The US Market commentary

August 31:

Corrective Action In the Market Could Be Developing

By Doug Kass

Our Federal Reserve-centric stock market followed the script on Friday, moving both up and down as Fed chair Janet Yellen used her Jackson Hole speech to say something while committing to nothing.

Stocks briefly rose when Wall Street focused on Yellen’s remarks that the Fed might use additional stimulus tools, with the Fed chief saying: “Future policymakers may wish to explore the possibility of purchasing a broader range of assets.”

But equities quickly fell back as the business media quoted Yellen as saying: “I believe the case for an increase in the Fed funds rate has strengthened in recent months.”

The Fed chair argued that the data show the U.S. economy is reaching both full employment and the central bank’s inflation goals. Vice Chairman Stanley Fischer then told CNBC that Yellen’s comments were “consistent” with a September hike.

Contributing to the downside move, St. Louis Fed President James Bullard more or less warned of possible asset bubbles on Friday. Traders and investors also decided to rethink hawkish comments that Kansas City Fed chief Esther George had given on Thursday.

All in all, as I wrote in Friday’s missive The Fed Has No Cred, the central bankers’ musings and arguments are beginning to resemble the U.S. presidential election!

Was Friday a Reversal Day?

The market ultimately ended Friday off of its session lows, but the S&P 500 modestly breached its six-week-old narrow price range to the downside.

My guess now is that corrective action could be developing after Friday’s loss of momentum. Step back for a moment and you’ll see that nearly all of the S&P 500’s post-Brexit-vote gains came in the first three weeks following Britain’s June 23 referendum.

While stocks have seen been selective follow-through since mid-July, the market’s strength has narrowed. That’s a warning sign. Telecoms, utilities, REITs and defensive consumer staples closed near multi-month lows, while technology, banks and brokerages ended near their multi-month highs.

Market sentiment has become similarly bifurcated. While investor sentiment as measured by various surveys remains at a bullish extreme, most of business TV’s “talking heads” are alert to the uncertainties that surround the November election and the market’s historical September weakness.

Lastly, intermediate indicators like the McClellan Summation Index remain at high overbought levels.

The Contrarian View

Now, I always like to consider contrarian possibilities, and today, I see two potential ones:

* A continuation of a narrow trading range and very low volatility, which we saw in the month-long period prior to Friday.

* A quick market drop and a spike in volatility.

But the clues are unclear as to what’s really going to happen. After all, we saw a sharp U.S. dollar bounce on Friday, while gold broke down to a recent low and bond yields moved above their recent range. (The 10-year U.S. Treasury yield closed at 1.62% after trading in a 1.5%-1.6% range for weeks.)

The Bottom Line

I suspect that Wall Street will be thinly populated Wall Street during this last week of August as we head toward the long holiday weekend.

So, it wouldn’t surprise me to see weekly volume hit a low, with prices continuing in a narrow band. As such, I think that we’ll get little indication this week of stocks’ prospective price movements into the autumn.

Nevertheless, I’m left with two key conclusions and observations from last week:

* The markets are moving more than ever in response to “Fedspeak.”

* Friday was something of a reversal day, at least in technical terms.

Add it all up and, I remain cautious for the post-Labor Day period. So I’m sticking with the investment mantra: “Sell In September or Get Dismembered!”

Doug Kass is president of Seabreeze Partners Management Inc. 

August 08: Can we trust this rally (follow-up)

There are lots of bears out there, but they are in full retreat as the US markets keep soaring.

Friday’s rally came in the wake of news of the second consecutive strong monthly employment report; nonfarm payrolls rose by 255,000 in July, and on top of June’s blowout gain, which was revised up by 5,000, to 292,000. The past two months’ strong showings all but put the shockingly weak May payroll numbers as one time outliner.

The latest data are robust enough to keep the labor market on track, but not so strong as to spur the Federal Reserve to raise interest rates in the near term. Meanwhile, central banks abroad—most notably last week the Bank of England—continue easing. The United Kingdom central bank lowered its key lending rate 25 basis points (one quarter of a percentage point), to 0.25%, the lowest in its 322-year history, while expanding its bond purchases—even including corporate securities—to counter the economic impact of Brexit.

All that liquidity sloshes around the globe in search of the highest returns, which lifts asset prices, including U.S. stocks and bonds.

That said, the advance has been accompanied by low volume; even Friday’s rally came on below-average turnover. That should keep investors alert to a “bull trap.”

July 19  Can we trust this rally?

 

S&P just broke out of its 413-day go-nowhere trading range of 1820-2130 last week. How it’s possible the market is trading at all-time highs with so much global uncertainty and angst

First, good news:

Representing the “better” category of data:
• Industrial production up 0.6% in June versus 0.3% consensus
• Retail sales up 0.6% in June versus 0.1% consensus
• Initial unemployment claims down to 254,000 as of July 14 (weekly) versus 265,000 consensus
• NFIB small business optimism index up to 94.5 in June versus 93.9 consensus
• Payrolls up 287,000 in June versus 180,000 consensus
• ISM Non-Manufacturing index up to 56.5 in June versus 53.3 consensus
• ISM Manufacturing up to 53.2 in June versus 51.3 consensus

Many of the above economic indicators—including jobless claims and the ISM readings—are leading indicators. The stock market is a leading economic indicator as well. To see them collectively moving higher is not surprising.

Second, cautionary facts:

Nine out of 10 S&P stocks are already above their 50-day averages. Investors last week plowed $11 billion into stock funds, the most in nine months. It seems that this rally has been helped by central bankers forcing money into stock markets. U.S. stocks get bids because, quite frankly, what else is there? Treasury yields are sagging near all-time lows, and investors actually paid to lend money to governments because of negative rates. Roughly 30% of global bonds, or $13 trillion worth, now feature negative yields, up from none just two years ago, notes Bank of America Merrill Lynch. A conventionally balanced portfolio of 60% U.S. stocks and 40% Treasuries yields just 1.9%, the lowest ever. All this forces investors looking for bond substitutes to go further into stocks, real estate, emerging markets. Investsors around the globe are chasing yields. Yield-pimping sectors are doing extremely well: telecoms (up 22%) and utilities (up 20%).

What central bankers can offer, they can take away: watch for Federal Reserve policy. In the immediate aftermath of Brexit, the fed funds futures market was forecasting a 15% chance of a rate hike by year-end; while as of Friday, it was up to nearly 45%. The three-week decline in the volatility index (VIX) has been the largest on record. The 10-day advance/decline is at its highest level since late-2011. However, individual new high data have not expanded . And seasonality could spoil the bulls’ party as July strength has historically often led to a weaker August-September (especially in election years).

AY 多雲

 

June 28  What? What Brexit?

The S&P 500 rose 1.8% to 2,036.09 today, while the Dow Jones Industrial Averageadvanced 269.48 points, or 1.6%, to 17,409.72. The Nasdaq Composite gained 2.1% to 4,691.87.

