Mid-week market update: I was wrong. I thought that the stock market was due for a pause and pullback last week (see A possible pause in the uptrend). Instead, it has strengthening on skeptical sentiment and improving breadth. The combination of these conditions are suggestive that the current rally as a lot further to go in...
In Ben Bernanke's famous 2002 helicopter speech, he made the point that the Fed has numerous tools to fight deflation, even if interest rates was at the zero bound: The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
The latest Chinese GDP release came in right in line with expectations at 6.7%, but the growth came at a cost. I had written about this problem in my previous post, Big Trouble with 5-year China?). The Chinese authorities appear to be up to their old tricks again of using credit to drive growth, which is...
Mid-week market update: Let me make myself absolutely clear, I remain intermediate term bullish on US equities based on the points I made in past remarks (see Equities in a macro sweet spot and The trend is your friend (breadth, seasonality and sentiment too)). As the SPX struggles with a technical resistance level at about 2080,...
A reader raised a question after my generally bullish weekend post (see Equities in a macro sweet spot). The latest report from Barron's of insider activity had shown that readings had risen up into sell signal territory. How worried should investors be about this development? Insiders tend not to be short-term traders and...
Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model...
After I wrote my last post about the GAAP gap, which addressed many of the concerns about shortfalls in earnings quality (see The GAAP gap as Rorschbach test), I had a number of discussions about the vulnerability of the stock market to buyback activity. I had been meaning to write more on this topic, but...
Mid-week technical update: In my weekend market commentary, I wrote that I was intermediate term bullish on equities (see The trend is your friend (breadth, seasonality and sentiment too)). However, my inner trader was tactically watching the relative performance of the cyclical sectors for signs of market weakness. Now that cyclical stocks have weakened and,...
I encountered a couple of interesting observations about the bond market on the weekend. First, Tom McClellan pointed out that the latest Commitment of Traders report on bond futures shows that the commercial hedgers, who are thought to be the "smart money" are massively short the bond market. As well, Mark Hulbert observed that bond...
Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model...
Mid-week market update: Rather than the usual mid-week market technical comment, I thought that I would present updates on a number of trades that I had suggested in the past: How to play the Brexit referendum (published February 29, 2016): Setting up for a trade? A possible generational low in oil and energy stocks (published January 20, 2016):...
I've been meaning to write on this topic but I hadn't gotten around to it. For several weeks, I have seen warnings about deteriorating earnings quality. The gap between corporate earnings as defined by Generally Accepted Accounting Principles (GAAP) and operating earnings (earnings without the special bad stuff) has been widening to levels not seen...
Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model...
Mid-week technical update: I wrote on the weekend that I expect that the stock market would continue to rise on an intermediate term basis, but some short-term weakness was likely (see A repeat of the failed Oct/Nov rally of 2015?). What I did not expect was to see a short-term buy signal after the brief...
China's latest five-year plan seems to be a big hit. What's more, the most recent growth slowdown is abating, the stock market is recovering, but my indicators are suggesting that, despite all of the glowing rhetoric, the economy is taking a step back in its path towards re-balancing growth towards the household sector. Five-year plan...
Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model...
Mid-week update: I thought that I would write my mid-week update a day early, because of the binary outcome of the FOMC meeting. This meeting could turn out to be a critical turning point for the short and medium term tone of the markets. It`s becoming fairly clear that the Fed is unlikely to raise...
I normally confine my comments to top-down analysis and I normally don`t make my personal opinions on legal and political issues like the current case of Apple vs. the FBI, but a comment by John Oliver makes many of the issues much less black and white (via Barry Ritholz). I know that Apple (AAPL) has...
Some minor buzz has arisen among finance academics and professionals as a result of a paper by Ronald Kahn and Michael Lemmon, both of whom are employed by Blackrock, entitled The Asset Manager’s Dilemma: How Smart Beta Is Disrupting the Investment Management Industry. Here is the abstract: Smart beta products are a disruptive financial innovation...
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