Analysis Topic: Stock & Financial Markets
The analysis published under this topic are as follows.
Wednesday, May 19, 2021
Stock Market Same Old Song and Dance – Almost / Stock-Markets / Stock Market 2021
By: Monica_Kingsley
Pendulum keeps swinging back into the S&P 500 bullish camp, as the Nasdaq rebound was mightily aided by rising long-dated Treasuries while value couldn‘t care less about their direction. Just as sharply the VIX rose, that steeply it retreated over the past two days, hinting that stocks are returning back to the old normal, which means about to go upwards. Option traders didn‘t agree that profoundly, but they aren‘t sending a trustworthy warning sign.
I care more about corporate bond markets returning to life, and the retreating yields once the less alarming nature of Thursday‘s PPI has been digested. The transitory inflation story got modestly supported, but while I think that the red hot CPI inflation would die down a little (i.e. not keep rising ever as steeply as was the case with Wednesday‘s data) once the year on year base to compare it against normalizes, a permanently elevated plateau of high and rising inflation would be a reality for more than foreseeable future simply because the Fed would be as behind as Arthur Burns was in fighting the 1970s inflation, and upward price pressures in the job market pressures would kick in.
Given though the mammoth scale of money printing and fiscal injections that surely has the bond vigilantes rolling in their graves, it‘s miraculous that the bond markets aren‘t revolting more, much more. Okay, you may look at it as that the 10-year Treasury yield has more than tripled since August, but the low base (0.5% rate) is distorting the view. Plenty of room still before financial repression enters stage right even more noticeably (we are nowhere near the panic yield levels causing genuine hardship for the S&P 500), but we have time – I am looking for a reprieve in the Treasuries markets, which would help especially the tech sector recovery.
Tuesday, May 18, 2021
Are Apple, Tesla, and Bitcoin Entering Market Technical Excess Top Phase? / Stock-Markets / Financial Markets 2021
By: Chris_Vermeulen
In the first part of this research series, I highlighted the broad market cycles and what technical analysts call the “Excess Phase Top” process, which usually takes place after the market’s peak and set up a downward price trend. There are a number of technical setups that take place throughout this process. Today, I will be exploring the charts of Tesla (TSLA), Apple (AAPL), and Bitcoin (BTC) to see where they are in the process.
The suggestion I am making by highlighting these market trends and setups is that a Cash Position is a viable allocation of capital away from risks and losses. Many traders don’t view a cash position as a properly allocated use of capital. We believe taking a cash position at the right times can and does provide very clear benefits, including:
- Eliminating risks of further losses/drawdowns.
- Setting up a process of protecting cash and waiting for a confirmed re-entry trigger.
- Avoiding the failure of buying into a declining market – which is one of the biggest faults of active traders.
- Using the Cash position as a hedge against shifting currency/market valuations.
Remember, in many cases, broad market downtrends are often associated with bigger trends in currencies and global market sectors. Chasing these trends can lead to further risks if you are not careful and skilled in your trading decisions. Keeping your capital in a Cash Allocation/Position is often the easiest and safest way for you to ride out volatile downside price trends and allows you to re-deploy your cash into new trades when the time is right.
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Monday, May 17, 2021
Stock Market - Should You Be In Cash Right Now? / Stock-Markets / Stock Market 2021
By: Chris_Vermeulen
Sometimes there are very clear advantages to being in an all-cash position and avoiding the risks in the US/Global markets. For example, you should consider cash as a position when the markets begin to execute a broad market consolidation pattern that often results in many weeks or months of sideways, choppy price activity. You should also consider going to cash when a bigger shift in market trends takes place, putting your account at real risk should there be a 20% to 30%+ downside price trend setting up. Moving your assets away from these risks and into cash as early as possible can save thousands of dollars in unwanted – and worse yet totally avoidable – losses.
I know the rules of the game, and how everyone always says “it is better to ride out the trends and buy into the dips in the long run”. Well, we believe there is a better way to approach these bigger market trends that do not include riding out massive downside price trends – watching our wealth melt away as the markets collapse. We believe the purpose of actively managing your investments/trades should include a “cash position” as an active instrument in your portfolio. Why? Because moving your assets away from risks and into a cash position can often create a major advantage for all types of investors. We will get into more detail about this later.
