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Eric Parnell, CFA

 
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  • Beware Columbus
    Mon, Oct. 13 SPY, SH, SSO 5 Comments

    Summary

    • If the upcoming week was not already interesting enough, investors face an added risk factor as the markets reopen for trading.
    • Monday is the Columbus Day holiday, which results in some unusual trading conditions and the potential for greater than normal price volatility.
    • As a result, investors should take caution in reading too much into what comes out of Monday’s trading.
  • Stocks: The Most Important Week In 6 Years
    Sun, Oct. 12 EFA, HYG, IJH 37 Comments

    Summary

    • The time for the stock market to bounce is now.
    • At last, after two long years the S&P 500 Index and its 200-day moving average have finally met once again.
    • And this time, the fate of the third longest bull market in history hangs in the balance.
    • The week ahead is the most decisive for investment markets in years.
  • Finding The Bull Market Peak
    Fri, Oct. 10 IJH, IWM, SPY 39 Comments

    Summary

    • The stock market has suddenly encountered an identity crisis.
    • Violent swings have frayed the nerves of many investors that had become accustomed to a market that existed for so long with little volatility.
    • Recent history offers some clues as to what a bull market peak actually looks like and whether we are currently in the midst of one today.
  • Threats Remain Despite Wednesday's Rally
    Thu, Oct. 9 EEM, EFA, HYG 27 Comments

    Summary

    • After threatening to break lower for much of the morning, stocks exploded to the upside upon the release of the Fed minutes from a meeting held three weeks ago.
    • But today’s trading action obscured what has been the development of larger, more disconcerting trading pattern.
    • While investors still have good cause for optimism, now is certainly not the time for complacency, as the recent downtrend in stocks remains unbroken despite Wednesday's rally.
  • Stocks: The Hunt For Red October
    Sat, Oct. 4 EEM, EFA, IWM 49 Comments

    Summary

    • October has gotten off to a wild start.
    • How markets perform in October will be critically important in determining whether we are at a peak or if stocks still have the strength to run into 2015.
    • If stocks post a decisively red October, it may mark the beginning of the end of this graying bull market.
  • U.S. Stocks And Ebola: A Risk Without Precedent
    Wed, Oct. 1 SPY, DIA, QQQ 36 Comments

    Summary

    • The United States saw its first diagnosed case of the Ebola virus in Dallas on Tuesday.
    • Despite minimal risks of spreading, it remains worthwhile to closely examine the effects from an ebola outbreak starting to spread in the U.S.
    • Markets have shown resilience during past pandemics, but the nature of this virus is different than those that have come before.
  • How Green Was My Market?
    Wed, Oct. 1 EEM, EFA, EMB 9 Comments

    Summary

    • The S&P 500 Index was higher once again for the third quarter.
    • Yet every other major asset class outside of U.S. large cap stocks was down for the period.
    • Stock performance even within the S&P 500 Index was spotty at best.
    • The time may soon be here where investors are once again rewarded for carrying out a thoughtful and deliberate portfolio construction process.
  • About That Friday Bounce
    Sat, Sep. 27 EEM, EFA, EMB 57 Comments

    Summary

    • The U.S. stock market roared back to life on Friday.
    • This does not mean, however, that stocks have shaken off their recent challenges.
    • Most major stock asset classes remain under heavy short-term downside pressure.
    • Highly correlated high yield bonds are threatening to break down.
  • Perspectives On Thursday's Sell-Off
    Thu, Sep. 25 EFA, EZU, HYG 80 Comments

    Summary

    • U.S. stocks as measured by the S&P 500 Index dropped by –1.62%, which represented its fifth worst decline in 2014.
    • When putting this latest decline into perspective, it appears at first glance that the bulls still have good reason to remain optimistic.
    • But when exploring deeper under the surface, troublesome signs are accumulating that suggest a far more significant change in the long-term market trend may soon be on its way.
  • The Stock Market Machines Are Breaking Down
    Thu, Sep. 25 CMI, EMR, FAST 18 Comments

    Summary

    • Much has been made of the relative weakness of U.S. small-cap stocks so far in 2014.
    • But what is perhaps even more notable is that increasing signs of rot are presenting themselves from within the S&P 500 index itself.
    • The fact that these trailing results are coming from the economically sensitive industrials sector is particularly troublesome for the sustainability of the stock market rally going forward.
  • U.S. Stocks: All Better Now?
    Thu, Sep. 18 DIA, EEM, EFA 13 Comments

