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Eric Parnell, CFA

 
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  • Has QE3 Really Come To An End?
    Sat, Dec. 20 HYG, SPY 70 Comments

    Summary

    • In October, the U.S. Federal Reserve carried out its final asset purchases as part of its latest asset purchase plan designed to help stimulate economic growth.
    • Yet the Fed's balance sheet has continued to expand in the weeks since, increasing by more than $15 billion through mid-December.
    • As a result, it is reasonable to explore whether QE3 has really come to an end and if the Fed is still engaged in outright asset purchases.
  • This Is How A Bear Market Starts
    Thu, Dec. 18 GLD, XLB, XLE 57 Comments

    Summary

    • At this advanced stage of the six year bull market, some investors are understandably concerned about how much higher stocks can go from here.
    • How can investors know when the bull market in U.S. stocks has finally ended and a new bear market has gotten underway?
    • Fortunately, today’s stock market is providing a live and active case study right now that is demonstrating exactly what it looks like when a bear market is just getting started.
  • The Black Bear Is Unleashed
    Sun, Dec. 14 CVX, GLD, OIL 167 Comments

    Summary

    • A black bear has been unleashed on capital markets.
    • A number of characteristics make the sharp decline in oil and energy shares notably different from what so many have grown accustomed over the last six years.
    • The recent struggles in the energy sector may go on much longer than many are anticipating and may eventually spread to the broader market.
    • Fundamentals, policy and sentiment are all working against oil moving forward.
  • A Growing Black Cloud Over The Market
    Fri, Dec. 12 ACI, ANR, APA 43 Comments

    Summary

    • A storm is brewing over the high yield bonds in particular and capital markets in general.
    • The primary culprit has been the precipitous decline in oil prices.
    • Exactly how great is the direct exposure?
    • What are the specific companies that are worth monitoring?
    • What are the implications, if any, for the stock market?
  • The Black Friday Massacre
    Sun, Nov. 30 APA, APC, CHK 70 Comments

    Summary

    • Friday was a massacre for energy investors.
    • Following the announcement by OPEC on Thursday that it would keep its production target unchanged, the price of oil cratered lower by more than 10%.
    • The stocks of various U.S. oil companies were also completely mauled once U.S. markets reopened after the Thanksgiving holiday for a shortened trading session on Friday.
    • After the pullback, it is worthwhile to explore whether attractive buying opportunities are now presenting themselves in the energy space or if investors are better served to wait.
  • Feasting On The Stock Market Harvest
    Fri, Nov. 28 AMZN, APA, BHP 26 Comments

    Summary

    • Many investors are engaging in tax loss harvesting as the calendar year draws to a close.
    • Tax loss harvesting also can provide spillover benefits for value oriented investors that are standing at the ready with cash to snap up potential bargains.
    • Such a strategy can bring good fortune in the coming year for those that are busy acquiring bargains that others have cast aside from their own portfolio basket.
  • Stocks: Clear Sailing Into 2015
    Sun, Nov. 23 HYG, IWM, SPY 77 Comments

    Summary

    • Bullish investors are once again firmly in charge.
    • Stocks have successfully navigated some recently challenging stretches to achieve new highs.
    • It appears to be setting up as smooth sailing for stock investors as they move toward the end of 2014.
  • Playing Defense All Around The World
    Thu, Nov. 20 AZN, BTI, BUD 15 Comments

    Summary

    • Many investors today are feeling conflicted.
    • In one respect, they see a U.S. stock market that appears completely unyielding in its persistence to the upside.
    • On the other hand, they see a stock market that may soon be left exposed to the downside without the crutch of more QE from the Fed.
    • Playing defense all around the world may provide a way to participate in further stock upside while also protecting against the downside.
  • Impossible Germany
    Sun, Nov. 16 EWG, DBGR, DXGE 19 Comments

    Summary

    • The economic and market outlook appears impossible for Germany over the next few years.
    • The world's fourth-largest, heavily export-dependent economy is facing a fundamental problem.
    • With future growth prospects increasingly fading, this bodes ill for the future performance of the German equity market.
  • 2 Countries For Old Bulls
    Thu, Nov. 13 DXJ, EEM, EWJ 14 Comments

    Summary

    • The bulls are off and running once again in the U.S.
    • But what about stocks across the rest of the world?
    • While the bulls are stampeding in the U.S., the bears are out of hibernation and on the hunt across most other parts of the globe.
  • Oh No Canada
    Mon, Nov. 10 SPY, UUP, EWC 14 Comments

    Summary

    • I have long favored owning Canadian stocks when attractive opportunities present themselves.
    • The country is well positioned in several industries that are key to long-term global economic growth.
    • It is reasonable to consider whether an investment in Canadian stocks is a worthwhile strategy at the present time.
  • The Best Offense Is A Good Defense
    Sat, Nov. 8 BBY, BDX, DAL 44 Comments

    Summary

    • Stocks are once again in rally mode and bullishness is back on the street.
    • But the details behind this rally suggest that all may not be entirely copasetic with the markets as we move toward the end of the year.
    • The best offense for your stock portfolio may continue to be a good defense.
  • Stocks: Considering Life Without The Fed 'Put'
    Thu, Nov. 6 BIL, IWM, SPY 21 Comments

    Summary

    • It is a belief that has been firmly ingrained in the minds of investors for nearly three decades.
    • It is the Fed ‘Put’, which is the expectation that the U.S. Federal Reserve will intervene aggressively to support stock prices during any sustained correction or market crisis.
    • But following nearly three decades of pursuing this monetary policy approach, it is reasonable to question whether the days of the Fed ‘Put’ may now be over.
    • If this is indeed the case, it is worthwhile to consider the potential implications for the stock market going forward.
  • Japan Stimulus: Not My Cup Of Sake
    Sat, Nov. 1 ACWI, EMB, EWJ 119 Comments

    Summary

    • Bank of Japan announced that it was raising the stakes on its already unprecedented monetary stimulus program.
    • The stakes are high with this move, as the long run stability of the global financial system may ultimately hang in the balance.
    • In the meantime, it is worthwhile to consider the sustained near-term impact on global financial markets, including both U.S. and Japanese stocks.
  • A Once In A Generation Change For Stocks
    Thu, Oct. 30 GLD, HYG, LQD 409 Comments

    Summary

    • The Federal Reserve is currently undergoing a monumental change in its monetary policy priorities.
    • This shift marks a major departure from the focus that has defined the Fed’s work for more than a generation.
    • This transition will have dramatic implications for years if not decades to come on financial markets that have become so heavily dependent on the persistently generous support of monetary policy.
    • Stock investors will almost certainly be required to work much harder to generate consistently positive returns than has been required over the past few decades.
  • Stocks And Seasonality: Caveat Emptor
    Wed, Oct. 29 SPY, DIA, QQQ 19 Comments

    Summary

    • November and December are regarded as some of the best times of the year for stock investors.
    • It is has been the prospects of this seasonality that has helped assuage investor concerns following the recent correction.
    • But November and December should not be ignored for its potential risks as we move into the final two months of 2014.
  • Victory For The Bears
    Sat, Oct. 25 EFA, IWM, SPY 74 Comments

    Summary

    • The last two weeks has provided a pivotal and decisive victory for long suffering stock market bears.
    • A series of fireworks took place over the past two weeks that continued through the close of Friday’s trading.
    • It has become increasingly likely that the end of the nearly six-year long bull market may soon be upon us.
  • 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 41 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.