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Sunday, May 16, 2021
Is Stock Market Selling Madness About Over? / Stock-Markets / Stock Market 2021
By: Monica_Kingsley
The inflation scare amplified by CPI data has died down yesterday a little. Buying returned into the S&P 500, lifting Nasdaq ever so little too. VIX steeply rejected moving higher, and looks ready to decline today, but the put/call ratio doesn‘t share the optimism as obviously the bearish scenarios, powered by the inflation scare forcing a deflationary outcome in an overleveraged financial system is emboldened by the downfall‘s steepness since Monday and ineffective attempts to coutner it on Tuesday. While one swallow doesn‘t make a summer, the technical picture in the hardest hit tech is gradually improving, worthy of benefit of the doubt while you dance close to the Nasdaq exit door.
Credit markets have crucially improved, with the junk corporate bonds leading the way, and value stocks being soundly bought again. All it took was a decent daily stabilization in long-dated Treasuries coupled with an intraday upswing attempt – no issue that it fizzled out before the close, apparently. The markets are coming to terms with higher inflation, and the commodities hit starting with lumber, stretching to copper, and eventually also oil and soybeans yesterday, would likely recover – first those that hadn‘t been all that overheated.
Sunday, May 16, 2021
Wall Street Roiled by Hot Inflation Data: Is This REALLY “Transitory”? / Stock-Markets / Inflation
By: MoneyMetals
The Labor Department reported yesterday that the Consumer Price Index jumped 4.2% from the prior year. Although a big rise in the CPI had been expected, the actual number came in even higher than economists had forecast.
According to the CPI data, inflation in April accelerated at its fastest pace in more than 12 years. Higher prices showed up everything from used cars to lumber to energy to food.
If April’s rate of price increases were to persist for another 11 months, the annual CPI growth rate would be 10.3%. And that wouldn’t even account for items that the CPI excludes or understates.
Jerome Powell and other Federal Reserve officials have repeatedly insisted than any rise in inflation this year will be “transitory.” They cite base effects from last year’s economic lockdown and supply bottlenecks they expect to be temporary.
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Thursday, May 13, 2021
Stock Market Bulls Getting Caught in the Whirlwind / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
Seemingly uneventful and tight range day in S&P 500 gave way to extraordinary selling once the 4,220 intraday support broke – extraordinary by recent standards. The bulls obviously have quite some damage to repair before thinking about taking on new highs. Prices have moved back into the prolonged consolidation, in what isn‘t a true breakdown though yet.
Neither the smallcaps, nor the emerging markets, let alone S&P 500 fell on sharply rising volume, which speaks in favor of a bad day, chiefly driven by tech (yes, I‘m looking at you, $NYFANG) and weak credit markets. Look at market breadth – new highs new lows stunningly rose yesterday in spite of the 500-strong index losing quite a few dozen points.
Classic risk off positioning, if only the defensives as a group did a lot better – but it could have been worse had commodities joined in the melee. They didn‘t, and they are thus the dog that didn‘t bark, detracting credibility from yesterday‘s stock market plunge (unless they catch up next, that is).
Both copper and lumber reversed, but won‘t this turn out as another buying opportunity, especially in copper? Little has changed in the reflationary and reopening trades – financials managed to shake off the rising yields easily yesterday. True, VIX and put/call ratio aren‘t painting a picture of calmness, but especially the option traders are positioned a bit too bearishly at the moment. Again, it‘s a question of how long before the tech bottom hunters step in. Make no mistake though, growth is going to keep lagging behind value.
Gold, silver and miners are in a vulnerable position even though neither the technical nor fundamental reasons behind their rally changed. The rising yields are a testament of rotation out of stocks into bonds not having worked yesterday, and should commodities such as copper get hurt again, precious metals would land in hot water likely. Thus far though, no sign thereof – the momentum remains with the bulls overall, and higher time frames confirm that.
Wednesday, May 12, 2021
TESLA! Cathy Wood ARK Funds Bubble BURSTS! / Stock-Markets / Tech Stocks
By: Nadeem_Walayat
The stock market is now entering my forecast window for a significant correction which should present an opportunity to accumulate into most the AI mega-trend stocks many of which have galloped ahead to new all time highs this year, trending in the opposite direction to the much higher risk stocks such as those that heavily populate the media blitzkrieging Cathy Wood's ARK funds i.e. their biggest holding Tesla is down 4.5% year to date whilst AI numero Uno Google is up 32%! Which this analysis seeks to resolve in high probability buying levels in advance of an expected correction during May.
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Wednesday, May 12, 2021
Stock Market Extending Phase Two? / Stock-Markets / Stock Market 2021
By: Andre_Gratian
Current Position of the Market
SPX Long-term trend: There is some evidence that we are still in the bull market which started in 2009 and which could continue into the first half of 2021 before major cycles take over and it comes to an end.
SPX Intermediate trend: Phase two from 3853 does not look complete.
Analysis of the short-term trend is done daily with the help of hourly charts. They are important adjuncts to the analysis of daily and weekly charts which determine longer market trends.
