Indexor

ETF Trends: New Reality Weighs on Investors and Stocks

Excellent article. I appreciate the sharing of your trend work on such a broad array of asset classes, especially Bonds and Sectors, which are often overlooked. Your Momentum and Market Diary numbers are also routinely ignored by many but actually can provide very good tells. Thank you.

Investor Capitulation: What to Watch Now

As always, excellent article Chris. Although the VIX is down around 42 this morning, and will likely see that fall further if yesterday's large rally has any follow through over the next few weeks, the 56.65 is a good target to look for when we have that next (last?) downleg. We might not see that selloff in March, as we have several months of declines to unwind in a simple oversold bounce. Whether it's April, July or October, I believe we will see that 640-650 level, or lower, on the S&P500 before we put in a meaningful bottom.

My concern is that, even when the bottom is found, what is going to propel us higher? If the government continues to spend massive amounts of money that we do not have, and the country is pulled (while kicking and screaming by capitalists) toward socialism, it could easily take 20 years before a new generation of investors return to the markets.

Even though we may not be far from "the bottom," we may be waiting a lot longer for investors to be able to make decent returns from the stock markets around the world. Only traders are likely to profit over the next decade or two, assuming they aren't taxed out of profitability.

What Will Happen If America Returns to an Historical Savings Rate?

Excellent article. Interesting comments as well.

I believe the resulting impact on the investment markets around the world will be continuous contraction for the next 10-15 years. In the US, as Obamanomics and the liberal congress double the size and scope of the government, spending borrowed dollars from foreign governments, stimulating the "middle class" with welfare checks while overregulating and overtaxing succesful entrepreneurs, creative risk takers and "the evil corporations with their private jets," both business and stock markets are likely to languish for decades.

As the pendulum swings left toward an entitlement mentality, I believe investment returns will be marginalized under Obama's class warfare and collectivist agendas. His policies will likely be tolerated for a term or two (4-8 years) but our standard of living will quickly deteriorate. A return to capitalism, freedom from unnecessary government intervention and rewards for succesful individual risk taking are unlikely to find traction again for another 8-12 years. Yet, even as a new cycle begins, it will require a whole new generation of investors (being born at the moment) and possibly another 25 years before the next bull market returns.

Falling TED Spread Indicates Safer to Re-Enter Market

Matt:

The only data I can find on the TED Spread is on stockcharts.com and it only goes back to late September. Yahoo doesn't cover it nor does Bloomberg.com. Any ideas on a source to find it?

The Dangers of Timing the Market

David, I simply grin when these same old stale statistics, created by the mutual fund industry, who only earn fees as long as investors REMAIN FULLY INVESTED in their funds (no conflict of interest there), show that "It's time IN the market, not timing the market."

Or DALBAR (who make their living consulting to the mutual fund industry) updates their "If you only miss the 40 best days" argument. Punk_Ash already gave you a perfect answer. Why look at only HALF the equation? Instead of only missing the 40 BIGGEST UP days, also add to that missing the 40 BIGGEST DOWN days as well. The numbers will surprise you.

Both DALBAR and the mutual fund industry have misled the general investing public on this topic for a very long time. Even after yesterdays largest ever one-day gain of 936-points, wouldn't you (and your clients) be better off if you had sold your mutual funds in early January, as the market began selling off? Yes you both would be SUBSTANTIALLY better off.

I suggest you look up the name Mebane Faber. Find an article he published here within the last six months in which he provides a link to a study he conducted that was titled: "A Quatitative Approach to Tactical Asset Allocation." Using a very similar methodolgy, our real world experience allowed us to sidestep the carnage beginning in October of 2000 and got us back in during March of 2003. Again, we exited early in January of 2008 and remain on the sidelines until the markets tell us to return.

Please take a another step forward and get beyond the boiler plate mutual fund "educational research" that is so widely available. Think for YOURSELF and do your OWN research and you may find there really are better and safer returns available to you and your clients than from the "Buy-and-Hold" methodology that only guarantees profits to the mutual fund, in good markets AND bad. As Mebane stated in his article, it is possible to achieve "equity-like returns with bond-like volatility and drawdown" which is what most mutual fund/ETF investors strive to achieve.

Post-Bailout Investing: The Big Picture

As always, good information.

On the Dollar and Commodities: Currencies Move Because We Let Them

Excellent work. I appreciate your use of numerous Stockcharts to assit in making your points. In this article I especially enjoyed the final data on the importance of cutting losses. Cutting losses short is a practice I have utilized for years, even though it flies in the face of all the buy-and-hold, invest for the long run, Warren Buffett fundamental types. Technical analysis protected my clients money by exiting US stocks in October of 2000 and staying out until March of 2003. Our US stock allocations were sold again this past January.