Wells Capital Management’s Jim Paulsencalls the Brexit crisis “wimpy.” He explains why:

At least for the US Markets, this has been a wimpy crisis. The S&P is less than 2% below its level of a week ago Friday, the DXY dollar index is only a little more than 1% higher than it was a week ago Friday and the 10- year bond yield is less than 10 basis points below where it was a week ago Friday.

Would US investors even know it was a “crisis” unless they listened to or read the news???

Just an impression … Awful wimpy crisis so far!

AY 多雲

June 22  SKEW & Brexit

The CBOE Skew Index – referred to as “SKEW” – is an option-based indicator that measures the perceived tail risk of the distribution of S&P 500® log returns at a 30- day horizon. Tail risk is the risk associated with an increase in the probability of outlier returns, returns two or more standard deviations below the mean. Think stock market crash, or black swan. This probability is negligible for a normal distribution, but can be significant for distributions which are skewed and have fat tails.  SKEW quantifies the additional risk.

The value of SKEW increases with the tail risk of S&P 500 returns. When there is no tail risk, SKEW is equal to 100. Historically, SKEW has varied in a range of 100 to 150 around an average value of 115. Close to 100, the probability of a steep market decline remains very small. As SKEW rises above 100, this probability increases. The low skew readings might be a sign that portfolio managers and other players in the index market are not aggressively taking positions in S&P 500 puts to hedge stock positions. The high skew readings suggest otherwise.  As of today, Skew is at 136.

Takeaway: enough puts have been purchased by portfolio managers; speculative call buying have been done as well. Whether Brexit happens or not, by June 24, many out of money calls and puts are going to lose money fast, faster than you can say “fast”.

AY 多雲

June 20  Brexit= non event=another Y2K

Brexit is probably most widely broadcasted known unkown event ever. The reality is the market knows what to expect, this bipolar event has almost all participants of market on edge, yet folks are lined up to buy weakness, and global central banks are primed with liquidity. I do hope that the event come and go without much of shaking to the steability of the US market. Y2k deja vu?

More important news for me is this one:  on Friday, June 17,  St. Louis Fed President James Bullard released a paper advocating that based on the current economic “regime” of roughly 2% growth, a 4.7% unemployment rate, and inflation approaching the Fed’s 2% target for the personal consumption expenditures deflator, one increase in the fed-funds target, to 0.63% should suffice. And so long as those economic conditions obtain, that’s where he expects the funds rate to be in 2017 and 2018.

My call: buy gold on any kind of weakness.

AY 多雲

 

June 09     Gold, I tell ya!

George Soros The billionaire fund investor recently guided his firm, Soros Fund Management to  be positioned defensively for a possible collapse of the US and European markets. It’s recent 13-F filings showed that Soros’ firm loaded up on bearish put options that profit from declines in the SPDR S&P 500 ETF (SPY). Soros also added a 19 million-share stake in Barrick Gold (ABX) and a one million-share chunk of Silver Wheaton (SLW)

The rationale behind his move: Brexit referendum that may pull the UK out of European Union;  China’s bad debt issue may spiral out of control.

Gold prices ticked higher on Thursday to the best level in nearly one month. Futures prices rose 0.4% to $1,267 in recent trading, while the SPDR Gold Shares (GLD) added 0.2%.

Load up gold, this time?

AY 多雲

June 01

Where Are We with Market Valuations?

June 1st ushers in a new quarter. It is time to look at market valuations.

1. the ratio of total market cap (TMC) to GNP

Over the long run, stock market valuation reverts to its mean. A higher current valuation certainly correlates with lower long-term returns in the future. On the other hand, a lower current valuation level correlates with a higher long-term return. The total market valuation is measured by the ratio of total market cap (TMC) to GNP — the equation representing Warren Buffett’s “best single measure”. This ratio since 1970 is shown in the second chart to the right. Gurufocus.com calculates and updates this ratio daily. As of06/01/2016, this ratio is 118.7%.

Based on these historical valuations, we have divided market valuation into five zones:

Ratio = Total Market Cap / GDP Valuation
Ratio < 50% Significantly Undervalued
50% < Ratio < 75% Modestly Undervalued
75% < Ratio < 90% Fair Valued
90% < Ratio < 115% Modestly Overvalued
Ratio > 115% Significantly Overvalued
Where are we today (06/01/2016)? Ratio = 118.7%, Significantly Overvalued

2. Shiller P/E: 26.3 (+ 0.11%)

Shiller P/E is 57.5% higher than the historical mean of 16.7
Implied future annual return: -0.2%
Historical low: 4.8
Historical high: 44.2
S&P 500: 2099.33
Regular P/E: 24 (historical mean: )

AY 多雲

May 26 Final thrust to lower high, and then…

There is still a huge amount of chart resistance overhead on the S&P 500 between 2115 and 2135, in round numbers, from the top of the market’s two-year sideways range.

AY 多雲

May 23 The Standard & Poor’s 500 index weekly review and outlook

1. Review:

The Standard & Poor’s 500 index closed at 2130.82 on May 21, 2015, 3.7% higher than it did on May 20, 2016. The Dow Jones Industrial Average ended last May 19 at 18,312.39, some 4.4% above where the blue-chip gauge finished the week. The Nasdaq Composite hit 5218.86 on July 20, almost 9% above Friday’s close.

SP0520

2. Forecast

Louise Yamada, the wizard of market watchers said recently that “in looking at a Dow chart over the past few months, there have been recurring moves every two months or so in the past half-year, with high-water marks reached last December and in April around 18,000 and lows around 16,000 (not including a short spike down to around 15,660 on Feb. 11).” Now she sees the Dow rolling over once again. From Friday’s close at 17,500.94, a break to 17,100 would point to 16,000 as the next stop. In terms of the S&P 500, breaching 1985 (from Friday’s close of 2052.32) would put the index on the way to its key support of 1800, she says.

Flattening 2/10 yield curve: another indicator of bond market expectations, 2 year vs. 10 year UST yield spread, has been a very accurate recession forecaster in the past as it has inverted (short yield trading above long yield) 100% of the time ahead of the past five past slowdowns. The good news so far is the 2/10 yield curve is nowhere near an inverted state yet.

S&P prices were choppy and displayed a series of lower highs and lower lows, though the technically important 2040 support neckline of the head and shoulders pattern did not break decisively. The short-term trend remains down and key intermediate term indicators has not reach oversold levels, as measured by the NYSE McClellan Oscillator breaching the -80 level and VIX Index moving above its Bollinger Band, which suggests that the current corrective action isn’t finished.

3. Concern: fragile US economy and policy mistake

Steven Blitz, chief economist at ITG Investment Research, assigned a 60% chance of probability of recession in the next 12 months, largely because of possible policy error:

“My 60% probability really means to convey a sense that the economy is nearing a point where policy mistakes can kick it into recession. A lot of data appear to be more middle or end-of-cycle in their behavior. This means to me that the economy is more susceptible to a policy mistake. The Federal Reserve really needs to be careful and more recent statements from [Chairwoman Janet] Yellen suggest they are.”

