy next with their debt? Is the Euro ultimately set to fail? I personally have no concern over Italy's ability to meet it's debts however just this morning ECB's Ben Moyer said it would not pose a problem if Greece leaves the Euro, so go ahead and go. Exports in Italy simply are nowhere what (little) they are in Greece. Greece itself simply should not have been allowed in the Euro to begin with. It doesn't belong. I make jokes that Putin and friends should just go ahead and buy Greece but a great part of me truly believes that would be for the best. Don't tell the U.N. Just let it happen and look the other way. All is well and move on with your business.</p>
<p>The market, in the meantime, is looking for reasons to head higher amongst the obvious profit taking which is taking place. </p>
<p>I think the market is at a profit taking level and seeking a growth story to head higher. Will we find one <span style="text-decoration: underline;">now</span> or have to wait until September? Banks are one solid play but a pullback in the 10yr will cut that off at the neck. In the meantime, your 401k is busy pumping in and buying "here" but you have to ask yourself if it's the right thing to do. </p></div>Poised For Jobless Claimshttp://stockbuz.ning.com/articles/poised-for-jobless-claims2015-05-14T01:24:27.000Z2015-05-14T01:24:27.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291177?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1291177?profile=RESIZE_320x320" width="300"></a><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291213?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1291213?profile=RESIZE_320x320" width="300"></a>Ready for tomorrow's numbers, gold and IWM are ready to head either way. Utilities are sitting at support and banks are ready to scream up.</p>
<p>Higher-than-expected claim numbers will mean the economy is not as strong as we believed and the chances of a June rate hike will be off the table until September. </p>
<p>No support or resistance is broken so we'll wait for the numbers but isn't it grand; how the markets are not rigged. Sarcasm alert there. Good luck.</p></div>Not the monday you hoped forhttp://stockbuz.ning.com/articles/not-the-monday-you-hoped-for2015-04-28T00:51:31.000Z2015-04-28T00:51:31.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291234?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1291234?profile=RESIZE_1024x1024" width="750"></a>Damn ugly, especially the high volume selling in healthcare and biotech.</p></div>Bulls Must Be Patienthttp://stockbuz.ning.com/articles/bulls-must-be-patient2015-04-26T21:19:59.000Z2015-04-26T21:19:59.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>Things rising now are for the most part due to those (few) who see better earnings ahead, an earnings beat or rising on the struggling dollar........while peers get a definitely smaller bid....or none.  It's a struggle.  You'll notice more losing trades recently as markets are searching out the "good".  Some are talking recession (I don't buy that) while others struggle to find a way to get "through" the soft patch; waiting for 2016.  </p>
<p>In futures, volume has dropped off the cliff overnight.  It's amazing (and worth noting).</p>
<p>One things that's stood out for me is the increase in dividends and buybacks.  Yes, there's been an increase and <em>new ones</em> begun while O&G cut theirs.  Isn't it interesting how the market will do whatever it can to keep people in stocks.  Just sayin'.</p>
<p>AMZN is leading the Nasdaq with AAPL reporting this week but MRVL just announced a much <a href="http://www.thestreet.com/story/13126159/1/trade-ideas-marvell-technology-group-mrvl-is-todays-post-market-laggard-stock.html" target="_blank">lower 2015</a> than previously believed so computers seem a weak area.  Spot plays remain such as SNE who just raised their guidance again; second time in three months thanks to <a href="http://www.reuters.com/article/2015/04/25/us-sony-outlook-idUSKBN0NG04N20150425?feedType=RSS&feedName=businessNews" target="_blank">Playstation</a> sales   Pay attention to those tickers inside ETFs as sector leaders.  We need more of them to break higher on good news, or we fail.  Areas of curiosity are as follows:</p>
<ul>
<li>SMH is that a right shoulder just been capped?</li>
<li>IYT stopped at the 50d and 100d?  If I were a short, that's where I'd be selling.</li>
<li>Gold and silver:  In large H&ST?  Working on right shoulders now?</li>
</ul>
<p>Fact though is many are betting <em>against</em> the U.S. Dollar now.  Many such as <a href="http://www.gannglobal.com/webinar/2015/April/Webinar/15-04-23-GGF-Webinar-Recording.php?inf_contact_key=1b5e2d21b5c15d9e6b5fc475d7150979e5fa98617e83cfe6cecad693ab414384" target="_blank">GannGlobal</a> are praying the dollar continues to weaken - and they're betting on commodities to benefit.</p>
