Daily Global Economic Calendar

Real Time Economic Calendar provided by Investing.com.

Sunday, April 6, 2014

What's Up

------------------Internals Update-----------------------
Surprisingly, internals don't offer much insight into presently potentially dangerous situation.
Over 70% of S&P500 stocks are still bullish and above 50dma. It doesn't tell the future, only present conditions.
MADI is still above 0, while Nasdaq A/D indicator is much weaker and already  spent some time below 0 in March. Confidence Indicators are just in a sideways noise. Golden Indicator is surprising - it was advancing strongly in second half of March, I am really curious at what it will do next. SPX under-performing the world and especially Emerging, but it doesn't last long in recent months.

It strongly feels to me that market is falling apart, everything will get hit, leading to much-much lower levels on popular indexes. Small caps (via IWM) and Nasdaq stocks in general are weaker than large caps, represented by Dow and S&P, but I want to focus on S&P500 for several reasons.

I studied major averages going back over 100 years. There is no dependable set of rules that would enable a person to ride every zig and zag. On a top of that they keep changing the rules of how indexes composed and calculated. That cockamamie S&P500 index is calculated based on publicly available float, which is misleading number, and then there is a divisor (o, statistics). Historically index moves up and down 10 to 30 percent at a clip without rhyme or reason, and can go for over 20 years in a wide range without any noticeable progress or just rip endlessly higher for years. We seemed to be in a former up until last year. As I pointed out back in early 2013 (link): "Sure, we can learn from history, but not as much as you think."

There is an unusual divergence in performance of growth VUG vs value VTG stocks, over a recent couple of months. Value out-performance is uncommon, as growth stocks are market leaders most of the time. So much so that 90's crazy bull market was all growth, while value was killed and many good companies in their own mini-bear market, even with averages ripping higher.

Lets assume for a second that miscreants from McGraw Hill are actually doing a good job (for index that is) and that ,based on Dow Paradox (link), "The purposeful manipulation of index components is designed to produce positive outcome, thus creating an upward equity slope". Then it would be possible to find good, profitable, growing companies, that are also in up-trend, among S&P 500 index components. These type of stocks should be something similar to System12 components, as this is how a company becomes one of Mega Dozen (MD) - grow to become The Biggest. The bottom of the barrel should be exactly the opposite - a prime candidate for short before these lagging dullards are dropped from index (and especially after).

OTOH, I am looking for new emerging Theme, not based on my own opinion (which is usually correct, but badly timed), but on price action and fundamentals of present market leaders. The trick is to find a Theme that is emerging from years/months of basing, so I can 'buy low - sell high'; and at the same time the one that is already moving on daily/weekly, so I can 'buy high - sell higher'. This is an epitome of System9.

---------------------------In The News----------------------------
The biggest unreported news is a string of at-least 12 suicides of high level financial services executives around the globe. Tragic and not comical at-all, the story is custom made to fit any popular conspiracy theory. I wonder why nobody seems to step forward?
JP Morgan, Deutsche Bank, Swiss Re, ABN Amro etc. Clean-up or damage control...he-he

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