Blitz went on to outline his bearish scenario:

“Understand the Fed tightening began after QE3 ended, and the forward market started pricing an aggressive forward trajectory for Fed policy, aggressive for this economy. Media focuses on the funds rate, but forward pricing matters most. Forwards determine the Treasury yields against which mortgages, corporate borrowing, and dividends are priced. As an increasingly aggressive Fed policy tack was priced in, capital markets reacted as they always do once the Fed starts in this direction—the 2s/10s yield curve flattened, equity markets weakened, and economic growth began to decelerate, which continued into the first quarter.”

AY 多雲

May 18 Stocks Slide as Hawkish Minutes Highlight Rate-Hike Potential

The US Fed just released its minute from April FOMC meeting at 2:00pm EST. The key phrase is “Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June.”

AY 多雲

A “collar” that pays to hedge S&P downside risk

Buzz Gregory, one of Wall Street’s most respected strategists, is telling clients to prepare for the stock market to suffer a “death by a thousand cuts” correction.

In a recent trading note to his clients at Goldman Sachs, Gregory warned that the Standard & Poor’s 500 Index could decline 5% to 10% over a prolonged period without a substantial move in the CBOE Volatility Index (VIX). This winnowing down could occur as investors react to market headwinds including rising stock valuations, slowing stock buyback demand, potentially hawkish U.S. rate surprises, negative economic growth and event risks like Brexit and the U.S. election.

Gregory says the S&P 500 options market is pricing a 5% stock correction over the next three months at odds of 21%, just below the long-run average of 23%. The market puts the likelihood of a 10% drawdown at 11%, compared with a long-run average of 13%.

Yet the VIX, which most investors use to assess risk and options market dynamics, is muted. The fear gauge is around 14, a level that suggests investors are complacent about market risks. By Gregory’s valuation methods, which rely heavily on economic data, the VIX should be priced around 18.5.

To temper market risks, Goldman is advising clients to sell S&P 500 upside calls and buy puts. This “collar” strategy protects a stock portfolio against a decline in exchange for limiting the upside. The put, of course, increases in value if stocks decline. The call should expire worthless if stocks fail to advance (and the seller pockets the income). Many institutional investors regularly collar portfolios to lock in gains and insulate stocks from declines.

AY 多雲

The US market weekly review (May 09-May 13)

It was a fluctuating week for the major indices of US market.  The Dow posted its biggest gain since March on Tuesday, only to record its worst fall since Feb 11 the next day due in part to big retail chains’ weak earning reports. The real problem is weaker consumptions growth. And that problem isn’t going away.” Given that consumer spending amounts to roughly 70% of gross domestic product, it is hard to see how a hibernating consumer bodes well for economic growth. “One would think that the fact that one of the warmest winters in 122 years, robust job growth and tax refunds — and $32 trillion in asset gains (!!) — failed to persuade consumers to accelerate their spending would spur a rethink” on the part of investors, Stephanie Pomboywrote from MacroMavens advisory commented a week ago.
Investors are facing a variety of overhangs, from worries about consumer spending to cloudy expectations for corporate earnings and next month’s Federal Reserve meeting. Also, the UK is poised to vote on whether to exit the European Union. First quarter earnings season has so far come in ahead of lowered expectations. Still, corporate profits are expected to fall for a fourth consecutive quarter for the first time since the financial crisis.

Where are we headed? “Something happened Friday that’s happened only twice in over 20 years on the $SPX: The weekly 100MA has crossed over the weekly 50MA,” the blogger NorthmanTrader said. “The last two times this happened carnage followed.” this is truely somthing to chew on over the weekend.

AY 多雲

May 12 Extreme central banks intervention is distorting The Sanity Of The Stock Market

Today’s interesting read: “If you have trouble with the concept of asset prices pushing higher given numerous fundamental concerns (earnings, margins, productivity, valuations, etc.), keep in mind that the Fed would take whatever means necessary to prevent significant deflation in the United States. The Bank Of Japan and European Central Bank have already moved into “whatever means necessary” territory; the Federal Reserve may not be far behind. While investors prefer to see their investment portfolios rise instead of fall, when government institutions start distorting markets there will eventually be negative consequences.”

From Bloomberg:

A majority of analysts surveyed by Bloomberg predict the Band of Japan will boost its ETF buying — a move that could come as soon as Thursday. “For those who want shares to go up at any cost, it’s absolutely fantastic that the BOJ is buying so much,” said Shingo Ide, chief equity strategist at NLI Research Institute in Tokyo. “But this is clearly distorting the sanity of the stock market.”

AY 多雲

May 11 The US market recap and EOD interesting reads

May 11 美加股市陰轉雨、後面越下越大。
如何從一個側面看股市天氣?Smart money vs dumb money: behavioral measures of investor sentiment: Generally, investors should follow the Smart Money traders at extremes, while doing the opposite of the Dumb Money traders at extremes.
According to Liz Ann Sonders at Schwab, “examples of some Smart Money indicators include the OEX put/call and open interest ratios, commercial hedger positions in the equity index futures, and the current relationship between stocks and bonds. Examples of some Dumb Money indicators include the equity-only put/call ratio, the flow into and out of the Rydex series of index mutual funds, and small speculators in equity index futures contracts.” She went on to say that “The spread between the two recently widened significantly (before converging slightly); with Smart Money optimism down at levels only seen a few times in the past several years. This is another sentiment measure suggesting some near-term caution.”

AY 多雲

May 10 The US market recap and EOD interesting reads

1. Market recap: 
May10
2.No more EOD commentary from now on
From now on, I will refrain from making any commentary at the end of trading day. The market is a living being with twisted psyche (collective one from all market participants), too complex to even scratch its surface. Market pundits come and go making comments all the time, in the end, these comments mount to nothing. That means I have to keep my 2-cent market opinion to myself. A humble trader with few words, that’s role that I enjoy being in. Having said all that, I will share any interesting readings that I come across with you, my dear readers (followers).   
 
3. interesting read
 
Excerpt from “The Black Swan,”  by Nassim Taleb
“There are two varieties of rare events: a) the narrated Black Swans, those that are present in the current discourse and that you are likely to hear about on television, and b) those nobody talks about, since they escape  models — those that you would feel ashamed discussing in public because they do not seem plausible. I can safely say that it is entirely compatible with human nature that the incidences of Black Swans would be overestimated in the first case, but severely underestimated in the second one.”
 
My question to myself and to you: “Can we really hedge against or even profit from 2nd type of Black Swan event?” 
 

AY 多雲

May 06 The US market recap and EOD commentary

1. Market recap:

May06

2. Commentary: today is the job number day. At 8:30am, US labor department released April Non-farm payroll report. It disappointed with only 160 k new jobs added in April. Feb and March payrolls were revised lower as well. Unemployment rate was unchanged at 5%. The initial negative reaction of market participants dissipated graually throughout the day. Rational behind the coming back of the indice: June or September rate hike is less likely now given this less good job report. Bad news is good news as the Fed has more reason to stay “easy” for longer. What asset class to own if ultra low rate is here to stay longer? if you are regular reader of my daily comment, you should know by now.