<p>The COT (Commitment of Trader) <a href="http://t.co/IXF4l7nGT9" target="_blank">in USD</a> reflects that speculators have been taking profits this month but large traders are (for the most part) still heavily long.  I imagine it just comes down to <em>how fast</em> we'll see improvements in economic numbers overseas.  It certainly will be interesting.</p>
<p>The market is forever looking <em>forward</em> for reasons to rise.  Are there enough?</p>
<p></p>
<p></p>
</div>Now Do You Believe? Sell In May Began Earlyhttp://stockbuz.ning.com/articles/now-do-you-believe-sell-in-may-began-early2015-04-18T22:26:50.000Z2015-04-18T22:26:50.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291220?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1291220?profile=RESIZE_1024x1024" width="750"></a>The majority of sector ETFs closed their week below their 50d with energy having filled the gap.....and found sellers waiting there.</p>
<p>SPX itself found sellers at $2100 (clearly we weren't the only ones selling) which is 17x earnings. More and more are <em>accepting</em> reality that earnings have dropped the most in six years and the Fed (with no QE) will most likely begin to slowly raise interest rates in September. Don't believe me, just ask <a href="http://www.newsmax.com/Finance/StreetTalk/Barclays-earnings-S-P-500-estimates/2015/04/17/id/639210/" target="_blank">Barclays.</a></p>
<ul>
<li>US dollar found buyers at the 10week sma, prior support. Yes, they're taking profits. Will it continue? It's nonetheless <em>weighing</em> on U.S. earnings.</li>
<li><a href="http://news.yahoo.com/asian-shares-fresh-seven-high-look-past-weak-003907668.html" target="_blank">China</a> allowed further stocks to be shorted and talked of tightening margin lending. They hit the sell button.</li>
<li>Utilities are being held by their 50d - won't raise much if rates are going up.</li>
<li>Transports are being held by their 20d bu the 50d is just overhead; waiting.</li>
<li>For months money has been flowing into overseas markets searching for yield.</li>
<li>Not to Greece though (although Putin lent them $5B this morning)</li>
</ul>
<p>Well hopefully you didn't buy the top or if you do, you're using Calls rather than common (lose less is wrong).</p>
<p>Bottom line if you're a fund manager, May is right around the corner. Do you want to wait around?</p>
<p>I truly feel we are in the beginning of a solid correction and if you're not hedged, I hope you have raised your cash level. </p></div>Diamond Top In Small Capshttp://stockbuz.ning.com/articles/diamond-top-in-small-caps2015-01-29T16:03:27.000Z2015-01-29T16:03:27.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291153?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1291153?profile=RESIZE_1024x1024" height="296" width="750"></a>As discussed yesterday in Chat, small caps appear to be forming a diamond which can represent a "top" or merely taking a rest or consolidation before resuming it's trek higher.</p>
<p>Theory is to trade the direction of the break higher or lower. IWM would work for a bullish breakout and TWM for a bearish break down for those who are unable to short.</p>
<p>fwiw we <a href="http://stockbuz.net/charts/long-inverse-shorting-small-caps" target="_self">recently traded TWM</a> on market weakness. Looks as though it may be setting up again.</p>
<p>For more information on diamonds, I would suggest you browse through Thomas Bulkowski's pages at <a href="http://thepatternsite.com" target="_blank">ThePatternSite.</a></p>
<p>For a technical analysis trader or investor, you need to be able to <em>properly</em> identify stock patterns his book <a href="http://www.amazon.com/s/ref=nb_sb_ss_fb_1_21?url=search-alias%3Dstripbooks&field-keywords=encyclopedia%20of%20stock%20patterns&sprefix=encyclopedia+of+stock%2Cdigital-text%2C247" target="_blank">Encyclopedia of Stock Patterns</a> is a must have.</p></div>Breakouts vs. Breakdownshttp://stockbuz.ning.com/articles/breakouts-vs-breakdowns2014-12-21T16:47:49.000Z2014-12-21T16:47:49.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291048?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1291048?profile=RESIZE_320x320" width="300"></a>According to <a href="http://btigresearch.com" target="_blank">BTIG Research</a>, there remains cause to be concerned after the stock market's bounce last week.</p>
<blockquote>
<p>For the first time since the October low, breakdowns have outnumbered breakouts. This is a byproduct of the 5% pullback in the SPX over the past two weeks, which naturally saw some stocks break support levels. We are inclined to worry about breakdowns when they are abundant (at least 10% of the SPX, more than this time around) and recurrent (outnumbering breakouts for at least 2-3 weeks).</p>
<p>This last occurred in October, when the market suffered deterioration in breadth that was significant enough to suggest a structural shift may be underway. For this reason, we would be inclined to use strength to sell stocks that previously broke down or stocks that have exhibited weak relative strength.</p>
</blockquote>
