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O. Young Kwon

 
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  • The Daily TANER Momentum [View instapost]
    Hello Hillbilly Stock Sstar:

    Thanks for your comment. Happy Holidays.

    Young
    Dec 22 03:05 PM | Likes Like |Link to Comment
  • Are You Really A Chart Expert? [View article]
    Jeff. It’s a lucid illustration why and how chartists usually end up with their own chart-traps. Thanks. Young.
    Dec 22 07:57 AM | Likes Like |Link to Comment
  • Fiscal Cliff Notes: Plan B Edition [View article]
    Hello Jeff.

    It’s a superb post to clear about the essence and the purpose of Plan B, saluting Boehner: “The Plan B…is something that will emerge from the non-public bargaining…This does not mark the end of negotiations.” Agree with your view. On Thursday and Today (Friday) Boehner’s skillful maneuvers made me more optimistic about the resolution of budget negotiations.

    Happy Holidays.

    O. Young Kwon
    Dec 21 07:24 PM | Likes Like |Link to Comment
  • Will Interest Rates Rise In 2013? [View article]
    It’s a harmless post, yielding no new insight. Where do you stand on the role of expectations of price-sensitive investors? yk
    Dec 16 06:24 PM | Likes Like |Link to Comment
  • The RED Spread: A Market-Breadth Barometer - Can It Predict Black Swans? [View article]
    Dear Investor:

    The RED Spread [REDS] is calculated with two Diffusion Indexes: (1) a combination of 10 bond ETFs and 30 Stock ETFs in our TANER-Rotation Model [TRM] and (2) 40 equities in our TANER-Stock Model [TSM]. Diffusion Index is a statistical measure of the scope of expansions and contractions, indicating a number between 100 and 0, depending upon how many components in an indicator move up or down.

    The REDS is the Diffusion Index of the TRM Indicator (which contains bond EFFs) minus the Diffusion Index of the TSM Indicator (which doesn’t have any bond security). As a result, the REDS would be a proxy of the bond price (which moves in the opposite direction of its yield), implying a bond premium (or discount) in terms of diffusion index, explained in this article.

    The following Table exhibits the inverse relationship between the RED Spread and the 10-year Treasury yield. This table shows figures in the end of month except November. In November the election and the cliff negotiations severely distorted the market so that the middle of the month is included to capture the impact.

    THE Relationship Among RED REDS P/T/B ,S&P 500 & 10Y T Yield
    * * * 10Y TN IR
    DATE REDS S&P 500 Yield ON/OFF
    4/3/2012 -2.3% 1,413.31 2.280% .
    4/30/2012 0.4% 1,397.91 1.910% OFF
    5/31/2012 0.8% 1,310.33 1.580% ON
    6/29/2012 -0.7% 1,360.16 1.660% ON
    7/31/2012 2.9% 1,379.32 1.490% ON
    8/31/2012 6.3% 1,406.58 1.560% OFF
    9/28/2012 4.6% 1,440.67 1.640% ON
    10/31/2012 2.3% 1,412.16 1.690% ON
    11/15/2012 0.7% 1,353.32 1.509% OFF
    11/30/2012 3.5% 1,416.87 1.608% OFF
    12/7/2012 4.3% 1,418.87 1.630% OFF
    12/14/2012 3.2% 1,413.58 1.710% ON
    IR = Inverse Relationship between REDS & 10Y T Yield

    The reverse relationship was defied two occasions: One was in the end of May when the market was stressed as a mini-correction in April/May due mainly to investors’ anxiety to hope the Fed’s further stimulus. The other occasion was in November, as explained before. The Daily Market Condition [DMC] (http://seekingalpha.co...) tracks this relationship daily.

    The remaining days this year and perhaps several months in 2013, more volatile market movements are expected. The RED Spread will guide investors, showing whether the inverse relationship holds (ON) or not (OFF) every day. When the relationship is off, a sharp change in the market direction with a rapid shift in the sector rotation is likely. Of course, the daily change might be less reliable, but a clear direction would reveal when time lapse for a few day with the same signal.

    O. Young Kwon
    Dec 16 01:39 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Time For Clarity On Key Market Issues? [View article]
    Hello Jeff.

    This post is one of the best articles, reading the clear distinction between tax matters and deficit matters in particular. Certainly it can cure our head which has been poisoned by various misguided arguments and misleading advices regarding to the cliff matter recently. It’s a must read. Thanks

    Young
    Dec 16 05:55 AM | 1 Like Like |Link to Comment
  • The RED Spread: A Market-Breadth Barometer - Can It Predict Black Swans? [View article]
    @ Mr. Gabor

    The method is pretty simple, by using two diffusion indexes, but the inference may be a bit difficult to understand. If you pinpoint what you want to know precisely, I would do my best. My only suggestion is to follow the market-turning point signals for your investing as most investors perhaps do, rather than bogged down into its analytical aspects. Thanks for your comment.