I am curious about your use of a 325-Day moving average. It is not a fibonacci number and I have never seen it used before by Murphy or any of the other technicians. Does it have any significant characteristics that caused you to choose it?

Thank you for sharing your thoughtful insights.

Risk Management in Trending Markets

Exceptional article! Thank you for sharing your work. I look forward to reading your articles in the future.

When the Market Is Down, Benchmark to Cash

And what was the CPI for the 6/30 YTD period?

Timing the Rise of the Phoenix (and Markets)

Technical analysis has us in a bear market. When we are oversold, as we are now, we will continue to get upside rallies (which is good for traders) but they won't last and we will see further and deeper downturns, bad for investors and those with a buy-and-hold strategy for mutual funds.

Some indications include the S&P 500 INDEX trading below its 200-day simple moving average since the beginning of January. The NYSE Bullish Percent Index ($BPNYA on stockcharts.com) posted a negative Point and Figure signal on June 11. NYSE New Highs-New Lows also turned negative June 11, while the NASDAQ New Highs-New Lows has been bearish since the fourth week of October and the NASDAQ INDEX has fallen from over 2800 to 2450. The monthly S&P 500 INDEX Rate-of-Change Ratio has been bearish since late December as well as the monthly NYSE composite's MACD Histogram. Even the Vix is over 20.

4 Market Lessons from This Rocky Period

Which begs the question - why would anybody in their right mind follow fundamental analysis of companies and rely on such data, including earnings "estimates" to invest money? That is reckless thinking in our current manipulated markets. Wall Street is becoming clogged by spoiled little children known as shareholder "activists." Stir in the removal of the uptick rule and out-of-control hedge funds. And sadly, the total and complete failure of the SEC to even understand so many of the financial products that have hit the markets in the past ten years, especially in the fixed-income markets, and nothing more than a total disaster is now waiting to blowup. And where is the "regulation" (using the term very loosly) by the CFTC????

In a world of $50 Billion Warren Buffetts adding $10 Billion in a year, Billion dollar Wall Street CEO bonuses and $150 million "severance packages" not to mention the Clintons recent revelation of their $100 million "payday," the question remains: How are you going to get yours? If you're still thinking about "efficient markets" I'm sure somebody has a nice bridge they would like to sell you today, toll booths included.

Wall Street Breakfast: Must-Know News

"Bear Stearns Current Yield Fund (YYY), which will aim to beat money-market funds by investing in a range of fixed-income products..." Somehow this doesn't give me a sense of security for any of my client's capital. It would be similar to giving money to Eliot Spitzer for an IPO based on dating services.

Changing of the Short Uptick Rule: Bad Timing for a Bad Idea

The SEC is currently BROKEN. The have continued to make one bad decision after another. While they continuously harass brokerage firms and RIA's, they also create new compliance rules they aren't required to communicate and punish firms with "deficiencies" over mundane paperwork and rules that do nothing to protect investors. They are never held ACCOUNTABLE for their own actions.

The removal of the Up-Tick rule was simply another in a long list of extremely bad decisions made by the NYSE and the SEC, with no accountability. The ongoing kowtowing to hedge funds and institutional investors with such blatant disregard to individual investors is stunning. These transgressions need to be addressed.

Regulators need greater industry insight, potentially by a group of praticing brokers, advisors, institutions and hedge funds to foster a more realistic view of the differences in each of our businesses. We need to scrap the 34 Act, 40 Act, etc., and create new rules that are more specifically applicable to each of the different businesses we currently operate in 2008. We also desperately need a new standard of regulatory accountability. Potentially, securities regulators should be subject to the same lawsuits, fines and criminal laws that the rest of us in the investment business are subject to. That may deter some of the poor decisions that continuously rain down upon us and create the level of accountability that the industry so desperately needs.

Timing the Market With the 200 DMAs

For Ricky: the "D" stands for "Day" as in 200-Day Moving Average instead of 200-Week Moving Average or 200-Month Moving Average.

For aaCharley: Mr. Nusbuam has provided two excellent "data" examples to back up his article. You may need to re-read these charts a little closer at stockcharts.com to realize the true benefit. Having used a similar strategy during the 2000-2002 Bear market, I can assure you that a substantial amount of money was saved by sitting in cash. And, this strategy can be utilized in other asset classes as well. Remember, this is investing where no strategy is an absolute. But using the 200-Day moving average, as Mr. Nusbaum has suggested, may provide you with another tool that can save your client's money in a down market, reduce their portfolio risk (Standard Deviation) substantially and increase their overall return.