<p>Looking closer at a few of the internals: A 5-year weekly chart of T2107, or stocks which are above their 200d SMA, has made a lower high and appear to be rolling over again - almost as if it tested overhead resistance and failed before even reaching the overbought territory (if technical analysis were to actually work on such a study). </p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291086?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1291086?profile=RESIZE_320x320" width="300"></a>Breadth however has turned back up on a <a href="https://dwq4do82y8xi7.cloudfront.net/x/hmglw5Nu/" target="_blank">daily chart</a> and the Dow Jones Industrials (right) bounced off of it's 38.2% fibonacci level (a good sign the high will be challenged ahead) so it would seem that Santa Claus is indeed on his way.</p>
<p>Clearly the next two weeks (Christmas/New Years) will be important and volume is will be low as fund Managers are on vacation. Do we break higher on low holiday volume, hold in a range or (heaven forbid) do we drift lower? Will Europe/Asia be buying overnight or no? The historic bias on low volume is definitely to the upside and algos will be set to auto pilot so barring any shocking geopolitical news, we should be just fine..</p>
<p>What traders and firms such as BTIG will do now is short names which have made lower highs on any move higher in strength. Generally at overhead 50d moving average, 200d moving average or past support, now turned resistance. I would imagine this will be the case, <em>especially </em>in oil & gas (or related) names.</p>
<p>I have been recommending that any long positions initiated, doing so with Calls rather than common shares in order to lessen any losses given the age of this five (almost six) year bull run. The Santa Claus rally may have begun, but that doesn't mean <em>some</em> names won't fail at a higher level. Best of luck-</p>
<p>Per BTIG:</p>
<p>Breakouts: BK, CVS, ETR, OMC, SPLS, WAG, WDC<br> Breakdowns: CAT, CCI, CNP, COF, CTXS, CVX, DOV, DTV, ECL, EXPD, FLR, GCI, GOOG, GOOGL, HOG, IBM, JEC, JOY, KO, MCD, MET, MLM, NFLX*, NUE, OKE, OXY, PBI, PM, PSX, QEP, RRC, T, VZ, WIN, WMB</p>
<p>*Full disclosure I do have some short positions however not in any of the names mentioned in this article with the exception of NFLX as <a href="http://stockbuz.net/articles/roasted-nflx" target="_self">recommended here</a>.</p></div>It's Not A Bullish Engulfing Quite Yethttp://stockbuz.ning.com/articles/it-s-not-a-bullish-engulfing-quite-yet2014-12-16T17:28:31.000Z2014-12-16T17:28:31.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_blank" href="http://d.stockcharts.com/school/data/media/chart_school/chart_analysis/candlestick_bullish_reversal_patterns/bullrev2-bulleng-sunw.png"><img class="align-right" src="http://d.stockcharts.com/school/data/media/chart_school/chart_analysis/candlestick_bullish_reversal_patterns/bullrev2-bulleng-sunw.png?width=300" width="300" /></a>I should have titled this "counting your chickens before they're hatched".  Anyway, a few words on bullish engulfing candles, the term of which is being bandied about a great deal today.  But don't count your chickens.  Just because price took out a high and a low, does NOT a bullish engulfing make.  It's also unwise to call something a engulfing or any other pattern when the trading day is not yet over.  As explained by <a href="http://stockcharts.com/school/doku.php?st=bullish+engulfing&id=chart_school:chart_analysis:candlestick_bullish_reversal_patterns" target="_blank">stockcharts.com</a></p>
<blockquote>
<p>The <span class="search_hit">bullish engulfing</span> pattern consists of two candlesticks, the first black and the second white. The size of the black candlestick is not that important, but it should not be a  Djoi which would be relatively easy to engulf. The <span style="text-decoration: underline;"><strong>second should be a long white candlestick</strong></span> – the bigger it is, the more bullish. The <span style="text-decoration: underline;"><strong>white body must totally engulf the body of the first black candlestick.</strong></span> Ideally, though not necessarily, the white body would engulf the shadows as well. Although shadows are permitted, they are usually small or nonexistent on both candlesticks.</p>
<p>After a decline, the second white candlestick begins to form when selling pressure causes the security to open below the previous close. Buyers step in after the open and push prices above the previous open for a strong finish and potential short-term reversal. <strong>Generally, the larger the white candlestick and the greater the engulfing, the more bullish the reversal.</strong> Further strength is required to provide bullish confirmation of this reversal pattern.</p>
</blockquote>
<p>We are seeing some short covering today in crude oil ahead of tomorrow's inventory report.  I myself am taking partials in various short positions and checking my cover stop alerts but do not go all in on a bullish engulfing when the day is not over.  Even if the candle engulfs the prior days body by the close, these candles still require confirmation tomorrow.  Has the macro environment changed in any way?  Even if markets confirm tomorrow, this could all just be a back fill opportunity to add to shorts at a higher level.  Be patient.  If you buy, buy calls and limit your risk.  I don't hear any fat lady singing yet.</p>