AY 多雲

May 05 The US market recap and EOD commentary

  1. Market recap:

May05

  1. Commentary: the US market was in wait-and-see mood today as traders refrained from holding too many long or short positions. All eyes are on April Non-farm payroll number, which is to be released at 8:30am tomorrow. Nonfarm payrolls are expected to extend their very solid trend with a 200,000 rise in April that would follow March’s gain of 215,000. The unemployment rate is expected to dip 1 tenth to 4.9 percent. The participation rate has been on a notable rise in this report as newcomers enter the labor market. Average hourly earnings are also expected to show traction, at plus 0.3 percent for a second month.

EmployApril

if we get any number less than 150K, we will be in for a mini market correction, which may push the indices to prior break-out level. In the case of S&P, we may be looking at first stop of 2038 and failing that leverl, then low of 1975. if we indeed get there, then it will be a good buying opportunity.

明早8:30美國勞工部將公佈美國第一季度非農就業報告, 如果新增就業人數少於20萬,或甚至低至15萬的話,美股將繼續走低。

AY 多雲

May 04 The US market recap and EOD commentary

  1. Market recap: a picture is worth mannnnnnnnnnny words. Please see for yourself.
  1. Commentary: S&P is at 2050 now, sitting on 50 day moving average and is still above its 200 day moving average of 2013. So far, it is still a normal profit-taking led pullback. However, there are signs that trouble is brewing underneath. According to Gluskin Sheff’s David Rosenberg”the entire complexion to this market has changed and all signs now point to a near-term correction. The yield curve hits its steepest level on April 26th. The Dow Transports-to-Utilities ratio peaked on April 21st. The relative strength of small-caps peaked out on April 27th. Consumer Discretionary stocks relative to staples peaked on April 28th.” So what’s left to buy? Gold is still the best option even though it got chopped off $10 to sell a bit cheaper today due to strength of the US dollar index (I did issue a warning 2 days ago saying it is crowded holding long positions of gold and gold miners). It may well test $1250 level, but it is still an asset class to buy at any meaningful pullback.
  1. Other note-worthy observation: monetary policy has pretty much run its usefulness, and central bankers around the globe have not much monetary ammo left to fire up the economy. What can help is massive fiscal policy overhaul, ie, run huge deficit and lower corporate tax. This is exactly what Donald Trump is “trumping”. He isacting more and more “presidential” now, and he may ascend to the presidency in November. Is he the Regan 2.0?

AY 多雲

May 03 The US market recap and EOD commentary

  1. the market recap: the S&P 500fell 0.9% to 2,063.37, while theDow Jones Industrial Averagedeclined 140.25 points, or 0.8%, to 17,750.91. TheNasdaq Composite dropped 1.1% to 4,763.22.
  2. Commentary:Have I told you so! Yesterday I mentioned in the daily commentary that the US dollar holds the key in determining the fate of commodities and precious metal. Indeed it does, today we saw a reversal of trajectory of the US dollar (going higher for the first time in a week). As a result, crude and yellow metal went down in reverse correlation. To make the matter worse, China released its April manufacturing data yesterday. Caixin PMI was at 49.4 for the month, worse than estimated 49.8. S&P is retracing recent gains and heading lower to key level of 2050.

Trade with care.

AY 多雲 

May 02 The US market recap and EOD commentary

1. the market recap: sell in May and go away did not happen today. The S&P 500 gained 0.8% to 2,081.43 today, while the Dow Jones Industrial Averagerose 117.52 points, or 0.7%, to 17,891.16. The Nasdaq Composite advanced 0.9% to 4,817.59.  

2. Commentary: the US dollar holds the key. The U.S. dollar index has broken down below major support. The index is a basket of currencies weighted by trade between the U.S and other countries. Its composition is roughly half weighted to the euro, which, however, has not made a technical breakout move from its own pattern. It is the Japanese yen, with its 13.6% weight, that is now driving the dollar index. Since December, the yen has rallied roughly 16% – a huge move in the currency markets – to a 19-month high. It has also broken a long-term trendline to the upside. Weaker dollar gives great boost to commodities and precious metal because they are priced in dollars and often trade in the opposite direction. The only force left to break the downfall of the dollar is a hawkish Fed, which may raise Fed fund rate by 25 bpt in June. Until then, chase for gold and gold miners will only become more insane. ( the trade is getting crowded).
簡而言之: 日元沖天,美金跳崖。美股高位有支持,不過就怕來自美聯儲的加息槍聲。

AY 多雲

April 28 The US market recap and EOD commentary

  1. the market recap: The Dow Jones Industrial Average lost 210.79 points, or 1.17%, to 17830.76. The S&P 500 Index fell 19.34 points, or 0.92%, to 2075.81. The Nasdaq slid 57.85 points, or 1.19%, to 4805.29.
  2. Commentary: it is the worst decline in all major indices in 2 months. What has triggerred the declines? We can point fingers at governor Kuroda of Bank of Japan for failing to come up with a big bazooka of further easing. BoJ decided to keep its monetary policy on hold instead.Japanese Yen rallied hard to above 108 against the US dollar. Also blame bad Apple as it keeps dragging down blue chips since its disappointing earning casts doubts on earnings of other blue chip stocks. To make the matter worse, billionaire Carl Icahn disclosed that he’s veryskeptical of the broader stock market and has been shorting! “I still am extremely cautious about the market,” he said. The reason is the “experiment” of easy-money at the Federal Reserve and overseas’ central bankers embarkation into negative interest rates. He warned of “tremendous bubbles.” The S&P plunged to session lows immediately afterward. However, there are undeniable evidence pointing to a continued bull: The Dow Jones Industrial Average just experienced a so-called “Golden Cross.” This is a technical term used to describe the 50-day moving average crossing above the 200-day moving average as both moving averages are rising. Also, all 10 S&P 500 sectors are above their 200-day moving averages. So today’s selloff is just most skeptical group of market participants taking profits from recent gains and running away with their gains. I guess they did this as calendar is turning from April to May. Alas, the adage of “Sell in May and go away”.

AY 多雲

April 27 The US market recap and EOD commentary

1. the US market recap: The Dow Jones Industrial Average closed up 51.23 points, or 0.28%, to 18041.55 and the S&P 500 rose 3.45 points, or 0.16%, to 2095.15. Both indexes saw their third-highest close of the year, and are off 1.5% and 1.7%, respectively, from their all-time highs reached last spring. The Nasdaq fell 25.14 points or 0.51% today to 4863.14.
 
2. Commentary: the Federal Reserve’s two-day meeting ended today: as expected, the FED left interest rates unchanged, but it did remove language regarding its concern about global risks. It appears that the FED is downplaying 1st Q slowdown in growth and is bit more certain about the outlook for growth going forward, setting stage for a June or September rate hike. The FED action does encourage risk taking by the market participants. So called the FED put is still in place, but we, options traders, know that such “put” just like any options contracts, does expire in due course. So, enjoy the party while you can but keep an eye on the exit.
 