Tuesday, May 11, 2021
Stock Market Enters Early Summer Correction Trend Forecast Time Window / Stock-Markets / Stock Market 2021
By: Nadeem_Walayat
The stock market is now moving into my forecast time window for a correction to begin of approx 10% decline as illustrated by my trend forecast graph.
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Tuesday, May 11, 2021
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market / Stock-Markets / Tech Stocks
By: Nadeem_Walayat
Whilst the Dow has been trading at NEW all time highs, supreme media high risk stocks pumper's ARK funds have entered into a severe bear market as ARK bubble finally bursts. Those invested in ARK funds are in for a more pain over the coming weeks and months as reality catches up with the fantasy valuations that the Cathy brigade had lifted the likes of Tesla to.
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Monday, May 10, 2021
Stock Market Entering Early Summer Correction Trend Forecast / Stock-Markets / Stock Market 2021
By: Nadeem_Walayat
The stock market is now moving into my forecast time window for a correction to begin of approx 10% decline as illustrated by my trend forecast graph-
9th Feb 2021 Dow Stock Market Trend Forecast 2021
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Friday, May 07, 2021
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? / Stock-Markets / Financial Markets 2021
By: EWI
Markets go where they go. The news is just rationalization.
As Elliott Wave International has noted many times, the mainstream financial press always tries to find a reason for a given trading day's stock market action.
In other words, if stocks happen to be up for the day, many financial journalists will say it was because of this or that "positive" news. If stocks happen to be down for the day, you got it, these journalists will ignore the positive news and search for something "negative" that happened in the country or world and say that was the reason stocks went down.
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Friday, May 07, 2021
Stock Market Transportation Index Continues To Grind Higher / Stock-Markets / Stock Market 2021
By: Chris_Vermeulen
If the face of last week’s sideways price action and almost in a rebellious manner today (May 4, 2021), the Transportation Index is moving higher while the US major indexes are all broadly lower. VIX has shot up over 20 again (over +13% higher) and the NASDAQ is off by more than 300 points (-2.75%) as I write this article. Yet, the Transportation Index is bucking the trends and trading higher.
What Does It Mean When The Transportation Index Bucks The Major Index Trends?
My team and I have often highlighted the Transportation Index in our past research article. The reason we watch this index so closely is that it tends to lead market trends by at least 30 to 60 days. In short, the Transportation Index is a measure of future expectations related to freight, shipping, transportation, and the movement of goods and commodities across the US and across the globe.
When an economy contracts, the Transportation Index will likely follow major indexes lower as future expectations related to economic activity contract. When a recession or deep price correction happens, the Transportation Index usually moves sharply lower as the sudden shock of an unexpected economic contagion vastly alters future economic expectations. But generally, the Transportation Index tends to front-run economic expectations.
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Friday, May 07, 2021
SPX Stock Market Correction Arriving or Not? / Stock-Markets / Stock Market 2021
By: Monica_Kingsley
One more day of upside rejection in S&P 500, in what is now quite a long stretch of prices going mostly sideways. As unsteady as VIX seems at the moment, it doesn‘t flash danger of spiking in this data-light week, and neither does the put/call ratio. As I wrote yesterday about the selling pressure, these tight range days accompanied by 30-ish point corrections is as good as it gets when the Fed still has its foot on the accelerate pedal.
Yes, you can ignore the Kaplan trial baloon (have you checked when he gets to vote on the FOMC?) that spiked the dollar on Friday but didn‘t put all that a solid floor before long-dated Treasuries as seen in their intraday reversal.
Highlighting the key Treasury, inflation and reflation thoughts of yesterday, as these are still here to power stocks higher:
(…) the 10-year yield has been quite well behaved lately, closing at 1.65% only on Friday. The April calm seems to be over, and I‘m looking for the instrument to trade at 1.80% at least at the onset of summer. Then, let‘s see how the September price increases telegraphed by Procter & Gamble influence the offtake – will the price leader be followed by its competitors? That‘s one of the key pieces of the inflation stickiness puzzle – and I think others will follow, and P&G sales and profitability won‘t suffer. The company is on par with Coca Cola when it comes to dividends really.
Wednesday, May 05, 2021
Fed Taper Smoke and Mirrors / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
Once in a while, stocks closed in red – is that a reversal or the most the bears could hope for these days? Thursday‘s hanging man got its follow through, yet the bulls staged a rebound into the close. Perhaps that‘s as good as the selling pressure gets, for I think the path of least resistance is still higher in S&P 500.