</div>Bullish on Small Capshttp://stockbuz.ning.com/articles/bullish-on-small-caps2014-12-08T02:13:01.000Z2014-12-08T02:13:01.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291011?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1291011?profile=RESIZE_480x480" width="375"></a>In early October, I pointed out that the Russell 2000 (IWM or $RUT) could be forming a bullish butterfly pattern, having found buyers off of the 20month SMA. (<a href="http://stockbuz.net/articles/small-cap-bullish-butterfly?" target="_self">See here</a>) </p>
<p>Well so far so good and I'm calling it's recent consolidation a bull "flag" due to no significant breakdown in the other three indexes, nor semiconductors.</p>
<p>Friday we saw banks and broker/dealers make a nice reversal higher after comments were made, that while the ECB is not easing "now", they will be preparing a QE plan for their January meeting. The U.S. 10 year popped and the banks/brokers followed in suit.</p>
<p>Small caps also typically outperform large caps going into the end of the year. While the stronger US dollar may weigh on them longer term, I still believe Santa will not leave them off his "nice list" this holiday season.</p>
<p>While much of the equity market is extended, banks still have room to run and I feel small caps will rip to the upside and I hope to see them lead. My next $RUT target $1300. Stop below the 200d. </p>
<p>Conversely if you can grab VIX below $11, it is almost too tempting to pass up. It's extremely cheap protection............just food for thought.</p>
<p></p>
<div style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;"></div></div>Guilty Until Proven Innocenthttp://stockbuz.ning.com/articles/guilty-until-proven-innocent2014-10-17T20:51:03.000Z2014-10-17T20:51:03.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>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 <em>falling</em> 20d, which to many, represents sellers there.</p>
<p>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.?</p>
<p>The ECB announced they will begin their <a href="http://news.yahoo.com/ecb-begin-asset-purchases-within-days-board-member-185114529.html" target="_blank">asset purchase program</a> much sooner than expected after a raft of grim eurozone data this week alarmed financial markets and placed both Germany's doctrine of budgetary rigour and the ECB's monetary policy in the hot seat. While this may help American multinationals with exposure to the EU, it definitely does not help small caps, 80% of which have no European exposure. Small caps may not able to weather a strong U.S. dollar as easily as their larger cousins either. This may be why the Russell 2000 saw weakness again today but small caps are also a barometer for overall risk appetite itself. Is the market selling over or merely back filling so the shorts can re-load at higher levels? That's what I would do.<a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290949?profile=original"><img class="align-center" src="http://storage.ning.com/topology/rest/1.0/file/get/1290949?profile=RESIZE_1024x1024" width="750"></a>As I said, I feel the market is guilty until proven innocent. While $RUT and the Dow have tried to bounce off their 20m (a nice place to buy) we still have a good deal of geopolitical headline risk with Isis, Russia/Ukraine tensions, North Korea's Kim Jong Un's mysterious disappearance from public view, China's (and Europe's) slowdown to contend with and of course Ebola nagging in the background. Let's not forget 3Q earnings which have kicked off and 4Q guidance. Many concerns circle the retail and consumer discretionary area. Is the consumer tapped out here? </p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291007?profile=original"><img class="align-center" src="http://storage.ning.com/topology/rest/1.0/file/get/1291007?profile=RESIZE_1024x1024" width="750"></a></p>
<p>Clearly Wednesday's low must hold. SPX et al closing above the 50% retracement level would have me raising an eyebrow. Closing above the 78.6% and I'll bet you a steak dinner we challenge the market highs. It is entirely possible we are merely carving out a wide trading range and will resolve matters via time rather than price. While I nibbled on a few longs this week, I've hedged both. I'd rather be right and lose a little with worthless puts, than be fully exposed and have face ripped off.</p>
<p>Note: I will be out of office until Thursday, October 23rd. Intentionally leaving my laptop at home. If you experience a problem, you may contact me @ mrsbuz1@aol.com</p></div>Is It A Correction Or Bear Market?http://stockbuz.ning.com/articles/is-it-a-correction-or-bear-market2014-10-16T15:14:53.000Z2014-10-16T15:14:53.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>“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.</p>