3. Earning highlight: Facebook

Shares of Facebook (FB) are up $10 in afterhour trading, or almost 8%, at $118, after the company reported Q1 revenue and profit that topped analysts’ expectations, and said its board voted to create a new class of shares, a “C” class, that will have no voting rights, but that will be issued as a one-time dividend, two shares apiece to each A and B holders. Revenue rose to $5.382 billion, yielding EPS of 77 cents. Analysts had been modeling $5.26 billion and 62 cents.

AY 多雲

April 26 The US market recap and EOD commentary

  1. The market recap: the Dow Jones Industrial Average edged up 13.08 points, or 0.07%, to 17990.32, while the S&P 500 Index gained 3.91 points, or 0.19%, to 2091.70. The Nasdaq lost 7.48 points, or 0.15%, to 4888.31. The February S&P Case-Shillerhome price index shows that home prices in the US are climbing strongly, although it cooled a bit from January. The Fed also began its two-day meeting today, although it is widely expected to keep rates steady.Oil closed at its highest points this year, helped by the World Bank’s assessment that the global supply glut is subsiding.
  2. Earning highlight: AAPL

Apple (AAPL) just reported fiscal Q2 revenue and profit that missed analysts’ expectations, despited higher-than-expected iPhone sales, and forecast this quarter’s revenue substantially below consensus, sending its shares down 8% in late trading. Revenue in the three months ended in March was $50.6 billion, yielding EPS of $1.90. Analysts had been modeling $52.02 billion and $2 per share. iPhone units in the quarter topped analysts’ expectations at 51.19 million units, versus consensus for 50 million. That represents a 16% decline from the prior-year period in units and an 18% drop in revenue.

  1. Commentary:
  2. Earning season is in full swing this week as about 900 companies report their quarterly earnings. There are many more misses than beats, GOOGL, AAPL, MSFT, SBUX, V to name a few.  Technology sector has registered a technical breakdown which signals thatthe leadership by big tech since the middle of last year is broken too.
  3. We are now seeing conditions parallel the extremes of the late 1990s.
  • falling inflation expectations
  • tumbling emerging market currencies
  • extreme relative valuations for EM versus U.S. stocks and bonds
  • protracted growth-stock bull market and underperforming value stocks

The last time all four of these were at, or near, historical extremes was in December 1998. if you are old enough, you should recall how 1999 bubble ended.

AY 多雲

April 25 The US market recap and EOD commentary

 

  1. the market recap: It was a downday from the begining. At one point, the Dow Jones Industrial Average went down by 133 points. so it wasn’t too bad when the lose was narrowed to just 26.51 points, or 0.2% at the close, to 17,977.24, while the S&P 500 lost 3.79 points, or 0.2%, to 2,087.79. The Nasdaq slid 0.44 points, or 0.2%, to 4,895.79.
  1. Commentary: two concerns du jour that kept the market lower today. First, crude price went down today as there are signs of oil production increase. Kuwait’s crude production is recovering after its recent workers’ strike and output from Iraq has been climbing. Saudi Arabia will reportedly complete its expansion of a major oilfield next month. Second, New home sales unexpectedly declined in March, led by the weakest sales pace in the West since July 2014.  Just as Stifel’sChief EconomistLindsey Piegza analysed: “the longer-term declining trend across topline sales since the start of the year, suggests a more broad-based decline in construction activity during one of the sector’s busiest seasons of the year.” in short, new home sales and construction will likely have smaller contribution to overall economy going forward.

Elsewhere, market participants are looking forward to the Federal Reserve’s two-day meeting, which starts tomorrow. The Fed has cited global market turmoil as one of its asymmetric risks and the normalization in risk appetite of the past few weeks could play a key role in the pace of interest rate hikes.

AY 多雲

April 19 the US market recap and EOD commentary

Commentary: nothing has changed materially from yesterday, the US market is up again. S&P is now closed above 2100. It is clear that final chase of return by market participants is on. Fund managers feel that their jobs are at risk if they are not in the market by now. Fundamentals are not good, but price action is bullish. Do you want to be left out?
大市受技術突破的鼓勵,現在開始最後的高點衝刺。 現在不牛也不行了,股市一天天走高,不下場玩錯過了,基金經理沒法交代。 硬著頭皮也要進場。為什麼我心裡的擔憂越來越大?
短評快,謹慎些。

AY 多雲

April 18 the US market recap and EOD market commentary

1. Market recap: The Dow Jones Industrial Average rose 106.70 points, or 0.6%, to 18,004.16 today, it’s highest close since July 20, 2015. The S&P 500 gained 0.7% to 2,094.34, while the Nasdaq Compositeadvanced 0.4% to 4,960.02.
2. Dow is at 18k . Shall we throw a party to celebrate? Yes we should, the market has climbed 15% in about 10 weeks. Not an easy task for sure. However, as the S&P crawling back up to its all time high of 2130 (happened in May 2015), EPS multiple is already at 18 times approaching 19 times, that would be nose bleeding territory. I am still a doubter of this rapid market rally, so are many other seasoned traders. As a contrarian view, this may well be the exact reason why the market is still holding up so well at this elevated level.
美股今天又爬高一節, 道瓊斯指數收報18004 點 突破18000 心裡關口。 多哈限產會議無功而返,油價下跌但無損大市動力。四月大市很有可能重回去年五月的歷史高位。但之後呢?何去何從?沒有水晶球我也算不出來。唯一知道的是:標普平均盈利倍數已經到18倍,很快到19倍,長線合理倍數是16~17倍。大家自己看著辦吧。

AY 多雲

April 14 the US market recap and commentary

1. Market recap: the S&P 500 was little changed at 2,082.78, while the Dow Jones Industrial Average gained 18.15 points, or 0.1%, to 17,926.43, its third day of gains. The Nasdaq Composite was little changed at 4,945.89.
2. Commentary: today I am simply quote Evercore’s Dennis Debusschere: ” Much of the recent rally is a result of volatility suppressing central bank policy, particularly the shift in the Fed reaction function to address weak international economic activity and aggressive stimulus, monetary and fiscal, in China to support declining growth…
He also said that “the rotation into risk has also been helped by the nascent signs of better global economic activity. Leading economic indicators have improved since the February lows with inflation expectations moving higher, global manufacturing PMIs firming, and more recently the EISI economic diffusion indices (EDIs) gaining ground. The weaker USD has also helped by reducing the headwinds facing commodity prices, inflation and corporate earnings. The level of economic and earnings growth in 2016 is still forecast to be unusually weak, but investors are starting to look past the 4Q15/1Q16 downturn in activity andcorporate profitability and toward the potential for improvement in the back half of the year and into 2017. Recession fears and high volatility have been replaced by the anticipation of growth and central-bank-enabled low volatility. If high frequency leading indicators of growth continue to improve, negative earnings revisions should slow further, helping to support equities. The biggest risk to that outcome today is the rising costs of labor and declines in productivity. To reach current EPS growth targets for the rest of ’16 and early ’17, corporate profitability needs to improve, which will be difficult to achieve unless inflation (pricing power) increases and productivity improves to offset rising wages. “
The points are: US recession is not insight; China has somewhat stablised; US dollar is weaker alleviating USD denominated debt burden of EM countries. Global industrial production seems improving. Most of all, global central banks are ultra easy. All clear signal? Why i am still having this nagging feeling that when there is nothing left to worry about, it is itself the biggest worry of them all!