    Summary

    • The S&P 500 Index exploded higher on the news of China central bank stimulus.
    • Such a decisive reversal might understandably lead one to conclude that all is once again right with the U.S. stock market.
    • But one does not have to look far under the surface to find evidence to the contrary.
  • Is A Stealth Liquidation In Stocks Underway?
    Tue, Sep. 16 EFA, GLD, HYG 42 Comments

    Summary

    • It is September 2014 and all is well with the U.S. stock market. Or is it?
    • Despite this generally placid appearance on the surface, some notable signs of deterioration are growing underneath that warrant close attention in the days ahead.
    • It is possible that something much more substantial to the downside may be slowly starting to brew.
  • Are You Positioned For ECB Stimulus?
    Sun, Sep. 7 EWJ, IEV, SPY 25 Comments

    Summary

    • Is your portfolio positioned for the ECB's anticipated TLTRO stimulus program?
    • An examination of global stock market responses to various central bank stimulus programs is instructive in determining what to expect.
    • Not all QE is created equal.
  • Investissements Sans Frontieres
    Thu, Sep. 4 BAL, EEM, EPP 6 Comments

    Summary

    • The U.S. stock market receives a disproportionate amount of attention when it comes to portfolio investment strategies.
    • We increasingly live in a world today providing investment opportunities without borders.
    • The strong U.S. stock market performance in recent years is making it increasingly more reasonable to explore potential opportunities outside of this perceived comfort zone.
  • Rising Risks In The Quest For Yield
    Tue, Sep. 2 DVY, SDY, SPY 8 Comments

    Summary

    • Thanks to persistently low interest rates, many have been forced into higher risk investments including stocks to secure higher income.
    • This strategy has been rewarded to date with strong returns among higher yielding stocks.
    • These strong returns may be accompanied by rising risks among these same high yield names.
  • This QE Bower My Prison
    Sun, Aug. 31 EEM, EFA, FXI 107 Comments

    Summary

    • The Federal Reserve’s persistently aggressive monetary policy has had a paralyzing effect for many investors over the last several years.
    • Repeated monetary stimulus programs have distorted capital markets in such a way that it has imprisoned many investors to a bower of heightened risk control and uncharacteristically short-term thinking.
    • But as Fed asset purchases end, the confined investor has reason for gladness, for they can continue to participate in today’s upside while also preparing to capitalize on downside risk.
  • Are Stocks Set For A Major Decline In The Fall?
    Sat, Aug. 30 SPY, DIA, IWM 158 Comments

    Summary

    • The market news coverage is becoming increasingly polarized.
    • On one side of the debate are those that believe the sky is the limit for stocks in the months ahead.
    • On the other side of the discussion are those that expect a significant stock market pullback is not only imminent but also long overdue.
    • Market history provides important clues as to whether the stock market is indeed setting up for a major decline in the fall of 2014.
  • A Market That Defies All Expectations
    Sun, Aug. 17 AGG, IEF, PFF 28 Comments

    Summary

    • A constant refrain over each of the last six years has been the imminent bursting of the bond market bubble.
    • But the bond market continues to rallying smartly in 2014.
    • The bull market in bonds is now in its 32nd year and remains very much intact.
    • The latest rally in bonds has brought with it a new and unusual cast of asset class characters this time around.
  • 2 Key Tests For The True Dividend Growth Investor
    Editors' Pick • Thu, Aug. 14 BCR, BKLN, HYG 232 Comments

    Summary

    • Dividend growth investing is one of the most popular and time-tested stock market investment strategies.
    • Who among us are truly dividend growth investors? Do you pass the two key tests?
    • Will you be ready to not only withstand, but capitalize on the potential risks that lie ahead?
  • A Crisis Less Extraordinary
    Thu, Aug. 14 SPY, DIA, QQQ 37 Comments

    Summary

    • It is often said that the financial crisis that was unleashed from July 2007 to March 2009 was a once in a century event.
    • But upon closer examination, the market shock resulting from the financial crisis was not all that extraordinary.
    • In fact, it was rather modest in many ways when compared to other major historical bear markets.
    • And this fact alone may be setting investors up for a far more challenging bear market experience the next time around.
  • Euro Trashed
    Tue, Aug. 12 EPP, EWC, EWD 20 Comments

    Summary

    • European stock markets have been absolutely trashed in recent weeks.
    • This recent sharp decline has raised concerns among investors about whether such trends may soon spread to other global markets including the U.S.
    • A closer look at the trading climate around the globe provides clues as to what we might expect in the coming days and weeks.
  • Hunting For Bears
    Sat, Aug. 9 BRC, CVD, DIA 18 Comments

