Daily State Of The Markets: The Brave New World Of Day-Trading? [View article]
Prices in the market are a simulation performed by market makers who use futures to manipulate prices to where they want them to be. If they fear a certain close would stimulate program selling they will sim prices up to where they need to be so that the chart doesn't set off the expected behavior. Prices in the market can't be set by organic transaction activity when HFT and market maker manipulation is plowing through them all by orders of magnitude in both directions. More and more we will see stock markets impervious to the effect of economic information since the dollars representing short-term trading far outnumber the dollars representing actual value plays on the economy...
The "market" has become a few piles of big insider money controlled by parties that have to be in the market (market makers, mutual funds, plutocrats who have too much cash to risk on the messy "real" economy) moving the piles around in various ways to simulate a market. Don't count on the little guys running back on headlines any more; this generation is duly burned and won't be fooled so easily again in the lifetime of the survivors...
Charts Of The Day, Equity Volume Edition [View article]
Felix, I'm not sure how this is good news for upper-middle class incomes unless you mean that those investors will give up trying to manage their own investments and just park their money in passive management to benefit from long-term market appreciation. If the market is in long-term decline, then don't count on long-term appreciation. If we look at typical shares of stock we see something whose value is almost fictional--"ownership" proves to be a fantasy when individual shareholders find they're last in line in bankruptcy or engineered buyouts, and managements dilute value by making new offerings with impunity. Also, a big problem is the lack of effective investments outside of stocks. What is needed is a reform where investors demand serious value for their ownership, such as guaranteed minimum dividends (preferred shares) and guaranteed minimum buyback values, and businesses find they must give us what we want in order to raise cash through offerings. We should all be more insistent that shares which are offered to the public to raise cash for business purposes represent a loan which must truly be paid back, with added value. Buying dividend-yielding stocks is a good step, but institutional investors who handle our money need to be more demanding on our behalf to make Wall Street honor our needs...
Can Seeking Alpha User Behavior Predict Stock Market Direction? [View article]
This is obviously a worthy inquiry if you're a qualified statistician and want to take it on (while readers like me sit back and enjoy the fruits of your labor). Wouldn't you want to try a little backward engineering by collecting information on which SA participants had the highest accuracy and confining your study to that population? We know, after all, that SA readership is a mix of professionals and amateurs (including me in the latter category). If the mix is balanced you may not get useful results, and contrary indicators may not work if the user mix changes (like on the week that some national newspaper or WSJ publishes information on your study and new users sign up in droves to the web site)...
ECB Kicks The Can Down The Road... Was This Our 'September Surprise?' [View article]
Even without central banks, if most mutual funds are required to be 99% invested and not hold cash, they're really not "investors" at all, they're stock index inventory clerks. There must be rallies of some kind once a month as they distribute those 401k dollars into the stocks of the indices. If I were such a manager and had only minimal time windows with discretion I would pile into anything that looked like an incipient rally, however shaky its premise, to at least add synergy to the movement...
Future Bailouts In Jeopardy As Germany Reaches Breaking Point [View article]
Nothing about Germany's position adds up. Do they really think they will continue to be an exporting powerhouse if all their customers in Europe are pushed into unemployment? Do they really think the interest rates on their sovereign bonds will stay low if it should become clear to non-eurozone investors that the eurozone will break up? Do they think they'll be immune from massive loss of wealth due to currency value loss when countries start leaving the euro? Do they really think they won't suffer paying high interest on their bonds and loss and disruption if they should leave the euro? Their position seems to be a moralizing one rather than a rationally economic one, for which rational markets will punish them along with all those whom they consider their inferiors...
A Pragmatist's View: I SPY A Sell-Off [View article]
If the US economy is "maturing" then there should be a slow, organic decline in share values as money flows to other parts of the globe looking for growth; but that would be based upon the assumption that our stock markets serve the straightforward function of being a locus for trading shares and price discovery. If the stock markets have become a piggy bank for the mega-wealthy to park wealth which is too vast to manage as bricks and mortar, and if the mechanisms of the market allow large traders to manipulate market indices away from their proper trajectory based upon organic value, then the stock markets have become disconnected from the economy and may remain so for the long period in which the real economy is declining. Think of the reserve of wealth built up under feudalism which took a millennium to dissolve, where all the while the nobility continued to live in their castles and manage their estates as though that economic order were still in play...
Daily State Of The Markets: It's About The Fed, Greece (Yes, Really), And Well, The HFT [View article]
If all us little people would agree to type "Greek Exit" and "Italian default" into a google search 6 minutes before the next FED meeting we could have a jolly time punking the machines...
VIX Languishes As Stocks Fight Resistance [View article]
After further reflection I've come to the conclusion that a 3-party system would be the logical next evolution of our American system; the Democratic Party would absorb the center, including today's Republican moderates (!) and the GOP would remain the party of the hard right; a true party of the left would have to come into being, but the left tends to have the intellectual resources to carry out that project. Further fragmentation is possible but, like atoms and molecules, there are only just so many configurations which can remain stable...
