Wednesday, March 31, 2010

A Different Take

Over at the ZeroHedge website, they have a post attributed to Michael Panzer of the Financial Armageddon website entitled: "The Latest Red Flag - The Market's Rate of Melting Up". Here is a different take.

Tuesday, March 30, 2010

Morning News Notes: 3/30/2010

The "Morning News Notes" as prepared by TL...crude oil, uranium, mortgages, low interest rates and seniors, student lending, John Taylor, C, state debt, i-phone and i-pad, and sector performance breakdown.

Monday, March 29, 2010

Portfolio Review: March 29, 2010

This is a real time portfolio managing real money. The portfolio is managed by ARL Advisers, LLC, the publisher of TheTechnicalTake blog. The ARL Advisers investment strategy is a global asset allocation strategy that is strategic, balanced, and targeted. The portfolio is designed to produce equity like returns with bond like volatility.

Morning News Notes: 3/29/2010

The "Morning News Notes" as prepared by TL...Greece, Moscow train blasts, banks and Washington, the bank tax, junk bonds v. equities, health care in corporate America, and US Treasuries.

Saturday, March 27, 2010

Investor Sentiment: Investing Nirvana And The New Paradigm

The sentiment indicators would suggest that this is not investing nirvana. While prices can certainly go higher, the lack of buying power should be obvious. Who is left to buy if everyone is all in? But judging by the emails I receive, most market participants believe that this is a new paradigm, where the Fed is engineering a new prosperity founded on gains in the market. Investing nirvana? I think not. This market environment is more like a high wire act. A new paradigm? Every era is new, but fear and greed never go away. I have yet to convince myself that "this time will be different".

Friday, March 26, 2010

Trends In Gold, 10 Year Treasury Yields, And Crude Oil Remain Extreme

Our composite indicator that assesses the strength in the trends of gold, 10 year Treasury yields, and crude oil will remain in the extreme zone by the end of the week. This represents a headwind for equities.

Morning News Notes: 3/26/2010

The "Morning News Notes" as prepared by TL...GDP, Greece bailout, mortgage assistance, Bernanke and asset sales, ORCL earnings, health care, GM, California debt sales, and comments on US Treasury bonds.

Thursday, March 25, 2010

Higher Yields, Lower Equities?

For the longest while, my mind set has been to expect higher yields accompanied by higher equity prices. After all, wouldn't higher yields be a sign that the economy is expanding and on the track to recovery? Or to put the relationship between bonds and equity prices in another light: if the equity markets would ever sell off, wouldn't bonds catch a bid as there is a flight to safety? But the technicals have me rethinking these relationships. Is it possible that we could have higher yields and lower equities?

FXI: Didn't Get The Message

Aside from being on the wrong side of the market with my current S&P500 index short trade, there are several other things that have me puzzled about the market's ascent. One of these conundrums is the i-Shares FTSE Xinshua/ China 25 (symbol: FXI).

Morning News Notes: 3/25/2010

The "Morning News Notes" as prepared by TL... jobless claims, healthcare impact on corporate America, and C.

Wednesday, March 24, 2010

Morning News Notes: 3/24/2010

The "Morning News Notes" as prepared by TL... BAC, comments by Fed's Yellen, Gallup poll approval ratings of Congress and the President, health care and Libor continues to rise.

Tuesday, March 23, 2010

On Dealing With A Bad Trade

During the week of March 8 to March 12, I started to leg into a position that shorts the S&P500. My vehicle to express this bet against the market is the UltraShort S&P500 ProShares (symbol: SDS).

Morning News Notes: 3/23/2010

The "Morning News Notes" as prepared by TL... FHA loan delinquency rates, mortgage market, and Greece.

Monday, March 22, 2010

Rydex Market Timers: What Are They Up To?

Like NPR's popular Car Talk radio show with Tom and Ray Magliozzi - better known as Click and Clack - we here at TheTechnicalTake also have a "Shameless Commerce" Division. After all we have some unique content that we would like to capitalize on, and I have to make a living too!

