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While stocks continue to flirt with new rally highs, trouble brews beneath the surface.
A slew of short-term technical indicators are falling out of overbought territory including various stochastic and momentum measures. Breadth continues to narrow, with the percentage of NYSE stocks over their 10-day moving average dropping from 81% to 64% on Tuesday even as the NYSE Composite Index (NYA.X) closed just 1.1% away from the rally price high set on Monday.
Translation: Fewer and fewer stocks are holding up the major indices like a foundation made of sand that is slowing melting away. In fact, the situation looks somewhat similar to what happened between May and June before equities slumped into the July low. Read More...
This article is written by Minyanville's Carol Kopp
There’s a truism among investors that you should invest in what you know, understand, and like. It’s a commonsense strategy: You spot something new. It’s special. It’s useful or innovative. It’s cool and affordable. Let me buy some of that! The response to that can be summed up in just two words: Krispy Kreme (KKD).
Krispy Kreme had been a popular doughnut chain in the South since 1937, but remained unknown to the rest of us until about 1996. That’s when the first Krispy Kreme popped up in New York City, on West 23rd Street.Believe it or not, the town went nuts. Read More...
Since the Federal Reserve announced on September 23 that it would not be extending its direct purchases of mortgages and U.S. Treasuries, stocks have lost more than 4%. At the time, I wondered if the Fed had killed the bull market.
While that remains to be seen, in the near term at least, stocks look ripe for a rebound after sliding lower on a spate of sour economic news. On Tuesday, we got word that consumer confidence had slipped. On Wednesday, the Chicago PMI came in under expectations. Thursday saw very weak domestic auto sales. And of course, we had a horrible jobs report.
By all measures, with investors shaky after Thursday's plummet, the bears should have smashed the major indices on Friday. The fact that they didn't press their advantage, along with some other corroborating evidence, indicates we have a classic oversold scenario on our hands. This should help support stocks until Alcoa (AA) kicks off the third-quarter earnings season next Wednesday. Here's why. Read More...
This article is written by Minyanville's Josh Lipton
For all the tough talk heading into the month, September didn’t prove so scary after all.Stock pickers can’t be blamed for thinking these past few weeks were going to scratch up their portfolios. After all, historically, the market does pretty poorly as fall kicks off. The average price change for September, going back to 1929, is a decline of 1.2%. The market has typically fallen 56% of the time in September.However, through Tuesday’s close, the S&P 500 was up 3.9% for the month. For the quarter, we’re up 15.4%.Let’s put that in historical perspective, friends: That's the 17th best gain of all quarters since 1929, and 5th best of all third quarters. For more near future predictions, see Four Scenarios for the Fourth Quarter. Read More...
This article was written by Minyanville's Kristin Graham.
Since its collapse in 2008, the Shanghai Index has been in recovery mode; that is until my arrival in late August.
Six weeks ago, I headed off to Shanghai, ready to immerse myself in a country full of growth and investment potential. I haven’t been left with a good first impression. The Shanghai Index has plummeted more than 20% since I set foot in the Middle Kingdom.
Unfortunately, I don’t think the correction is over just yet.
For starters, the launch of a new Nasdaq-style market dubbed the “Growth Enterprise Market” is causing a liquidity squeeze as capital is being reallocated to new subscriptions. There’s also a lineup of new blue chip public offerings on the main boards that will also add to the share glut. Read More...
Most economists and investors strategists are feeling pretty good about the future right now. We appear to be on the verge of a fairly robust economic recovery as businesses replenish inventories, consumers emerge from their shells, and policymakers continue their simulative efforts. But for a small subset of market watchers (including me), there is still plenty to be worried about.
Of all these doomsayers, renowned bear and market commentator Marc Faber takes the cake with these comments from his latest Gloom, Doom & Boom report: "The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society." And he is "highly confident" in this prediction (see video below and more here and here and here).
Mr. Faber worries about the government's swelling budget deficit and the demographic pressures from the en masse retirement of the baby boomers. As a result, he believes that the Federal Reserve will have no option but to print dollars and try to inflate the United States out of its troubles. And he isn't the only one sounding the alarm. Read More...
The market just called to say the crash is canceled. You can go back to sleep now.It's really silly. All this ink being spilled over the market going down in September and the potential for a crash in October. Will it happen this year? Should you take your profits from the last six months and run for cover? Hardly. If anything, I believe September will be the start of the new bull market. Here are three key reasons why Read More...
Well, that was interesting. After the Federal Reserve announced on Wednesday it would leave interest rates unchanged, stocks initially bounded higher before abruptly shifting direction and screaming lower. The bulls gunned the Dow Industrial Average achingly close to the 10,000 level before things fell apart.
At issue wasn't the Fed's target policy rate, which affects short-term interest rates. Instead, traders were apparently concerned that Fed chairman Ben Bernanke and his cohorts failed to expand its direct purchases of mortgages and government debt. This will likely result in higher long-term rates.
You see, the Federal Reserve has been engaging in unorthodox monetary policy over the past 9 months via "Permanent Open Market Operations," or POMO. Fed traders were authorized in March to spend some $300 billion to buy U.S. Treasury debt and $1.45 trillion to buy mortgage-backed securities and debt from government-controlled housing lenders Fannie Mae and Freddie Mac. With the original budget on the Treasury allocation nearly exhausted, many wondered if the Fed will let the program expire, or renew it. Today we got our answer and Wall Street didn't like it. Read More...
Investors have wagered hard on the gambling stocks but, at their current prices, it’s hard to see why stock pickers should double down on this bet. Jeff Macke vibed on this sector over the summer in, Don't Gamble on Casino Stocks.
Wynn Resorts (WYNN) made headlines over the weekend when the Las Vegas-based company said it has increased the size of the initial public offering in Hong Kong for its Macau unit by 25%, looking to raise up to $1.6 billion, according to Reuters. Wynn’s rival, Las Vegas Sands (LVS), is also busy, hoping to raise $1 billion to $2 billion through the sale of a stake in its Macau operations, possibly at the end of November. Investors have gone all-in with the gambling stocks: Over the last six months, Wynn is up 232%, MGM Mirage (MGM) has skyrocketed 329%, and Las Vegas Sands has surged 673%.Why the enthusiasm? The stocks have run off the bottom as investors bet on better times ahead for the consumer. Also, there's now less fear about these companies going belly up. Read More...
