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Barry North

Barry North
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  • The Most Consistent Risk/Reward Speculation That I Have Ever Found [View article]
    Phil, yes it will. I would prefer 69 years of data, but some of the instruments used only came into existence in the last 6 years.

    What is interesting though is that it had by far its best year in 2011, a 19% correction year, and we have to be due for one of those in the next 69 months. It had it worst Q1-Q3 this year, but its best Q4, for a 103% gain overall. Since March 31st 2009, ARR is 307% excluding brokerage, tax etc.
    Dec 27, 2014. 05:07 PM | Likes Like |Link to Comment
  • The Most Consistent Risk/Reward Speculation That I Have Ever Found [View article]
    "When you don't know which way the market is headed, you play both sides of it".

    This comment caught my eye. Surely the correct answer is, you move to cash. No costs, no fees etc. just sitting and waiting for the next clear trend.

    At OSPX we run an algorithm that has a 75% trade win rate, over the past 69 months. It moves from long to defensive to short, as needed, and when it can't pick one of those, it moves to cash. The latter applies about 23% of the time and is where, since December 18th, it sits at the present time.
    Dec 27, 2014. 05:43 AM | Likes Like |Link to Comment
  • The Black Bear Is Unleashed [View article]
    Good article Eric. It would appear that the oil price weakness is set to continue and a spill over to the market as a whole is a possibility, as you say.

    Our free website, http://www.OnlineSPX.com, issues after the close trading signals for action on the following day and on Tuesday our call was to short the market. The SPX did fall the next day and is now 2.8% lower. Our call for Monday is to stay short.

    The short call was based on a few things. The ongoing declining HYG/TLT ratio, our rating of HYG as a short, have done for a month now, our rating of TLT as a strong buy, a rising VIX and the SPX going off the boil. On Tuesday the SPX dropped from a strong buy rating to cash. Add these up and you have a bearish picture...
    Dec 14, 2014. 05:32 PM | Likes Like |Link to Comment
  • The Market's Knockout Punch Is Still To Come [View article]
    Stephen,

    I agree a grim prospect where both equities and bonds would offer no long term growth.

    You can always trade though, timing the cyclical bull and bear markets as they form within the secular bear. 2003-07 and the current 2009-15, with a bear in between, are examples.
    Oct 15, 2014. 07:41 PM | Likes Like |Link to Comment
  • 10-year Treasury yield bounces all the way back to 2.15% [View news story]
    Hank, I gather there were two things happening, both driven by fear.

    Large cap stocks with strong gains were sold off; note the Russell, which has already sold off, went up; to lock in gains before they could be taken away.

    Two, this money then had a flight to the safety of treasuries, which was so over done at one point, that profit taking kicked in and brought in back to a more realistic gain by the close.
    Oct 15, 2014. 05:16 PM | Likes Like |Link to Comment
  • Stock Market Uptrend Is The Most Overbought In 40 Years [View article]
    gherzog, I agree. No need for semantics. I got the message too, loud and clear and also concur with the message.
    Oct 15, 2014. 04:39 AM | 2 Likes Like |Link to Comment
  • Black Monday The 13th? A Sequel? [View article]
    Bart, good article. thank you. I agree that we may be in for a rough ride. HYG, as I said elsewhere on SA yesterday, closed below it 200sma 5 weeks ago. "Bond markets know best", as they say and this seems to be being confirmed at the moment.

    I am old enough to remember Black Monday well and I agree there was no suggestion in the public domain to warn of its approach. However using the skills I have acquired from 11 years as a full time trader, I can see that Thursday October 15th's close offered a very loud get out of Dodge message, i.e.. 4 days before the crash.

    On this day the SPX closed at 298.08, slightly below the 200sma of 298.32 going into the day. In addition the all important trend slope, a rising or falling 200sma, started falling on that day as well.

    For me breaking of a major trend line such as the 200sma and the beginning of a falling trend slope, is a call to move to cash. Only one of these conditions exist today.

    The 200sma going into today's trading was 1905.32 and as we know the close was well below at 1,874.74. No falling slope has formed yet, but judging by the declining rate of growth in the 200sma, which began on August 26th and is now accelerating, this can't be far away.
    Oct 13, 2014. 08:33 PM | Likes Like |Link to Comment
  • Is Dollar Correction Over, Or Is It Just The First Leg? [View article]
    I closed a trade (YCS) shorting the yen last week, as the yen appears to be showing signs of trend reversal.

    Presumably this is due to the safe haven factor. Research tells me that while Japan has very high debt levels, in troubled times traders discount this due to its high trade surplus.

    Add the unwinding of carry trades, also a safe haven phenomenon, and you get a rising yen.
    Oct 12, 2014. 09:17 PM | Likes Like |Link to Comment
  • Stocks: The Most Important Week In 6 Years [View article]
    Eric, I agree we have an interesting week ahead.