Morning News Notes: 3/22/2010

The "Morning News Notes" as prepared by TL... healthcare, Germany and Greece, Bernanke, US Treasury bonds, and municipal bonds.

Saturday, March 20, 2010

Investor Sentiment: Going Forward

In hindsight, the best strategy has been to "set it and forget it" - buy at the bottom in March, 2009 and let it ride. I am sure that is what everyone did! Going forward, the best strategy remains as it has been since October. It will be important to exercise patience and buy at the lows and sell at the highs to capture any profits from this market. While buying low and selling high is always a good policy, it is particularly important here. Extremes in bullish sentiment, as we are seeing now, imply that a price move is either nearing its end or the ascent of prices is surely to show. This is our expectation 85% of the time. The other 15% of the time or what I like to call "it takes bulls to make a bull market" scenario, the market will continue meaningfully higher despite increasing bullish sentiment. We saw this in 1995, 2003, and 2009 when the markets were coming off of long periods of under performance. I am not banking on this time being different.

Friday, March 19, 2010

The Dollar Index: The Move Isn't Done

I will keep this brief as my rational for the new found strength in the Dollar Index is more observational than "scientific". Some things you just can't back test or measure in a methodical fashion or I just haven't figured out how to do it.

Thursday, March 18, 2010

The Technical Take: Silver ETF

It's the best 2 out of 3. It's me against the the i-Shares Silver Trust (symbol: SLV).

Morning News Notes: 3/18/2010

The "Morning News Notes" as prepared by TL... Greece, NKE earnings, healthcare and Marc Faber on Treasuries.

Wednesday, March 17, 2010

Complacency? Never.

A quick look around the web reveals that type of impenetrable bullishness where it is clear skies and happy days as far as the eye can see. Gosh, I only wish it was so easy.

Morning News Notes: 3/17/2010

The "Morning News Notes" as prepared by TL... JP Morgan comments on the Fed, healtcare votes, European sovereign headwinds clear, jobs, and China and the Yuan.

Tuesday, March 16, 2010

My Scrappy Little Portfolio

I want to call this piece "My Scrappy Little Portfolio" but after reading it, you might decide it is "My Crappy Little Portfolio".

Morning News Notes: 3/16/2010

The "Morning News Notes" as prepared by TL... China and the Yuan, crude oil, student loans, jobs bill, and Dodd and Volcker rules.

Monday, March 15, 2010

Morning News Notes: 3/15/2010

The "Morning News Notes" as prepared by TL... USA and UK credit ratings, short term money rates rising, healthcare, and state and local government pension obligations.

Sunday, March 14, 2010

Check This Out! This Is Great Stuff!

For the most part, I have a really knowledgeable readership, and I often don't give you guys and gals enough credit for keeping me honest and working hard. I am grateful for the time you spend at my outpost on the internet. Yes, I do get annoyed at the absurd comments for the umteenth time, but every now and then, I come across an email or reader that points me towards something extraordinarily cool.

Saturday, March 13, 2010

Investor Sentiment: Few Words Needed

With 3 out of 4 of our measures registering extreme readings, few words are needed to describe investor sentiment this week.

Friday, March 12, 2010

Employment Report: Leading Indicators

This is a top shelf, 9 page report on employment as prepared TL. He presents 8 leading indicators of employment and comes to the conclusion: "On the whole, these leading indicators paint a positive picture, indicating that net hiring should emerge before the end of the second quarter."

Morning News Notes: 3/12/2010

The "Morning News Notes" as prepared by TL... Janet Yellen, Japan Fed Bank to loosen monetary policy, healthcare, student loans, US equity market strategy, and year to date performance by sector.

Thursday, March 11, 2010

USDJPY: It Isn't Correlated

While the excitement of the media has been focused on equities, other corners of the markets go unnoticed. One such asset is the USDJPY cross rate. From my perspective, the USDJPY is on the cusp of a secular trend change.

Tuesday, March 9, 2010

Special Report For Our Premium Content Subscribers

The attached link is a special report that was written Sunday night for the subscribers to our Premium Content.