    O. Young Kwon
    Dec 13 01:33 PM | Likes Like |Link to Comment
  • (Fiscal) Cliff Notes [View article]
    Hello Jeff.

    It’s an excellent illustration. Thanks for your reliable advice, but all necessary adjustments in my portfolios are being made to be cautiously bullish, assuming that a bad case will happen.

    Young
    Dec 13 06:40 AM | 1 Like Like |Link to Comment
  • Is The U.S. Already In Recession? [View article]
    This post lucidly explains why the ECRI’s Recession Call is faulty. A turning point (a peak or trough) of the coincident composite index (monthly with four components) is a necessary condition for the NBER’s dating, The sufficient condition is that broad indicators (quarterly GDP and GDI) confirm or the diffusion indexes of the GDP and GDI agree with it. Currently not only the sufficient condition doesn’t meet but also the necessary condition possibly doesn’t too, as I comment on a different article as:

    “'The National Bureau of Economic Research…[D]ating Committee…looks at the composite indicator indexes. They are leading, coincident, and (inverted) lagging composite indexes. If these composite indexes yield mixed signals, the NBER looks into diffusion indexes of each composite indexes...When composite indicator indexes are compiled, the amplitude differences among components are carefully adjusted, not for any most volatile components to be dominated. Sometimes, however, the adjustments based on historical data turn out to be insufficient so that diffusion indexes with the composite indexes are needed to analyze further.' (From my comment on http://tinyurl.com/abq... current ECRI’s “Recession Call” is also premature (or false) as numerous previous calls were witnessed. The reasons are twofold. One is that both the IPI and Sales have a cross correlation with the GDP which has still shown its resilience. The other one is that diffusion indexes of the composite indexes – leading, coincident, and lagging – are not negative yet. As a result, a PEAK of the current weak recovery seems not to be reached within six months or so. In other words, an imminent peak of the current recovery is not seen yet.” (From my comment on http://tinyurl.com/b8j...)

    O. Young Kwon
    Dec 10 09:34 AM | Likes Like |Link to Comment
  • Market Outlook - Bulls Back In Charge, For Now [View article]
    It’s clearly an outstanding informative market review and preview with various data points. Agree with your bullishness. The IPI (0.4%) and capacity utilization (78%) are good enough for the economy to grow further “for now.” AAPL and VIX must be watched now. yk
    Dec 10 06:26 AM | Likes Like |Link to Comment
  • The RED Spread: A Market-Breadth Barometer - Can It Predict Black Swans? [View article]
    Dear Investor:

    Where does the market stand now after the whipsaw days in November and the somewhat stabilized days in December last week?

    THE Relationship Among REDS, S&P 500 & 10Y T Yield
    * * * 10Y TN IR
    DATE REDS S&P 500 Yield ON/OFF
    10/31/2012 2.3% 1,412.16 1.690% .
    11/6/2012 0.4% 1,428.39 1.740% ON
    11/15/2012 0.7% 1,353.32 1.589% ON
    11/30/2012 3.5% 1,416.87 1.608% OFF
    11/7/2012 4.2% 1,418.07 1.630% OFF
    IR = Inverse Relationship between REDS & 10Y T Yield

    As shown in the above Table, the S&P 500 Index was seesawed by the election and fiscal-negotiation worries, covering 75.07 points from its high (on November 6) to low (on November 15) points during the month, the heist such peak-to-trough range for the month since June.

    The relationships between the RED Spread [REDS} (the Bond Premium in terms of diffusion index) and the 10-year Treasury yield had been normal (ON) until November 15 when the S&P 500 Index was a low at 1,353.32, but had become abnormal (OFF) after that. A normal relationship is an inverse relationship which is when the REDS is up, the yield is down, and vice versa

    The RED Spread has become much higher in December than in November, as shown in a report of The Daily Market Condition [DMC] on December 10.

    <Quote>

    “…Friday the RED Spread edged down 4.2%. The normal inverse relationship between the RED Spread…and the 10-year Treasury yield was ON. The abnormal relationship (OFF) has shown really for 10 days out of 22 days since November 7 after November 6 (the election day), as shown in the near chart… This illustrates how the market has been confused these days.

