The situation in Catalonia is a mess. Catalan frustrations are understandable. The region is the most prosperous of all in Spain, and shares similar characteristics as norther Italy to the rest of Italy, or North Rhine-Westphia and Bavaria to Germany. Here at Humble Student of the Markets, we try not to take political positions, but we stand in …
Nearing upside target, what now?
Mid-week market update: Back on July 19, 2017, I wrote about using point and figure charting as a way of projecting an upside SPX target when the index stood at 2473 (see What’s the upside target in this rally?). Using different sets of inputs that represent different time horizons and risk tolerances, I arrived at a target range, and a …
How American policy could tank China
As China approaches its 19th Party Congress, there has been no shortage of analysis about what to watch for. Here are a couple of examples worth reading: The meeting that could seal Xi’s grip on China (Bloomberg) Beijing’s Game of Thrones: Signaling loyalty before the Party Congress (China Focus) Of particular importance is the Reuters report that the Party plans …
Buy the breakout?
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 the 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 is an asset …
The things you don’t see at market bottoms, CFD leverage edition
It is said that while bottoms are events, but tops are processes. Translated, markets bottom out when panic sets in, and therefore they can be more easily identifiable. By contrast, market tops form when a series of conditions come together, but not necessarily all at the same time. I have stated that while I don’t believe that the stock market …
Equity lessons from the bond market
Political operative and former Clinton advisor James Carville once quipped that he wanted to be reincarnated as the bond market so that he could intimidate everybody. Equity investors and traders are well advised to remember that comment, as there is much to be learned from a cross-asset, or inter-market, viewpoint from bond market action. For example, the relative performance of …
The Fed has spoken (and what that means)
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 the 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 is an asset …
NAAIM buy signal update
I had highlighted an unusual contrarian buy signal in my last post (see Round number-itis at 2500). NAAIM sentiment, which is reported weekly, turned anomalously bearish last week and fell below its lower Bollinger Band. Past episodes of such occurrences have turned out to be very good contrarian buy signals. The reading last week was anomalous because every …
Round number-itis at 2500
Mid-week market update: I normally write my mid-week market update on Wednesday, but the market action on FOMC decision days tend to be wildcards and not necessarily indicative of future market direction, therefore I am writing my commentary a day early. I agree with Jonathan Krinsky of MKM Partners when he wrote that the stock market is likely to encounter …
A secular bottom for inflation?
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 the 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 is an asset …
Things you don’t see at market bottoms, Paris Hilton edition
It is said that while bottoms are events, but tops are processes. Translated, markets bottom out when panic sets in, and therefore they can be more easily identifiable. By contrast, market tops form when a series of conditions come together, but not necessarily all at the same time. I have stated that while I don’t believe that the stock market …
A “good overbought” advance, or an imminent pullback?
Mid-week market update: A number of major averages hit fresh all-time highs this week. For traders and investors, the question is whether the market is likely to continue to grind upwards while flashing a series of “good overbought” signals, or will it pull back? Here are the bull and bear cases. Fresh highs are not bearish The most …
The Fed’s perfect storm of 2018
I see that the world is catching up to me. The resignation of Federal Reserve vice chairman Stanley Fischer has sharpened the focus of analysts on the future composition of the Fed Board in determining the direction of monetary policy. This is a topic that I have been writing about since June (see A Fed preview: What happens in 2018?). …
Correction is over, wait for the blow-off top
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 the 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 is an asset …
A stepwise market advance
Mid-week market update: In my post written last Sunday (see September uncertainties), I outlined three disparate sources of uncertainty that faced investors in September. Legislative uncertainty over the debt ceiling and tax reform; Geopolitical uncertainty over North Korea; and Uncertainty over Fed action. While some of those problems have been temporarily resolved, developments since the weekend have raised further questions …
The bullish implications of the North Korean Bomb
In the wake of the news of the latest North Korean news, Donald Trump responded with his usual tweetstorm. The markets have learned that Trump doesn’t necessarily follow up presidential tweets with action. Official statements, on the other hand, are another matter. In the aftermath of the North Korean missile test which overflew Japan, the statement that “all options …
September uncertainties
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 the 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 is an asset …
The surprising conclusion from top-down vs. bottom-up EPS analysis
Mid-week market update: Business Insider recently highlighted an earnings warning from Strategas Research Partners about possible earnings disappointment for the remainder of 2017 and early 2018. Expect a deceleration in EPS growth because of base effects: A big part of Strategas’ argument stems from the fact that the period against which current earnings are compared — the first half of …
Hurricane Harvey as a mini-stress test
Q: What’s George W. Bush position on Roe vs. Wade? A: He doesn’t care how people get out of New Orleans after Katrina. – Joke that circulated in the aftermath of Hurricane Kartina There are many stories coming out in the wake of Hurricane Harvey that hit Texas. I was most struck by this BBC account of the woman who …
Is the Fed tightening into a stalling economy?
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 the 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 is an asset …