VIX Languishes As Stocks Fight Resistance [View article]
America's 2-party system evolved for logical reasons, but fragmentation is inevitable in the longer course of history. At some point we will have at least a 4-party system as the committed ideologues (not a pejorative here) of right and left are forced to work outside the 2-party system in order to be heard. On the right it may be necessary for the centrists rather than the far right to institutionalize, since the far right has taken over the GOP. The resulting fragmentation will not resemble parliamentary systems because offices in the American system are bestowed on persons, not parties. Of course, if the Citizens United decision can't be overturned soon, each corporation could become a political party and own seats in congress (as some already do)...
Knee-Jerk Fed Reaction Doesn't Add Up [View article]
I doubt that serious "investors" are fans of QE--QE has been a convenient cover narrative for big-money manipulators who make their dime moving market indexes up and down with futures and harvesting the volatility.
And how hard would it be for the FED to release its minutes on Saturday mornings, giving the markets plenty of time to react rationally to the content? Is there really any benefit to this sugar-rush injection into the markets, which hurt as often as they help?
Based upon the consistent behavior of the parties involved over the last 3 years we are only entitled to interpret the German response to mean that Germany is willing to continue talking, not that they're committing to accepting some version of his plan...
Jeff, if it's the case that the typical investor watching CNBC today is a long-only long-term investor, it may also be true that the numbers of such investors have shrunk in relation to people swing-trading or day-trading ETF's in the face of what appears to be a manipulated market. That's the area CNBC (and Bloomberg and Reuters and WSJ) falls down on, doing reporting that shows how the mechanisms of the stock markets work and investigative reporting into how some large parties (including the FED) are using futures and algorithm trading to drive the market in particular directions. The individual investor is largely out of the market right now on the fear that the market is a fixed card game and wants to know how the market actually works behind the scenes, which is the job of reporters to find out and describe. The CNBC crowd stick to the msm party line narrative that all market movement is driven by news or fundamentals, a proposition the viewers no longer believe...
Will There Be A Major Financial Crisis, Short Correction, Sideways Action Or A Bull Market? [View article]
"a technical trader who looks at moving averages of the S&P 500 would not be able to extract predictive power. "
Interesting dismissal of the only objective information we have upon which to do any "technical analysis". How technical would it have to be for an intermediate-term trader to make purchases at significant market corrections which can be sold profitably a month or two later? And swing-trading between the daily or weekly standard deviation by Bollinger bands looks pretty profitable as well. Predictive power must be a function of which "technical" analysis you choose to recognize in which time frame...
There will actually be a cause and effect relationship between rising home prices and stagnating consumer spending going forward because rising home prices in the near term will be a sign that life-cycle issues (death, divorce, retirement, etc.) are forcing owners of move-up homes to finally put them on the market after holding back for a couple of years to stave off loss. These homes will raise the median selling price metric, but the sales represent losses of equity which will come out of other parts of the economy as the sellers raid savings, liquidate assets, or borrow to make up the loss. This equity loss may be unmeasurable by any obvious metric other than a constipated economy...
Daily State Of The Markets: The Brave New World Of Day-Trading? [View article]
The Market's Grand Illusion [View article]
Charts Of The Day, Equity Volume Edition [View article]
Can Seeking Alpha User Behavior Predict Stock Market Direction? [View article]
ECB Kicks The Can Down The Road... Was This Our 'September Surprise?' [View article]
Future Bailouts In Jeopardy As Germany Reaches Breaking Point [View article]
A Pragmatist's View: I SPY A Sell-Off [View article]
Daily State Of The Markets: It's About The Fed, Greece (Yes, Really), And Well, The HFT [View article]
VIX Languishes As Stocks Fight Resistance [View article]
VIX Languishes As Stocks Fight Resistance [View article]
Knee-Jerk Fed Reaction Doesn't Add Up [View article]
And how hard would it be for the FED to release its minutes on Saturday mornings, giving the markets plenty of time to react rationally to the content? Is there really any benefit to this sugar-rush injection into the markets, which hurt as often as they help?
Jackson Hole To Create Euro Rally [View article]
Based upon the consistent behavior of the parties involved over the last 3 years we are only entitled to interpret the German response to mean that Germany is willing to continue talking, not that they're committing to accepting some version of his plan...
Has CNBC Lost Its Mojo? [View article]
Will There Be A Major Financial Crisis, Short Correction, Sideways Action Or A Bull Market? [View article]
Interesting dismissal of the only objective information we have upon which to do any "technical analysis". How technical would it have to be for an intermediate-term trader to make purchases at significant market corrections which can be sold profitably a month or two later? And swing-trading between the daily or weekly standard deviation by Bollinger bands looks pretty profitable as well. Predictive power must be a function of which "technical" analysis you choose to recognize in which time frame...
Higher Home Prices Is Bad News? [View article]