    THE Relationship Among RED REDS P/T/B ,S&P 500 & 10Y T Yield
    * * * * * 10Y TN IR
    DATE RED REDS P/T/B S&P 500 Yield ON/OFF
    4/4/2012 54.3 -3.7% p 1,398.96 2.240% .
    4/26/2012 53.0 0.0% B 1,399.98 1.960% .
    5/25/2012 45.5 0.0% B 1,317.82 1.750% .
    5/30/2012 45.0 0.0% B 1,313.32 1.620% .
    8/28/2012 51.0 6.3% T3(1) 1,409.20 1.630% .
    9/19/2012 54.0 6.4% T4(4) 1,459.32 1.780% .
    10/31/2012 51.1 2.3% * 1,412.16 1.690% .
    11/6/2012 50.8 0.4% * 1,428.39 1.740% .
    11/7/2012 50.1 0.7% * 1,394.53 1.630% ON
    11/8/2012 49.5 1.2% * 1,377.51 1.630% OFF
    11/9/2012 49.6 1.4% * 1,379.85 1.610% ON
    11/12/2012 49.5 0.6% * 1,380.03 1.610% OFF
    11/13/2012 48.9 0.4% * 1,374.53 1.590% OFF
    11/14/2012 47.6 1.0% * 1,355.50 1.590% OFF
    11/15/2012 47.0 0.7% * 1,353.32 1.589% OFF
    11/16/2012 47.3 0.8% * 1,359.88 1.570% ON
    11/19/2012 48.8 0.5% * 1,386.89 1.611% ON
    11/20/2012 49.6 0.0% B 1,387.82 1.660% ON
    11/21/2012 50.2 0.8% * 1,391.03 1.690% OFF
    11/23/2012 52.2 0.9% * 1,409.15 1.690% OFF
    11/26/2012 52.1 2.0% * 1,406.29 1.660% ON
    11/27/2012 50.9 2.4% * 1,398.94 1.650% ON
    11/28/2012 52.3 2.6% * 1,409.93 1.620% ON
    11/29/2012 52.9 2.9% * 1,415.95 1.620% OFF
    11/30/2012 52.7 3.5% * 1,416.87 1.608% ON
    12/3/2012 52.0 3.9% * 1,409.46 1.630% OFF
    12/4/2012 51.6 3.5% * 1,407.05 1.610% OFF
    12/5/2012 51.3 4.0% * 1,409.28 1.590% ON
    12/6/2012 52.5 4.3% * 1,413.94 1.580% ON
    11/7/2012 53.9 4.2% * 1,418.07 1.630% ON
    * * * * * *
    P = Peak T = Trough B=Breakeven
    IR = Inverse Relationship between REDS & 10Y T Yield

    From: The Daily Market Condition [DMC] (http://seekingalpha.co... condition)

    <Unquote>

    The market has now a strong bullish signal because the RED Spread became much higher, ranging from 3.5% to 4.3% which is not too far down from 6.3% at a trough on August 28. Also because the current 10-year treasury yield, 1.63%, is exactly where it was on August 28, expecting a stream of spillovers from the Treasury market into the equity market.

    As a result, a steady upswing is likely in several weeks.

    Happy Holidays.

    O. Young Kwon
    Dec 9 07:53 PM | Likes Like |Link to Comment
  • ECRI Weekly Update: More Recession Flag Waving [View article]
    Just curious why making your great effort on ECRI every week, by wasting the invaluable SA space. yk
    Dec 9 08:26 AM | 4 Likes Like |Link to Comment
  • Weighing The Week Ahead: Something New From The Fed? [View article]
    Hello Jeff.

    Have to give you a big thumb up, reading, “The post-election posturing and the effects of Sandy have left investors with less real data…In the next few weeks, we may finally get some clarity…[T]he Fed to replace ‘operation twist’ with a new asset purchasing, keeping the monthly target of $85 billion…The Fed’s latest initiative…is designed to change market expectations.”

    Completely with your view, only adding a footnote:

    "The only reason why the Fed moves from OT (without an increase in the Fed’s balance sheet) to QE (with an increase in its BS) is that simply the Fed doesn’t have enough short-term securities to sell in order to buy longer-term securities, NOT that there is any change in the Fed policy."

    Young
    Dec 9 06:24 AM | 1 Like Like |Link to Comment
  • Conducting Bernanke's Symphony No. 3 In F Major [View article]
    Eric.

    It’s clearly timely and informative pitch. One direct benefit and one caveat:

    (a) The fact that the settlement of $13.85 - $17 billion for 30-year GNMA is scheduled helped me to make a decision on my holding of GNMA. Thanks.

    (b) “…[T]he music…finally comes to an end over the next 12 to 18 months.” This conclusion is somewhat puzzled to me. How can you draw this conclusion? By your inflation forecast or other metrics?

    Young
    Dec 8 06:16 AM | 3 Likes Like |Link to Comment
  • A Bull Market In Bad Predictions [View article]
    Hello Jeff. Agree with your view. It's a time to pick some good ones up. Young
    Dec 5 10:20 AM | 1 Like Like |Link to Comment
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