AY 多雲

April 13 the US market recap and commentary

1. Market recap: The S&P 500 advanced 1% to 2,082.42, its highest close in more than four months while the Dow Jones Industrial Average rose 187.03 points, or 1.1%, to 17,908.28, its highest close in more than five months. The Nasdaq Compositerose 1.5% to 4,947.42, its highest close of 2016.
2. Market commentary: S&P finally pierced through formidable resistance of 2070 and closed above it. It needs to close above the level for a few more trading days to signal a sustainable rally to 2100~2150. What has transpired since yesterday is stronger conviction by market participants that China will get it right this time to avoid hard landing of her economy.
It has been a tough stretch for China. The stock market has plunged 40% since June, the yuan remains volatile, bad corporate loans are on the rise, and China’s foreign exchange reserves are dwindling as government is combating capital flight. However, we, traders and investors in North America tend to underestimate the will and financial wherewithal of Chinese government. It will prevent a collapse at all cost. We have to remember that the house always wins.
Chinese Premier Li Keqiang said in March that it would be “impossible” for China to miss its economic targets even as it presses ahead with structural reforms.
The trend (if there is any) from now to mid May is still up with governments digging into their war chests to prop up their weak economies.
It is not easy to be a bear these days.
AY 多雲

April 12 the US market recap and commentary

1. Market recap: what a difference a day makes. Yesterday, the market opened higher butfinished in the red. Today, however, stocks opened higher and kept on going as oil closed at its highest level in more than four months. The S&P 500 gained 1% to 2,061.72, while theDow Jones Industrial Average rose 164.84 points, or 0.9%, to 17,721.25. The Nasdaq Composite advanced 0.8% to 4,872.09. WTI crude, the U.S. benchmark, rose 4.5% to $42.17 today, its highest close since Nov. 25, 2015.
2. Commentary: let us look at both sides of coin, shall we?
On positive side, after a few weeks of the oil/market correlation breaking down, stocks and oil are moving higher as WTI is about to break above the 200 day, the S&P is moving up and the retail ETF, XRT, is not moving lower.Yield curve steeper a little bit as well. Let’s see if it continues, but the move higher in all commodity prices, along with retail stocks moving up, suggests improving demand, not just supply constraints, is behind the move higher in commodity prices. Market based odds of just one rate hike in 2016 are still ~50% today despite stronger oil prices, increasing inflation readings and EM stabilization. An increase in market-based rate hike expectations seems likely if this backdrop continues and would be a tailwind for the USD, supporting Financials stocks at the expense of Utilities and Staples.
On the flip side, after a good few years – helped, of course, by extremely accommodative monetary policy – equity markets now offer more limited upside. I expect a continued upwards trend, but this will be modest in scope and accompanied by periods of volatility…I think that it is also important to remember that we are now very late in the financial (if not seasonal) cycle and, typically, this is a period when markets can hold many surprises.
週末在多哈的原油限產協議有望達成,這風一吹出,原油衝高一度到$42,帶動能源和金融股大幅走高。牛熊之爭牛又再下一程。不過美股 S&P 仍然在2025~2070之間,大市還是停留在2014年11月的水平。

AY 多雲

April 11 the US market recap and EOD commentary:

1. Market recap: the S&P 500 fell 0.3% to 2,041.99 today, while the Dow Jones Industrial Average declined 0.1% to 17,556.41. The Nasdaq Composite dropped 0.4% to 4,833.40. The S&P 500 is now back in negative territory this year, having dropped dropped 0.1%.
2. Commentary:
Earning season is upon us again (so soon). The street’s expectations have been adjusted down to reflect mediocre EPS growth. However, the overall market indice have moved up substantoally to within 1% of 2016 high. In another word, even with many positive beats of earning estimates of S&P companies, we may only see prices to move up slightly. We are back at cross road again: energy sector behaved poorly even as crude price (WTI) closed above $40. Financials are still facing regulatory headwind and flattening yield curve. The only bright spot today is shinning gold and gold miner stocks. Money is flooding into this area due to prolonged low interest rate environment engineered by central bankers.
美股今天高開但收市小幅下跌。從2月初的低位到現在的價位,美股的大幅反彈勢頭似乎已經變得停滯不前。今天是第一季度季報的正式開始日,S&P 2070這個重要上行阻力線看來需要更好的整體業績和更長的時間來突破。原油德州輕質(WTI)收報$40以上,但整體能源股今天沒有跟著上升,表現一般。金融類股高開之後也走弱,加息無期、長短國債收益弧線趨向平緩、和對金融機構的日趨收緊的政策監管都是金融類股面臨的阻力。
一句話,現在還是以清倉出貨為主。Cash is king!

AY 多雲

April 07 the US market EOD commentary

We all know that it was a down 1% day in the market. S&P has just given up much of this year’s gain. Well, I am not going to say much today, and I am just laying out facts to my dear readers:
1.  The yield on the benchmark 10-year US treasury note fell below 1.7% Thursday afternoon for the first time since February. It was a steep 7 basis point drop from the prior day’s close to a low of 1.691% at 2:30, according to Tradeweb. The 30-year bond yield was at 2.516%, also down 7 basis points from Wednesday’s close. For the 30-year, that was near its previous 12-month low of 2.503%, where it traded on February 11, 2016.
2.  Beginning in mid-March, the Transports have been the weaker of the two Dow averages. The Dow industrials since then have gained around 1%, in contrast to a 4% loss for the Dow Transports. An alarming divergence.
3. S&P is still above its 200 day moving average.
Bull or bear, you decide. Trade with care.
美股今天下跌1.2% 。我留意到以下幾點:1. 美國兩年和十年國債收益率都紛紛下跌。2. 而自從3月中以來,道瓊斯運輸指數也不斷下滑。 3. S&P 仍然在200 天均線之上。
牛?熊?從牛轉熊?從猛牛轉病牛?大家自己判斷吧。
AY 多雲

April 06 the US market EOD market commentary

Just as i said over 24 hours ago: hold the horse if you plan to short the market. S&P went up 21.49 points to 2066.66. As trader, i can’t help but respect resiliency of the US market. What has changed from 24 hours ago? Not much except the fact that the Fed minute released today shows the Fed governors at March meeting were overly concerned about “turbulence in other parts of world.” So as long as Janet is dovish and wants to proceed with rate hike very cautiously, this market will be fine, …but for how long? According to analysts’ estimates, Q1 profit will fall in 7 out of 10 S&P 500`s10 sectors. What`s worth noting is stock buybacks which help EPS will come down rapidly in coming quarters.
美股 今日止跌反彈。原因:今天公佈的美聯儲3月議息會議記錄。大家還是擔心加息加劇其它地區美元債務的償還。用美聯儲主席的話來表達“加息慎之又慎”。下星期一第一季度業績開始公佈,標普10個板塊有7個的盈利預測下調。而且公司對本公司股票的大規模回購進入尾聲。這市還能撐多久?