<p>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 <em>cheap</em> and define their risk.</p>
<p>For me, I consider the monthly 20 SMA as you can see from my <a href="http://t.co/2jdRIMma1h" target="_blank">prior post on the subject here</a>.</p>
<p>If only a correction, one would want to see SPX bounce off of the 20month or (the line in the sand) the prior correction low to HOLD. If that prior correction low were to break, all bets are off as volume spikes and we’ve entered a Bear Market. Again, remember we're talking a <strong><span style="text-decoration: underline;">monthly chart</span></strong> here and not a daily or weekly.</p>
<p>The ensuing Bear market sell off is wicked fast and generally lasts only a few months. Stock market bubbles and crisis'............well that's a horse of a different color. In a Bear market however you'll still see rallies. They are not a signal that all is well. Rallies are swift and sharp back up to resistance where you re-load your shorts and define risk above the 20month as your cover point. I've provided a few charts so you get the idea of my theory.</p>
<p>Are we in a Bear market now? No one knows Dorothy (ignore what they say on "entertainment" news television but if you want to dip a toe, I wouldn’t do it until we reach the 20month OR retrace 78.6% of the prior drop. I don’t need to catch a bottom……….but I also don’t need my face ripped off by volatility.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290966?profile=original"><img class="align-center" src="http://storage.ning.com/topology/rest/1.0/file/get/1290966?profile=RESIZE_1024x1024" width="750"></a></p>
<p>You will notice that I have two different 20month SMA's on the chart. One is based on the "close" and the other based on the "low" of the candle. Of course there are anomalies where the 20month did not hold such as the fear sell off in 2012 when Greece was rioting and there were concerns the taper. Operation Twist was magically announced and all was well. Regardless it is of note that <strong>the prior correction low was <span style="text-decoration: underline;">never</span> violated.</strong> Fed to the rescue. No bear market. <a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290995?profile=original"><img class="align-center" src="http://storage.ning.com/topology/rest/1.0/file/get/1290995?profile=RESIZE_1024x1024" width="750"></a></p>
<p>This is important as you see an enormous volume spike as the prior correction low was taken out. Guess who had their stops there. Yep - big money. Now the 20month SMA (either based off the low or the close) has become resistance. Hang on to your hats. <a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291021?profile=original"><img class="align-center" src="http://storage.ning.com/topology/rest/1.0/file/get/1291021?profile=RESIZE_1024x1024" width="750"></a></p></div>Roasted NFLXhttp://stockbuz.ning.com/articles/roasted-nflx2014-10-15T20:10:19.000Z2014-10-15T20:10:19.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>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 along side AMZN and others and well, it all equals = 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?</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290943?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290943?profile=RESIZE_1024x1024" width="500"></a><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290968?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290968?profile=RESIZE_1024x1024" width="500"></a></p></div>S&P500 Monthly Supportshttp://stockbuz.ning.com/articles/s-p500-monthly-supports2014-10-12T20:38:26.000Z2014-10-12T20:38:26.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>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'.</p>
<p>The 20m (off the low) then became overhead resistance. </p>
<p>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?</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290953?profile=original"><img class="align-center" src="http://storage.ning.com/topology/rest/1.0/file/get/1290926?profile=RESIZE_1024x1024" width="750"></a></p></div>Small Cap Bullish Butterfly?http://stockbuz.ning.com/articles/small-cap-bullish-butterfly2014-10-02T14:06:46.000Z2014-10-02T14:06:46.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290883?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290883?profile=original" width="275"></a><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290900?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290900?profile=RESIZE_480x480" width="375"></a>We've all watching the weakness unfold in small caps and I would question whether it is truly weakness or has merely been consolidating after running too far, too quickly. One distinct possibility is that it has now formed a bullish butterfly as shown right (click image to enlarge).</p>
<p>The measurements using a fat crayola are there, although butterfly patterns <em>can</em> extend down to a 161.8% extension so further downside would not void the possibility. It would merely wash out all weak hands by taking out the low before reversing.</p>