    Summary

    • Trouble is increasingly brewing under the stock market surface, as a growing number of stocks are finding themselves mired in their own individual bear market.
    • Where there are meaningful corrections, so too there are opportunities.
    • Today is a good time to get started in hunting for bears.
  • A Surprising New Portfolio Diversifier
    Editors' Pick • Fri, Aug. 8 XLU 50 Comments

    Summary

    • Portfolio diversification is a primary objective for most investors in any market environment and a particularly high priority today.
    • In 2014, a surprising new category has emerged from within the stock market itself to become an effective portfolio diversifier in the current environment.
    • Utilities are providing a far greater diversification benefit today than normal and may be worth a closer look following a recent pullback.
  • The Slow And Perilous Death Of Bull Markets
    Thu, Aug. 7 SPY, DIA, QQQ 35 Comments

    Summary

    • A primary worry among many stock investors today is that the long running bull market may soon come to an end.
    • At the heart of their concern is the worry that the subsequent decline into the next bear market could quickly become swift and severe.
    • History has shown that the transition from a bull market to a bear market is a process filled with rallies and correction that plays out over an extended period of time.
    • Bull markets die long slow deaths, and it is this prolonged dying process that causes so many investors to find themselves unwittingly trapped in the next bear market.
  • 3 Keys To Watch In The Week Ahead
    Sun, Aug. 3 AMZN, HYG, IWM 16 Comments

    Summary

    • While the magnitude of the pullback has thus far been modest at just over -3%, some investors are wondering whether this is the start of something bigger.
    • Three key leading indicators for the broader market are worth watching in the coming week.
    • These three readings may foretell whether far greater declines may soon be in offing even if the broader market manages to find its footing.
  • The Good News From A Bad Friday
    Fri, Aug. 1 GLD, HYG, IWM 100 Comments

    Summary

    • Friday was another down day for stocks, following the notable -2% decline on Thursday.
    • But despite the generally poor performance of stocks on Friday, several important points of good news accompanied the bad.
    • Overall, investors could find reassurance at least as we head into the weekend that the latest stock market correction is taking on a more orderly behavior.
  • Why Thursday's Sell-Off Matters
    Editors' Pick • Thu, Jul. 31 CWB, EEM, EFA 263 Comments

    Summary

    • The stock market was rocked on Thursday, posting its worst single day decline in nearly four months.
    • Such declines are not unexpected, but Thursday's decline was both notable for a few key reasons.
    • Thursday's sell-off matters, and how events unfold in the coming days should be watched closely for potential action, if necessary.
  • Is A Stock Market Correction Imminent?
    Sun, Jul. 27 EFA, GLD, HYG 175 Comments

    Summary

    • The stock market is overdue for at least a modest pullback in the near-term.
    • When exactly might we expect such a correction to take place?
    • How far can we expect the stock market to fall once it finally arrives?
    • How should investors react once this correction finally takes place?
    • And what will this anticipated correction mean for the sustainability of the long running bull market?
  • S&P 500: Still Trading Below 2000 A Decade From Now?
    Fri, Jul. 25 SPY, DIA, QQQ 19 Comments

    Summary

    • It is only a matter of days before the S&P 500 smashes through the 2000 barrier.
    • But just as trees do not grow to the sky, neither do stocks.
    • What can we reasonably expect over the next decade?
  • A World Without Consequences
    Thu, Jul. 24 AIG, BAC, BKLN 50 Comments

    Summary

    • We are increasingly living in a world without consequences.
    • What was once true in financial markets has increasingly spread to the geopolitical stage.
    • The potential cost down the road for this apparent lack of accountability today could be extreme.
  • On The Fourth Of July: Bullish On America
    Fri, Jul. 4 SPY, DIA, QQQ 40 Comments

    Summary

    • The United States of America is well-positioned to lead the global economy in the 21st century.
    • A number of forces are supportive of the America's continued strength.
    • It is time for policy makers, including the Fed, to allow the U.S. free market system to stand on its own.
  • Less Than Zero: The Case For Cash
    Sun, Jun. 29 GLD, HYG, LQD 39 Comments

    Summary

    • Investors receive virtually no direct reward for holding cash in the current market environment.
    • But the case for holding cash may be growing stronger as the stock market continues to rise.
    • A number of reasons support why investors may want to consider holding at least a portion of their portfolio in cash in the current environment.