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Dr. Kris
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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Market Notes: Another Move Higher Or Is The Market Ready To Roll-Over?--December 4

    After two decent up days, the market decided to take a rest. While the daily chart of the major averages shows them flat-lining, intraday action was anything but dull. The elevated VWAPs on both the positive and negative sides combined with the large intra-day swing in the VIX reflects today's seesaw action between the bulls and the bears. There are some good and bad points to this market, both on the technical and fundamental sides:

    1. The Dow Transport Index (DTX), a leader in determining market direction, is showing signs of forming a downward trending channel. If the index can't manage to close above today's high (917.7 on my chart; 9177 on other charts), a roll-over in the overall market becomes a higher probability scenario.

    2. Today's Trin (Arm's Index) rose to top out at 1.4 before closing around 1.2. Values above 1.1 are considered bearish while values in the 1.5 or above area are considered to be bearish contrarian. We were near this contrarian level today meaning we could possibly see the market move to the upside tomorrow. Of course, what happens on the open is going to be determined in part by the jobs report due before tomorrow's bell.

    3. The current P/E ratio of the S&P 500 sits at 20. That's 33% above its historical norm. Anyone who believes in the mean-reversion theory should be getting nervous. However, the real question is not if the market will revert back to its historical level it's when will it do so? Remember, the market can remain irrational for longer than you, the investor, can remain solvent.

    So, what's the take-away from all this? My interpretation is that the market is showing us that Wall Street is becoming uneasy with the high market valuation and unless economic indicators continue to show increasing growth (and increasing wages), we could see investors move to the sidelines (which appears to be happening already). The moral of the story is to batten down the hatches and tighten up your stops!

    Dec 04 6:15 PM | Link | Comment!
  • Market Notes: Time To Bet On Bullion? Not Just Yet... -- November 14

    While the major averages have been spending the past few days digesting gains and trading within a narrow range, action in the metals market has been quite the opposite. Precious metals, especially gold, platinum, and silver, have been in the dumpster for the past six months. In that time, the Gold etf (NYSEARCA:GLD) lost 18%, the Silver etf (NYSEARCA:SLV) lost 30%, and the Platinum etf (NYSEARCA:PPLT) lost 22%.

    But that situation may be about to change as witnessed by the extreme volatility seen this week in both the metal and miners stocks and their exchange-traded funds. The Gold Volatility Index (GVZ) has been moving up rapidly, gaining more than 11% just today to close over 23. Historically, a spike in the GVZ indicates that a reversal in gold is imminent. However, the GVZ isn't close to reaching an extreme level (typically over 35), and until it does, I'm staying away from making any move into the precious metals (although if you're a day trader you're probably loving this one!).

    I wish I could find something more to write about but there are very few bargains left on the long side. Have a good weekend!

    Nov 14 4:52 PM | Link | Comment!
  • Market Notes: Is The Sell-Off In Gold Nearing An End? -- November 3

    There's so much going on in this market that I only have time to summarize the highlights:

    1. Oil plunged to another yearly low today. While relief for this commodity is nowhere in sight, natural gas, however, enjoyed a big rally. Shares of nat gas etvs (exchange-traded vehicles (etns & etfs)) $GAZ and $UNG popped back above major support/resistance levels today--a bullish sign.

    2. If today's pop in the gold miners is an indication of an impending reversal in the precious metal itself, then it appears we could be in for a significant move to the upside. Many of the junior miners gained as much as 10% on slightly heavier than normal volume. While I wouldn't be a buyer just yet, now is a good time to start building a watchlist in this area.

    3. Real-estate investment trusts (REITs) are killing it! One popular exchange-traded fund in this space is the Vanguard REIT etf (VNQ, $80). It hurdled minor resistance to a new all-time high on Friday and pushed even higher today. Note that the fund pays a dividend currently yielding 3.5%. While the yields on some individual REITs may be higher, the appeal of this fund is that the risk is spread over a basket of issues.

    4. Heavy call options were noted today in shares of the CME Group (CME, $85) and CBOE (CBOE, $60.5). Both stocks broke to new highs on slightly heavier than normal volume.

    5. Speculative cannabis stocks Medical Marijuana (MJNA, $0.20) and Cannabis Science (CBIS, $0.09) rose on anticipation of favorable marijuana legislation being approved by voters in tomorrow's elections. While these stocks could make big moves, I would strongly recommend playing them with funds you don't mind seeing going up in smoke.

    Nov 03 6:21 PM | Link | Comment!
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