<p>If so, here is your entry to get long with risk being very limited with a stop (alert) below the lows......along with everyone else's.</p>
<p>I would point out that even though everyone has wondered if small caps divergence from it's large caps brothers, there are no negative divergences really when it comes to indicators. If it were bearish, one would expect to <em>see</em> bearish divergences indicating a further decline. </p>
<p>We are not witnessing that in small caps. I am all about buying at supports and limiting risk. Lord only knows the market loves to do exactly what you don't expect. While I am long TWM as a hedge, I cannot ignore this as a possibility for IWM to get back into the bullish longer term trend.</p>
<p></p>
<p></p></div>Divergence Continueshttp://stockbuz.ning.com/articles/divergence-continues2014-09-26T01:19:13.000Z2014-09-26T01:19:13.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290887?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290887?profile=RESIZE_480x480" width="375"></a> Pick any one of 10 difference reasons; does it really matter?</p>
<ul>
<li>Autumnal solstice</li>
<li>End of quarter</li>
<li>End of fiscal year</li>
<li>Rosh Hashanah</li>
<li><a href="http://www.mainstreet.com/article/if-smart-money-is-exiting-hedge-funds-why-are-you-still-hanging-on" target="_blank">CALPERS</a> beginning to liquidate hedge fund positions</li>
<li>Curreny-related pressures</li>
<li>Concern over weak earnings</li>
<li>Weaker China growth</li>
<li>Russia's <a href="http://www.reuters.com/article/2014/09/25/us-russia-sanctions-law-idUSKCN0HK1EO20140925" target="_blank">asset seizure</a> proposal</li>
<li>EU growth concerns</li>
<li>China's <a href="http://www.bloomberg.com/news/2014-09-25/china-foreign-exchange-watchdog-finds-10-billion-in-fake-trade.html" target="_blank">$10 in Biliion</a> bogus trades</li>
<li>QE taper</li>
<li>Plain old valuation (nah, it's never that)</li>
</ul>
<p>It is what it is. (Click chart to enlarge) </p>
<p>Small caps are definitely looking at the edge of a descending triangle. Long TWM was recommended on <a href="http://stockbuz.net/charts/twm-1" target="_self">this chart.</a></p>
<p><a href="http://stockbuz.net/articles/spx-breadth-is-the-problem" target="_self">As warned previously</a>, SPX has now broken $1979. I have a sell signal in SPX. Instead of buy the dips, I will be selling the rips with cover stop (alert) above $2003.00. Be hedged or stay on the sidelines until after October 5th. Work on your watch list of names you would like to buy. Determine entry and exit points. It's about time we got more than a 2-3% pullback.</p>
<p>If the stronger dollar persists, this will weigh on multi nationals. Small caps will (in the long run) not be as affected as the majority do not reap much from overseas sales. More to come......</p>
<p></p></div>Rosh Hashanah Tradinghttp://stockbuz.ning.com/articles/rosh-hashanah-trading2014-09-24T14:31:52.000Z2014-09-24T14:31:52.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290912?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290912?profile=original" width="392"></a>The weeks between Rosh Hashanah (which begins tonight at dusk) and Yom Kippur (October 4th) can be volatile ones with some traders taking time away from their desk to be at home with family and lower trading volumes exhibit themselves as a result.</p>
<p>While the old saying goes "<em>never short a dull market</em>", low volume tends to be bullish BUT there could also be a problem if there's no underlying bid, or bids are being lowered on a continual basis.</p>
<p>As of this moment, the September low is being tested; bears hoping to trigger stops below $1979 which would issue a wave of further selling.</p>
<p>It's important to understand the dynamics behind the candles on the screen, where stops lie and how the market has traded historically. Be nimble or sit it out.</p>
<p>Data courtesy of the <a href="http://stocktradersalmanac.com" target="_blank">Stocktradersalmanac</a></p>
<p> </p>
<p></p></div>SPX Breadth Is The Problemhttp://stockbuz.ning.com/articles/spx-breadth-is-the-problem2014-09-23T23:20:07.000Z2014-09-23T23:20:07.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><em>Edited 9/24/14 7:40am</em></p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290875?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290875?profile=RESIZE_480x480" width="375"></a>Market breadth has deteriorated badly once again. In fact, breadth hasn't been strong for several months (since early July). Even last Friday, when the market gapped higher on the Alibaba (BABA) mania, breadth was negative — a divergence that proved to be significant so far this week. Cumulative breadth has been a problem since July. Were market makers (MM) merely propping up the market until the IPO went off? Surely a market selloff leading up the launch could risk Alibaba founder Jack Ma to possibly post pone the event; a smear the market wouldn't want to face (not to mention unhappy investors).</p>