AY 多雲

April 05 the US market EOD commentary

2 steps forward, and 1 step back. Nothing goes up in straight line. This is especially true with stocks and market in general. After posting new high of the year, it is normal to see market retrace a bit. S&P closed at 2045 down 20 points. As long as it is above 2000, I remain short term (1 month out) bullish. Let’s put the Fed aside today, and simply focus on economically sensitive areas: cyclicals, high beta, materials, retail, crude oil, transportation and credit. After initial jump from Feb lows, they all stop moving higher, remain stagnant in a range or head lower again. Does that foretell an imminent collapse? Not necessarily, market is consolidating recent gain, and climbing a wall of worry. Let’s remain open minded.
美股連續第二天下跌,今天跌度稍大。過去近兩個月的升幅太快,大市需要時間小幅下跌調整消化。只要標普仍然在2000以上,近期可以避免大幅下跌。不過,對經濟敏感的幾個領域的股票已經開始止漲並部分下滑。第一季度的業績報告將決定未來幾個月大市走向。

AY 多雲

April 01 the US Market EOD commentary

The US labor Department released Non- farm payroll report for March. 215k new jobs were created, slightly better than expected. So, we are in this ‘Goldilock’ situation in which job growth is steady but not red hot, inflation is ticking up but still subdued. We all expect the Federal reserve NOT to raise rate any time soon to spoil this ‘sweet spot’. In fact Janet Yellen said so herself. At this stage, don’t buy the market nor should you sell short it. If do-nothing-and-sit-in-cash does not work for you, then do your homework and treasure hunt those undervalued Warren Buffet style stocks.
For traders, do nothing sometimes is a better option.
By the way, Elon just introduced TESLA model 3, retail price is from $35k and up. Global pre-orders is already at 200k and going higher by minute. Please mark today as the day when he killed fossil-fuel-powered cars.

AY 多雲

March 31 the US market recap

Today we saw 2 things:
1. Yellen dovishness induced rally faded away a bit. S&P stands at 2059, still yet to challenge 2075. Will tomorrow’s job report help or hurt? That remains to be seen.
2. Today is the last day of Q1, a tumultuous quarter which first began with relentless selling driving down the S&P to 1812. Now after a remarkable recovery, we are back at high of the year. You may wonder: “now what?”
All depends on forward EPS (earning per share) growth of S&P companies. I don’t expect a substantial improvement of earning growth for Q2. Fed has talked down the USD, which is helpful. However, if centra) bankers cannot reflate the economy by year end, we will be in for substantial sell off across the globe.
Trade with care, trade with hedge!

AY 多雲

March 29 the US market recap

Janet Yellen has spoken: the Fed has set its mind on “greater gradualism” when it comes to interest rate hike. As soon as the message came across the wire, the US market took off and did not look back. S&P is now closed above 2050 with bullish bias. The S&P wants to test 2075~2100 area regardless of good or just -so-so economic indication from Friday’s releases of Non farm payroll, ISM manufacturing and Consumer sentiment. Why? Janet has given market participants a “Yellen Put”. Personally, i think the Fed has lost its credibility of data dependency. This very accommondative Fed may have to raise rates agressively later this year to fight inflation.
Traders, party on for now,  as we cannot afford to fight the Fed.
AY 多雲

P.S

就美金 vs 加幣來說, 美聯儲主席今天在紐約經濟俱樂部講話。她的觀點反應美聯儲的整體意見:美國經濟向好,通脹可控,但全球經濟疲弱,強勢美元對大家都沒好處。所以她一再強調美國加息步伐會緩慢,以便控制由於各國央行放水和負利率政策導致的美元相對升值。

在這個背景之下,只要油價不大幅下跌,近期加幣對美元必然會小幅上升。

March 28 the US market recap

We are all in this quiet wait and see mode right now. Trading volume is half as the average. Nothing seems able to move the market, not even the latest shooting incident at Capital Hill! You might wonder what the market participants are waiting for? Here is the list:
1. Janet Yellen is to speak at Economic Club of New York tomorrow. Her clarification (or lack of it ) on interest rate stance of the FED is to be scrutinized for sure.
2. 1st quarter is coming to an end on Thursday, and 1st day of new quarter is jam packed with big data releases: Nonfarm payrolls, PMI manufacturing, ISM manufacturing index, Consumer sentiment, Construction spending, you mame it!
So, enjoy the peace and quiet for the next few days.
Have a wonderful trading day tomorrow!
AY 多雲

March 24 the US Market recap

It was holiday shortened trading week. S&P is slowly giving back a small portion of over 11% gain from Feb low. Call it churning and consolidating. Much uncertainty as usual, the only certainty this week is that we can no longer 100% rely on FOMC statement to guide our trading/risk management decision. There is growing call from within the Fed to raise rate earlier and more rapidly. This is a paradigm shift that every trader should pay attention to.
美股S&P 本週在2020~2050之間小幅波動。最終本週收報2035, 之前5個星期超過11% 的漲幅需要時間來消化。下週二美聯儲主席 Yellen 將會在 Economic Club of New York 發表講話。看看她到時候是否還是用“耶倫體”來回答加不加息的問題。
明天是耶穌受難日,美股假日休市。
Enjoy your long weekend!

AY 多雲

March 23 the US market recap

Mini revolt within the US Fed. Just a week after telegraphing to the whole world that there are most likely only 2 rate hikes for 2016 with 1st increase to happen in June, there are suddenly dissenting hawish voices from the FOMC members. On Monday, both Alanta Fed President Dennis Lockhart and San Franciso Fed President John Williams said 1st rate increase should be done in April. Today, St. Louis Fed President James Bullard, a voting member of FOMC joint the pro-rate hike group. Overnight, the CME’s FedWatch shows that traders are adjusting rate hike probability from 7% yesterday to 14% today!
Those interest rate sensitive groups and sectors like gold, silver, precious metals got clobbered.
My predication (made on last Sunday ) that S&P will be in trading range from 2020~2050 stands unchallenged!
美聯儲內部幾位地區分部大員紛紛表示在4月27號的公開市場委員會會議上應該加息,不要再等到六月議息會議上。而一個星期之前,美聯儲才表示2016加息步伐就2步,第一次加息最快在六月。這發自內部的不同聲音讓 traders 感到焦慮,唯一能做的就是拋售黃金、白銀和其它貴金屬。因為加息的預期加強之後,美元走強,直接打壓以美元定價的貴金屬。
金價跌了近$30一盎司,收報$1220。買vs 賣?/::d/:,@o
Happy trading

AY 多雲

March 22 the US market recap

Best wishes to peace loving citizens in Brussels, Belgium! The latest terrorist attack only highlights urgent need of vigilance and unity to defeat terrorism !
The US market is incredibly resilient in the wake of the attack, down only fractionally. The long term impact of such attack may not show until after June 23 referendum of Britain’s exit from EU. The odds of Brexit have increased after Brussels attack. The market has not priced in the exit.
Another concern is that the attack also provides ammunition to European far-right movement, which is on the rise rapidly to challenge “weak and ineffective establishment”. Sounds similar to what you hear on US presidential campaign trail? You bet, that is Donald Trump’s rhetoric!
The world is full of uncertainty, tread and trade with an eye on “black swans”.
Keep on trading!
AY 多雲