    If we accept the dictum "bonds know best", it would appear that HYG has been flashing a warning for over 5 weeks now. It broke below its 200dma very early in September. It did the same in January 2008 and stayed that way, as it and the SPX fell around 35% over the year.
    Oct 12, 2014. 07:06 PM | 1 Like Like |Link to Comment
  • Europe Woes, Small Cap Decline, Corporate Buyback Excess Fuels Deep Risk For Equities [View article]
    Great article. This quote from the first link sums up the corporate greed problem which in time, will erode the market as reality bites.

    “You can only go so far with financial engineering before you actually have to have a business with real growth,” Chris Bouffard, CIO at Mutual Fund Store.

    The financial engineering is done to lift the share price, so that CEO's / boards can be rewarded on manipulated prices, rather than the far more desirable and difficult to achieve, increase in sales.

    Warren Buffett is a long time crusader for executive remuneration to be both fair and justifiable. Judging by his failed attempt to influence Coca-Cola's board vote on the issue, where he holds great sway, does not bode well for the market as a whole. He abstained, feeling that was as good as a no and the motion carried by 83% vote in favor.

    Companies are even borrowing to facilitate buy backs, increasing shareholder risk, to reward their executives. Aren't the latter there to protect shareholders, not increase their debt risk? Short term behavior for a short term benefit, saddles shareholders with long term debt.
    Oct 8, 2014. 08:28 PM | 4 Likes Like |Link to Comment
  • Are Commodities Waving Red Flags For Stocks? [View article]
    “Never interrupt someone doing something you said couldn't be done.”

    ― Amelia Earhart
    Oct 3, 2014. 07:23 PM | 1 Like Like |Link to Comment
  • Is A Stealth Liquidation In Stocks Underway? [View article]
    Eric, I suspect that a low VIX cannot jog on for much longer. Our data, see below, recognizes that historically it is in an extremely low band and Tuesday’s bump notwithstanding, could see the VIX start to rise this year. Having said that, we call the VIX as a neutral bet right now, neither short nor long and best to be in cash as far as a volatility trade is concerned.

    We applied our short/long formula to over 20 years of VIX data and counted the number of days per thousand that it rated the VIX as a short, i.e. volatility is falling.

    Notable peaks were February 2007, when it hit a then record 458/1000 and then declined steadily until the GFC started 8 months later. The absolute highest was in April 2013 at 476/1000. Interestingly the market appeared to peak in December 2013, again 8 months on from a peak reading.

    After the April 2013 record peak the number fell to 372 in April this year and market caution seemed to be rising. It then rallied to 427 early this month and as of Tuesday’s close it stands at 423, a level it has only achieved on 385 (6.9%) of the last 5,577 trading days, so we are still in low percentile volatility atmosphere.

    This September’s 427 number is a lower high, so maybe the next move will be a lower low sub April’s 372?
    Sep 16, 2014. 07:02 PM | 1 Like Like |Link to Comment
  • Is A Stealth Liquidation In Stocks Underway? [View article]
    Eric, good work. This fits quite closely with our 17 day Advance / Decline count on the SPX which peaked on September 2nd and has been sloping lower since.

    It also tallies with our monitoring of the growing number of SPX stocks that we call as a short. These numbered just 11 on August 28th, but today sit at 46, the highest number in the 18 months we have been counting.
    Sep 16, 2014. 02:49 AM | 2 Likes Like |Link to Comment
  • A Very Imperfect Storm [View article]
    Good article Kevin, as always.

    You mention "...more than half the gains have come in the last few weeks, on little news and even less volume".

    I can offer some anecdotal evidence on the low volume aspect. Our free website, http://www.OnlineSPX.com, splices and dices data on around 1,250 stocks and 600 ETFs. Well it did, until we started culling illiquid ETFs, 30 so far and rising, in the last 2 weeks.

    The site has been running for three years and this is the first time we have had to suspend coverage on ETFs that are simply not trading, i.e. volume is zero day after day. No point covering something that nobody is buying.
    Sep 12, 2014. 03:21 AM | Likes Like |Link to Comment
  • Why Interest Rates Won't Rise - Continued [View article]
    Great set of articles Mary and I could not agree more, particularly with this point;

    "As yields on peripheral EZ debt continue to decline due to ECB programs such as LTRO and TLTRO, European investors will look to the US Treasury market to pick up yield"

    Today we saw the incongruous situation of yields RISING on US, Germany, UK and Japanese treasuries, amongst others, on news of reducing interest rates in the EU... I suspect that if Draghi had announced increased rates, the same thing would have happened, so I do wonder what dynamic is at work here.

    At http://www.OnlineSPX.com, a free website, we go to a lot of trouble tracking trends and we have called TLT a strong buy, trending up, since mid January and still do. Over the same period we have also been calling the SPY, as being in uptrend.

    Back testing to TLT's start in 2002, we find that only 10% of the time, calling it day by day using our methods, has TLT and the SPY been in uptrend lockstep, as they are now, putting us in relatively rare territory.

    As we call trends, over 12 years TLT and SPY have averaged around 25 trading days of uptrend correlation per annum. So far this calendar year, we call it as 163 days.
    Sep 4, 2014. 10:43 PM | 1 Like Like |Link to Comment
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