<p>I'm sure <a href="http://www.bloomberg.com/news/2014-09-21/lew-says-treasury-completing-work-on-limiting-inversions-benefit.html" target="_blank">Jack Lew's</a> comments at the G20 summit that he is pursuing methods to curb tax inversions (and soon) along with funds approaching end of their fiscal year is not helping matters. </p>
<p>Cyclicals (XLY) and consumer staples (XLP) experienced big selling today; the former closing below it's 50d. Retail (XRT) also closed below the 50d; filling the August gap however it did not find buy orders there; rather closing on the lows. Not an encouraging sign.</p>
<p>Energy (XLE) has been no help as it follows other commodities (now in bear markets) lower, now at its 200d.</p>
<p>Small caps ($RUT) decisively broke lower trend line support. As mentioned Friday, VXX long has been a good hedge as well as TWM hedge posted yesterday.</p>
<p>On July 3, both SPX and the “stocks only” cumulative breadth line made new all-time highs together. Since then, SPX has gone on to close at new all-time highs another nine times, but cumulative breadth hasn't made any new highs. Thus a negative divergence exists here, and while the timing of such divergences as sell signals is somewhat vague, the importance isn't — this is generally the sign of a major top if it continues to persist. We treat it this way: If SPX breaks major support ($1979) while this negative divergence is in place, one should allow for the possibility that any correction could be a severe one. My cover stop (alert) would be a little over a 50% retracement of this sell off, or $2003.50ish.</p></div>Small Capshttp://stockbuz.ning.com/articles/small-caps2014-09-22T17:33:55.000Z2014-09-22T17:33:55.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290885?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290885?profile=RESIZE_480x480" width="375"></a><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290919?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290919?profile=original" height="177" width="133"></a>Small caps have been the 800 pound gorilla in the room as the Dow achieved a new all time high. A stronger dollar would certainly have more of an impact on them of course as they tend not to have the cash reserves of their larger mid-cap and large cap cousins. Lack of growth in the EU and China certainly do not help matters.</p>
<p>What some pose as a possible double top, could also be a bullish butterfly pattern beginning to emerge. It's downside target would coincide quite nicely with it's rising 200 week simply moving average.*and* keep it within it's long term channel since the 2009 low (a buying opportunity) and then the reversal would kick in as the market would reverse (trapping shorts) and resume it's move upward.</p>
<p>BTW one must note that no support has truly broken yet. It is entirely possible tomorrows opening drive low is bought and we begin to ramp up once again. Just pointing that out.</p>
<p>The inverse ETF, $TWM, is nearing triangle resistance, which if broke, would give it a target of $53-55 initially. </p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290961?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290961?profile=RESIZE_480x480" width="375"></a><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290984?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1290984?profile=RESIZE_480x480" width="375"></a>What is also interesting is that TWM volume in 2014 has been larger than at any time since the ETF's inception. Even heavier than with the correction in 2011. Funds hedging their bets in large size? I wouldn't be surprised.....</p>
<p>Just a thought. Only time will tell.</p>
<p></p>
<p></p></div>If The 10 Year Were A Stockhttp://stockbuz.ning.com/articles/if-the-10-year-were-a-stock2014-09-12T14:26:34.000Z2014-09-12T14:26:34.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290893?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290893?profile=RESIZE_1024x1024" width="562"></a>I'd be trading this bad boy to the long side. In this seven year weekly chart, not only has it broken my three trend line rule, there was positive MACD convergence (as shorts began to massively cover) and the 200week SMA which was prior resistance, has now become support. </p>
<p>It certainly appears that the "low" in low rates was in in 2013.</p>
<p>I should also note that the monthly chart is deeply oversold. At some point, you simply run out of sellers.</p>
<p>I've long said that when in mortgage banking, we watched the 10yr. each week for direction of rates and we completely ignored the Fed raising or lowering rates. They were a laggard; the 10yr was already there.</p>
<p>Yep. If this were a stock, I'd be trading it long, buying at support or out of the short side completely. Maybe not expecting anything spectacular in terms of upside but ROC would indicate no heavy selling; short covering more than anything else. </p>