If you look at the VIX or the put/call ratio, Friday‘s setback is readily apparent, and stocks seem ripe for an upswing now. Fed‘s Kaplan did its job s with the taper talk, yet I think he played the bad cop part – the Fed will really act ostrich in the face of not so transitory inflation, for as long as the Treasuries market doesn‘t throw a tantrum.
And the 10-year yield has been quite well behaved lately, closing at 1.65% only on Friday. The April calm seems to be over, and I‘m looking for the instrument to trade at 1.80% at least at the onset of summer. Then, let‘s see how the September price increases telegraphed by Procter & Gamble influence the offtake – will the price leader be followed by its competitors? That‘s one of the key pieces of the inflation stickiness puzzle – and I think others will follow, and P&G sales and profitability won‘t suffer. The company is on par with Coca Cola when it comes to dividends really.
Once there, we would progress further in the reflation cycle when inflation is no longer benign and anchored. We‘re though still quite a way from when the Fed tries to sell rising rates as proof of strengthening economic recovery – once the bond market would get to doubt this story though, it would be game over for its recent tame behavior.
Friday‘s retreating Treasuries though didn‘t lift gold, and neither helped miners – it‘s not that inflation expectations would be sending a conflicting signal, as these slightly receded too. Inflation at the moment is probably still too low for the complacent market lulled to sleep by the transitory story, but look for that to change.
Tuesday, May 04, 2021
Stock Market SPX Short-term Correction / Stock-Markets / Stock Market 2021
By: Andre_Gratian
Current Position of the Market
SPX Long-term trend: There is some evidence that we are still in the bull market which started in 2009 and which could continue into the first half of 2021 before major cycles take over and it comes to an end.
SPX Intermediate trend: SPX has completed the next phase of its intermediate uptrend and should correct.
Analysis of the short-term trend is done daily with the help of hourly charts. They are important adjuncts to the analysis of daily and weekly charts which determine longer market trends.
Tuesday, May 04, 2021
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display / Stock-Markets / Stock Market 2021
By: EWI
Stock market newcomers revel in their ignorance
In the past year, the stock market has been flooded by inexperienced investors.
Here's a May 12, 2020 CNBC headline:
Young investors pile into stocks, seeing 'generational-buying moment' instead of risk
The message of that headline matches up with the sentiment among many investors that the stock market is at the start of a boom -- not near an end.
Yes, financial history shows that the same psychology has been on display before, i.e., the heralding of "The New Economy" in 2000 -- just as stocks were topping. And, if you want to go all the way back to the 1929 top, the proclamation of "A New Era."
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Sunday, May 02, 2021
Stock Market Enough Consolidation Already! / Stock-Markets / Stock Market 2021
By: Monica_Kingsley
Stocks are readying another push higher, and not just on the heels of the still accomodative Fed. The Fed won‘t simply remove the punch bowl, let alone discuss removing it, and will keep repeating the transitory inflation mantra ad nauseam. The ingredients are in place for a continued upswing in stocks and commodities.
Look for nominal yields to continue rising, and my hunch is that won‘t be enough to turn the dollar around. We‘re about to experience continuously rising inflation expectations, rising nominal yields, and declining dollar:
(…) When even Larry Summers starts talking the dangers of an inflationary wave, things are really likely getting serious down the road.
(…) we‘re in the decade of precious metals and commodities super bull runs – and these are well underway. The debasement of fiat currencies against real assets is set to continue, and will accelerate given the unprecedented fiscal and monetary support already and ahead – sorry dollar bulls, the greenback declines are resuming – just look at the yen and yields nodding to the metals upswing.
Friday, April 30, 2021
Stock Market Correction Time Window / Stock-Markets / Stock Market 2021
By: Nadeem_Walayat
One of the most common questions I am often asked is when to sell ones stocks i.e. after a surge in stock prices there is a tendency to fear the gains will evaporate as followed soon after the March 2020 lows, where many investors are focused on trying to Sell the Tops with a view to Buying the Bottoms. Apparently this is how most investors tend to approach investing as it crops up in many communications I have with investors i.e. when should one sell their holdings with a view to buying back after a market correction, which is especially true at the present time given the recent rally in stocks to new highs that my trend forecast for 2021 suggests is now converging towards a time window for a correction.
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Friday, April 30, 2021
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" / Stock-Markets / Stock Market 2021
By: EWI
"Our view is that the use of margin to buy stocks is far higher than the NYSE figures indicate"The stock market uptrend has extended for more than 11 years.
Even so, instead of displaying caution, investors have been borrowing to buy stocks like there's no such thing as a bear market.
For example, consider this chart and commentary from the March Elliott Wave Financial Forecast, a monthly publication which provides analysis of major U.S. financial markets:
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