Paul D. Castro, CFA

http://www.vestopia.com/IDs/Profile.aspx?piid=18

20 Comments

    • Adjusted for Household Size, Real Income Reached an All-Time High in 2007 [view article]
      Isn't the fact that Mark's using "real" income informing us that the numbers are already adjusted for inflation? Aug 28 03:50 PM
    • Mindless Churn in Trendless Market [view article]
      Investors Intelligence (I'm a subscriber) is saying the sentiment DNA of this period mirrors 1994 - 1995.

      For the entire 12 months of 1994 the S&P bounced around between 400 and 500, never once closing above 481 or closing below 438 (a range of 9.8%). In December 1994 the S&P then took off on a 52% rally that finally peaked in May 1996.

      We'll just have to wait and see if the price action also mirrors the sentiment. My money is invested as if it will.       Aug 27 06:57 PM
    • Today’s Bull Market Is Tomorrow’s Bear Trap [view article]
      Oops! Meant to post that the average downtrend in the DJIA shows a 22% loss peak-to-trough. Aug 14 01:06 PM
    • Today’s Bull Market Is Tomorrow’s Bear Trap [view article]
      I agree with those here who dispute the basic premises of this article. In fact, as per research done by Bespoke (see link below) 300 pt rallies in the DJIA have in the past occurred at the start of big uptrends.

      bespokeinvest.typepad....

      Since 1956 the DJIA has completed 16 downtrends (the current downtrend is the 17th). Those 16 downtrends (series of lower pullback low's and lower rally high's) have averaged 370 calendar days each and losses of each. Measuring from the peak on 10.09.07 to the most recent low on 07.15.08, the current downtrend has lasted 280 calendar days and evaporated 23% of the DJIA's value.

      So far the current downtrend has been fairly typical and, if the historical averages are any guide, is pretty close to being over.

      See my blog for similar analyses I conducted on the Russell 2000, the Nasdaq Composite and the S&P500.

      www.vestopia.com/IDs/P...       Aug 14 01:05 PM
    • Have We Reached the Turning Point? [view article]
      "Bull markets are born on pessimism, grow on scepticism, mature on optimism, and die on euphoria" ~ Sir John Templeton Aug 11 06:48 PM
    • U.S. Unemployment During Recessions and Expansions [view article]
      Dec -07 expansion? Did you mean the Dec-01 expansion? According to the NBER the last recession ended Nov-01. Jun 06 03:51 PM
    • 'You Are To Blame': Sobering Words From Dallas Fed President [view article]
      "No, central bankers created the mess. Let them live with the guilt and not blame their victims."

      I think what he's saying is that the Fed's hand was forced by fiscal defecits. But I agree that the Fed is part of the problem and, at least since Volker, hasn't been part of the solution.       Jun 04 07:22 PM
    • CNNMoney’s ‘Depression Comparisons Misguided’ Shows It’s Imminent [view article]
      Saul,

      Massive foreign inflows are the bell that rings at stock market tops, not bottoms. To illustrate, foreign Net Private Equity purchases reached a peak at $28B in February 2000. That peak was surpassed in May 2007 when foreign Net Private Equity purchases clocked in at $43B.

      If you want to look for a bottom in the stock market, look for persistent foreign selling. Foreigners are no more immune to greed and fear than domestic investors.

      See below link for TICC data.

      www.treas.gov/tic/ticp...       Jun 02 11:09 AM
    • What Recession? Disposable Income Grows [view article]
      Don't you understand that our civilization is coming to an end? Oil and ag commodities are headed to the moon, soon nobody will be able to afford to eat or drive, every homeowner in America is going to default on his/her mortgage and become homeless, Americans have zero net worth and have not saved one cent for their retirements, financial institutions are all going bankrupt, fiat money is better used as toilet paper and we are losing the war on terror!

      What is the matter with you!?! Stop bringing this kind of data to our attention and get out there and buy a shotgun, lots of shells and stock up on canned goods for pete's sake.       May 30 11:38 AM
    • Dow Jones Industrial Headed For Major Breakdown [view article]
      I'll see your head and shoulders breakdown and raise you by a Dow Theory Buy Signal. The Dow typically takes ~110 calendary days to put in an intermediate top off of an intermediate bottom. Along the same lines on average intermediate tops peak ~18% above intermediate bottoms. So far this rally, the peak came on May 2 which is 53 days off the intermediate bottom seen on March 10. Likewise, the Dow is ~11% above the intermediate bottom seen on March 10.

      Comparing both days and %'s to the averages leads me to believe the odds favor a continuation of the current intermediate rally. Not a lead pipe cinch, just looking at the odds.       May 27 03:56 PM
    • Gauging Market Strength After a Move to New Highs [view article]
      Right on, Dr. Brett! This is what it's like to be in the early innings of a new bull market. I prefer looking at whether or not we are on a series of higher intermediate highs and higher intermediate lows to determine trend. In all 4 major indexes (DJIA, Nasdaq, S&P and Russell 2000) we have within the last few weeks made the first higher intermediate high since last summer or fall (depending on the index). Nice to see other indicators confirm what I already know. May 15 11:40 AM
    • S&P 500 Down More Than 1% for First Time in 26 Days [view article]
      The S&P has just recently made a higher intermediate high for the first time since last October. By my count;

      08-15-07 close = 1,406.70 = higher low,
      10-09-07 close = 1,565.15 = higher high,
      01-22-08 close = 1,310.50 = lower low (first lower low since Nov 02 which was also the last lower low of the post-bubble bear market),
      02-01-08 close = 1,395.42 = lower high,
      03-10-08 close = 1,273.37 = lower low,
      05-06-08 close = 1,418.26 = higher high (first since Oct 07)

      What this most recent higher high means is a new uptrend (ie, bull market) has begun. The last time the S&P made a higher high after a series of lower highs and lower lows was in Mar 04. That uptrend lasted until the lower low in Jan 08 (ie, 3 yrs and 10 months). The only event that could occur which would annul the new bull market thesis would be a take-out of the Mar 08 closing low.

      May 07 06:46 PM
    • Barry Ritholtz Wants Investors to Stay Cautious [view article]
      Of course Barry wants investors to stay cautious. Barry's behind the curve. Each of the major indexes (DJIA, S&P, Nasdaq) have recently bested their February 1 highs and appear to have embarked on a new uptrend. The longer investors stay cautious the longer Barry can play catch-up. If you read between the lines Barry is saying "this time is different", the 4 most dangerous words throughout the history of investing.

      I used to read Barry's blog but I've stopped because he (and especially his readers who post comments) are just way too nihilistic.       May 02 03:46 PM
    • Informed Traders and Options Use [view article]
      It would be helpful if you could give a real-life, contemporary example rather than directing readers to wade thru the academic paper that reads like a CFA exam question. Apr 29 02:25 PM
    • A new Bullish Divergence [view article]
      Moby,

      I was referring to intermediate highs, not all-time highs. To illustrate, the last time the S&P 500 made a higher price high was on October 9, 2007 when it closed at 1,565 which exceeded the previous intermediate closing high of 1,552 reached on July 13, 2007. The most recent intermediate high was the close at 1,395 on February 1, 2008.

      So when I say a higher high, I am looking for the S&P to close above 1,395 sometime in the next few weeks. Once that happens, then I'm looking for an intermediate low that does not violate the 1,273 close we saw on March 10, 2008. If this happens then a new series of higher highs and higher lows would have begun (ie, a new bull market).       Apr 17 11:50 AM
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