<p>I believe we've entered the phase in our bull market where "good news" is now bad news to the market; as a reinforcement that QE will no longer be extended and the market has to sink or swim without their safety "floaties". Major gains have been made in the last five years. Take profits, do not trade unless you're nimble and wait for some major support to come in. </p>
<p>The dollar strength, with Russian sanctions and Scottish election (to determine if they leave the UK) approaching next week, should buoy it for the time being. September is the end of fiscal year for most funds. Again they'll be taking SPX (and bond) profits and shifting allocations. </p>
<p>I see no reason to be a super hero. Some names may pop and that's great but why risk it? We will see support at some point. Just how low we go is anyone's guess. No one has that answer. I've taken profits in many names and will sit back and wait.............for good, low risk entries.</p></div>Shipping Rates Increase; $BDI Wedge Breakouthttp://stockbuz.ning.com/articles/shipping-rates-increase-bdi-wedge-breakout2014-08-18T14:50:50.000Z2014-08-18T14:50:50.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290826?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290826?profile=RESIZE_320x320" width="312"></a></p>
<p>Having felt that BDI had bottomed and recommended accumulation <a href="http://stockbuz.net/articles/light-at-the-end-of-the-tunnel-for-shippers?context=tag-shippers" target="_self">here</a>, <a href="http://stockbuz.ning.com/profiles/blogs/light-at-the-end-of-the-tunnel-for-shippers" target="_blank">here</a> and <a href="http://stockbuz.net/articles/rising-from-the-ashes-bdi?context=tag-shippers" target="_self">here</a> it appears that $BDI came back and tested prior breakout support. Certainly a not unexpected move. Now, breaking out of a falling wedge, I would imaging that lower area to be tested once more where I will add further to my position in the belief that the bottom is still in and they're finally able to increase rates.</p>
<ul>
<li>Drybulk shipping rates <a href="http://www.dryships.com/pages/report.asp" target="_blank">continue to move higher</a>, adding to last week's run as iron ore shipments out of Brazil and Australia pick up.</li>
<li>On Friday, drybulk rates as measured by the Baltic Dry Index rose 7.7%, capping a 31% gain for the week driven by strength across the board but mainly in Capesize and Panamax rates.</li>
<li>After beginning its ascent on July 23, the BDI has jumped 40%, rising in every session except one.</li>
<li>Last week, Capesize rates surged 65% to $15,561/day, Panamax rates climbed 29% to $6,397/day, and Supramax rates added 9% to $9,170/day. (courtesy of <a href="http://seekingalpha.com" target="_blank">S/A</a>)</li>
</ul>
<p></p>
<p>Full disclosure: Long $NAT as a drawer stock</p>
<p></p></div>Sector Red Flagshttp://stockbuz.ning.com/articles/sector-red-flags2014-07-29T19:08:23.000Z2014-07-29T19:08:23.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>A few areas of concern are beginning to display in the consumer discretionary, consumer staples and industrial sectors. We can point a finger at Russian sanctions, an overextended market, the Fed removing the punch bowl or maybe the consumer is simply tapped out but I think we all would agree, a decent correction certainly would be welcomed as an overdue buying opportunity.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290870?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1290870?profile=RESIZE_1024x1024" width="750"></a></p></div>Possible Small Cap Double Tophttp://stockbuz.ning.com/articles/possible-small-cap-double-top2014-07-10T15:01:23.000Z2014-07-10T15:01:23.000ZKoshttp://stockbuz.ning.com/members/Kos<div><p>Some technicians draw with a wide crayon but when I see <em>exact</em> touches in a pattern, I feel it adds to it's validity. Such is the case in IWM (daily and weekly shown). The chart is simple to understand and we <em>may</em> simply be carving out a consolidation or trading range during these Summer doldrums however if lower support breaks with volume, then watch out. Click chart to enlarge.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290796?profile=original"><img class="align-center" src="http://storage.ning.com/topology/rest/1.0/file/get/1290796?profile=RESIZE_1024x1024" width="750"></a></p></div>Hedges? We Don't Need No Stinkin' Hedges on Alcoahttp://stockbuz.ning.com/articles/hedges-we-don-t-need-no-stinkin-hedges-on-alcoa2014-07-08T20:23:56.000Z2014-07-08T20:23:56.000ZKoshttp://stockbuz.ning.com/members/Kos<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290768?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290768?profile=RESIZE_1024x1024" width="750"></a>Since recommending $AA in July 2013, we now stand up 80% and feel no reason for a hedge going into earnings. We've taken partials along they way at fibonacci levels and would actually welcome a solid correction in the name to add back to our stock position near $10-11. Hedges? pfft!</p></div>