It's All The Same Trade!

One of the frustrating aspects about this market environment is that all assets look like the same trade. Betting on equities is a bet against bonds or vice a versa, betting on bonds is a bet against equities. It is that simple. Consequently, using a tactical asset allocation strategy makes it hard to diversify away my risk as I end up being all in on essentially what has become the same trade.

Morning News Notes: 3/9/2010

The "Morning News Notes" as prepared by TL...US Banks, China and Treasuries, and Europe cracks down on Wall Street.

Monday, March 8, 2010

Like Minds...I Hope!

There are several commentators on the web that I read consistently, and John Hussman of Hussman Funds is one of them. I always take great comfort when my analysis rhymes with his because like myself I know he does his homework too.

Morning News Notes: 3/8/2010

The "Morning News Notes" as prepared by TL...Met Life and AIG, market talk from JPM analysts, the deficit, and healthcare.

Saturday, March 6, 2010

Investor Sentiment: Don't Stray Too Far From The Data

I always have the option of how I present the data. I can be negative or positive in my outlook and tone. But one thing I rarely do is stray too far from the data. I am flexible, but I remain data centric in my approach, and this forms the basis for my trading decisions. In the current market environment we find the sentiment picture to be pretty much what it has been for the last 6 months: the "smart money" is bearish and the "dumb money" remains bullish. Under these conditions, I know that the ascent of prices is likely to slow as either range bound trading will develop or an intermediate term top is imminent. I play with discipline and caution and expect the worst. Yet the market has refused to crack, and in fact, prices on the major indices are back at their 52 week highs. Failure of the indicators? Greed and fear gone from the markets? No and no! The price cycle as defined by greed and fear will play itself out. It always has and always will. I see no reason to stray from the data at this time.

Friday, March 5, 2010

"Danger, Danger Will Robinson"

I feel like the robot in the television show, "Lost In Space". Investor sentiment remains bullish and trends in gold, crude oil, and yields on the 10 year Treasury bond are collectively becoming extreme as well. This combination has me thinking: "Danger, Danger Will Robinson".

Morning News Notes: 3/5/2010

The "Morning News Notes" as prepared by TL...non-farm payrolls, the Fed, jobs bill, and Greece.

Thursday, March 4, 2010

A Comprehensive Look At Investor Sentiment

Figure 1 is a weekly chart of the S&P500. The indicator in the lower panel is a composite of the 4 sentiment measures posted to this website every weekend: the "dumb money", the "smart money", company insiders, and the Rydex asset data. It takes 13 data inputs to make this one indicator!

Morning News Notes: 3/4/2010

The "Morning News Notes" as prepared by TL...Monster Worldwide Employment Index, Blackrock buying US Treasurys, Greece, healthcare, Volcker rules, and merger and acquisition activity surges to December, 2008 highs.

Trends In Gold, 10 Year Treasury Yields, And Crude Oil

Our composite indicator that assesses the strength in the trends of gold, 10 year Treasury yields, and crude oil is likely to be back in the extreme zone by the end of the week. This represents a headwind for equities.

Wednesday, March 3, 2010

The Bullish Case For Equities

The bullish case for equities is best summarized by some of the price action that I am seeing especially in the retail, home building, financial and energy sectors. Leadership provided by these sectors would be the right kind of leadership for a broad market rally.

Morning News Notes: 3/3/2010

The "Morning News Notes" as prepared by TL...Greece, US economic growth revisions, and mortgage rates.

The Bearish Case For Equities

From this perch, the bearish case for equities is really one of sentiment. The "smart money" is bearish and the "dumb money" never really got too bearish after the mid - January correction. As discussed in "Why I Think We Need To Go Lower Before Going Higher" this is a market "call" where context matters. The best dips to buy are those where the "dumb money" turns bearish and the "smart money" turns bullish. Neither of these happened after the mid - January correction. It would be my expectation that a modest sell off will lead to a modest bounce. Therefore, I would be a seller as prices approach the January, 2010 highs.