March 21 the US market recap

It was just a quiet trading day. Nothing unusual to report but low volume and small price up. Wait a sec! It may have been a low profile day on Wall st, it was certainly anything but ( ) day in international politics and domestic front: oh yes, historical visit by a sitting US President to tiny Island of Cuba in 88 years; also, Elon Musk’s wife filed for divorce again ( they married twice, and divorced once for now).
Back to business, both the Dow Jones Industrial Average and the Dow Jones Transportation Average are to set higher highs. This is really positive to support this already overbought market. However, neither of these indexes moved above their last major price peaks set in November of last year . Both are close but until they each make significant technical breakouts there is no signal and the bears remain alive.
For a seasoned trader, bull bear wrestle always keeps going on and on…
Happy trading!
AY 多雲

Looking into next trading week (Mar 21~25)

Rumors are spreading that central bankers reached a so called “Shanghai Accord” in late February when they met during G20 finance ministers and central bankers meeting. So it is very likely that there is a global coordinated central bank effort to weaken the US dollar.A weaker dollar has been a key reason why we have seen a 54% rally in U.S. crude and 40% rally in Brent.
So the takeaway for traders boils down to this: 1. S&P will trade in small band of about 30 points from 2020~2050 this coming week. Traders can cautiously and selectively long stocks of energy E&P companies. Gold and gold miners stocks still see new money inflow. Keep an eye on the US dollar for any sign of strength.
Happy trading
AY 多雲

March 17 the US market recap

If market participants had any doubts about dovishness of Janet Yellen and the company yesterday, they are more convinced today as they bid up gold, oil, industrial, material, emerging markets, even financial (not to be expected to shine in lower rate environment). Dow Jones has erased all loss suffered this year. We are in Goldilock situation from now until mid April: the US economy is humming along fine, very supportive Fed and other central banks, China is not imploding yet. All clear and smooth sailing from here? Well… so called safety asset still sees buyers rashing in: gold, utility stocks, etc. This market is sending mixed signals. Look under the hood to find value stocks with strong balance sheet.
美股全線上揚,收復今年全部失地。美聯儲放話暫時不再緊密加息,美金下滑,帶動能源、材料、黃金和工業股上漲。不過這次迴轉可持續的動力不多了。各個央行紛紛放水貶值貨幣,來提振疲軟的經濟,看來黃金還是不錯選擇。
Happy trading.

AY 多雲

March 14 the US market recap (今天用中文)

美聯儲公開市場委員會(FOMC) 明後天將閉門開會,星期三下午將公佈議息結果。今明兩天美股成交量減少、小幅上落。如果大家還在期待美聯儲明確按兵不動不會按計劃加息。我個人覺得大家會失望了這次。1月以來的通脹以達年度1.7% (扣除食品和能源成本) 逼近2%的年度警戒線。美聯儲很有可能這次即便不加息,也會強烈暗示6月開加。股市在此高位,下行風險加大。
 本日美股財經大新聞
(以下文字來自新浪財經)
“以安邦保险集团为首的一个财团已向美国喜达屋酒店及度假村国际集团发出非约束性收购要约,提出以每股76美元,总计约129亿美元(约合人民币838亿元)的价格收购该公司所有股票。若交易达成,将创下中国企业在美并购的最高纪录。
安邦这一报价超过了此前万豪集团提出的122亿美元的收购报价。去年11月,喜达屋与万豪集团达成并购协议,若交易完成,将产生全球最大连锁酒店集团,在100多个国家和地区拥有5500家酒店,客房总数达110万间。根据协议,如果喜达屋最终选择接受另一家公司的收购,则须向万豪支付4亿美元的解约金。
 喜达屋是喜来登、威斯汀和瑞吉等多个知名酒店品牌的母公司,在全球拥有1200多家酒店和度假村。早在去年10月就有报道称,锦江国际、海航集团和中投公司计划竞购喜达屋,消息传出后,喜达屋股价一度上涨9.1%,创下2009年以来最大涨幅,市值达到近120亿美元。
安邦保险集团去年以19.5亿美元全额收购了拥有120多年历史的纽约华尔道夫酒店,成为国际社会关注的焦点。”(新浪财经)
Happy trading.

AY 多雲

March 11 the US market recap

Talking about delayed reaction to European Central banks intervention yersterday. Both US, Canadian and European markets are up sharply today. It is said: don’t fight the FED. I would say: don’t fight central bankers!
However i am getting uneasy buying equity at this elevated level after 10% rally off Feb low. True, in January and February, the market went down violantly to price in a possible US recession and China economic slower growth. The market participants were rushing out due to fear. Now we have rallied 4 weeks because the market is pricing out such dire predications. Optimism is running high. We are moving towards the other extreme of greed.
Next week the FED FOMC meeting will definitely set the tone for intermediate term. Janet may sound dovish but listen for her hawkish undertone. That will your signal to exit the market.
Trade with caution and happy weekend!

AY 多雲

March 10 the US market recap

When i say that S&P closed today pretty much unchange from yesterday’s close, you may think that nothing eventful happened today in the US and European equity and currency markets. If you thought so, you couldn’t be more wrong! Mario Draghi (ECB president) delivered heavy dose of QE, heavier than expected. Risk assets got a firm bit initially across the globe. The only fly in the ointment is that Mario indicated also that this round of easing is probably the last. European market tanked in response dragging the US market down to as much as 1%. By the end of day, the indice climbed back slowly to break even. What happened? The US market bulls are not giving up hope yet, the US Fed chair is not expected to raise interest rate next week. GDP and employment data point to a slow growth not recession. Recession or not, the market had priced in a dovish Fed. In short term, it is a trendless market, in mid to longer term (6 months to a year), it is still in a downtrend.
Trade with caution.

AY 多雲

March 09 2016  the US market recap

It has been 7 years to the day since the US market hit genetatinal low of S&P 666. If you bought tons of stocks which were on fire sales at that despairing moment, you wouldn’t be reading my daily comment now, instead, you would probably be touring the globe in your luxury yacht.
Now 7 years later, the aging secular bull is almost dead by my reckoning. S&P 200 day moving average is trending lower with formidable overhead resistance at 2025~2050. To keep bull from dying, central banks around the world are called upon to continue less effective monetary policy of easing. Now, all eyes are on ECB (European Central Bank) to deliver heavy dose of quantitative easing (to be announced tomorrow by ECB President Mario Draghi ). The street expectation for ECB is high: it is expected to cut already negative deposit rate by 10 basis points, taking it to negstive 0.40 percent. It is to extend asset buying program to June 2017 and increase the amount by 10 billi9n euros a month. ECB better delivers, otherwise markets are going down.
Trade with caution!

AY 多雲

An options trader's soliloquies