sg hammer

Tuesday's Closing Update: Broadly Lower

Since May 15th, the S7P 500 has been locked in a narrow 2 point range. Ranges don't last forever and typically some exogenous event triggers either pent up selling or buying. My work suggests that the recent trading range has been broken and that we're in for a 4-6 week down cycle.

It's Not Too Soon to Sell in May

For thirty years I've been making a living from investing in US companies. For thirty years I've heard doom and gloom and why this or that will prevent further growth. If there's one truth through all of this, it's the fact that America survives and grows bigger. Buying shares of great companies when people don't want them is a strategy that has worked for decades a la Bernard Baruch. The only trick is you need to know which are the great companies and that is something only balance sheets and income statements can provide.

..sg hammer

Awesome infographic that flowcharts the nearly $12T allocated in government progams affecting the financial services industry.

the image comes from a french server. be careful.

The Tiger Woods Economic Upturn

Well...we're really sunk now. Tiger lost to Clark 4&2...sell!

The Doomsday Argument, Market Version

Good points. Clearly, if the global economy chugged along at $18 trillion and needed X level of debt to do it, cut X by 1/2 and where does that leave global GDP? Well, a lot lower and in no condition to reach back to $18 trillion anytime soon.

It's going to be a trader's market for quite awhile and the increased volatility makes it easier to achieve trading goals.

S&P nearing a 2% gap down this morning (though it may not make it). Might be a gap you want to fade, Quantifiable Edges blog says after looking at large opening down gaps back to 1994. "The edge remains squarely bullish."

The trouble with looking into the past is that it correlates poorly to the future. There are leading market analytical tools that look into the future if you know how to read them.

The Heretics of Finance

The problem with most technical analysis tools is that they are price based--that is they use past price action as a predictor of future price action. I discovered many years ago that price action is dependent on other factors. Setting price as the dependent variable, years ago I found what the independent variable is and built several software programs that I use to identify specific points in time that allow me to trade with a rules based system that is extremely effective. My methodology is quite different from others and, while it takes some time to understand, not too difficult to learn. My website has this information.

Another $700B in corporate loans comes due this year. So what does this mean for the many companies that were counting on borrowing more money to kick their debt farther down the road.

The best way to encourage participants to reenter the corporate markets is the provide tax incentives to purchase corporate debt. We could, for the next few years, eliminate the income tax on interest paid on corporate notes. It's the uncertainty on being able to roll this debt that has investors like me, who would normally purchase 2-3 year A or better corporate notes, staying away. It's not so much the ability to repay debt as it is the ability to refund this debt which is a function of market demand. Give me a tax break on the interest and players will reenter the market.

Stocks have rebounded into the final half-hour, but will they hold?

Only the Delineator knows for sure.

2009: Expecting a Massive Rally

Since making this comment, the Delineator has continued to rise and the negative divergence that I spoke of has moderated. The Delineator never gave a sell signal and instead generated another long signal on December 30th toward the initial SPY 99.5 target generated on November 21st. You can read about this on my Delineator Journal pages available through my website at the link immediately above. While fundamentally I am still negative on the overall condition of the market, the Delineator has effectively called the moves up in the market since it called this move on November 21st.


On Dec 29 10:22 AM sg hammer wrote:

> The Delineator is now showing significant negative divergence from
> the November lows. This suggests that a move back to test the SPY
> 75 level is in the offing representing an 11% decline from current
> levels.

2009: Expecting a Massive Rally

The Delineator is now showing significant negative divergence from the November lows. This suggests that a move back to test the SPY 75 level is in the offing representing an 11% decline from current levels.

Don't Step in Front of the Market Steamroller

The secondary (daily) Delineator turned up on November 21st giving a target for SPY of 99.50. Since that date, the primary (30 minute) Delineator identified 5 separate long trade opportunities. Yesterday's signal came 3.5 hours prior to the FOMC announcement.

Is It Time to Buy? What History Shows

My site shows my Delineator analytic which currently is supporting long signals. The Delineator turned up on November 21st and as a first target has 99.5 on SPY which should be achieved within the next two weeks.

After the worst month for high-grade debt in nearly 30 years, new corporate debt issued in October climbs over 10%. Some are hopeful that the gains may pry open the corporate debt market. Still, the average return for October was -7.38%, and many remain wary.

One sure way to reinvigorate the corporate debt market is to make the interest received on corporate notes (say two year notes) tax exempt. You'd see money flood back into this market. In the long run, this solution would be a lot cheaper than allowing the FED to print money.