The Best Newsletters

The Important Message From Earnings Season

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Oil didn’t go down. Bank stocks in Greece didn’t crash. The dollar didn’t make a new high. And rates didn’t put in a new low. As a result, traders and their computers in the U.S. had the green light to hit the buy button for much of the day on Thursday.
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Trading Ranges Hold For Now

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MARKET SUMMARY

- Trouble early again but stocks reverse with a Yellen briefing of congressional democrats.
- Trading ranges hold for now.
- Jobless claims tumble outside of shale oil states.
- Pending home sales fall.
- After hours earnings have stocks jumping even if AMZN and GOOG missed.
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Price Action Has Been Nutty

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Are we having fun yet? If you are someone who attempts to manage risk and/or play the trends in the market the answer is likely a resounding, NO!
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The High Was On The Opening

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MARKET SUMMARY

- Earnings improve considerably but stocks cannot take advantage of it.
- Stocks try to rally, look decent heading into the FOMC, but collapse afterward.
- NYSE large caps, NASDAQ heading toward the lows in the range as midcaps, small caps try to hold near support, maintain some semblance of a January Effect.
- FOMC statement as we figured with no negatives mentioned re oil or recent data, and market views that as hawkish.
- Lower oil is not a sign of deflation.
- Buybacks drop precipitously, stock prices follow?
- Watching SP400, RUTX, SOX to hold near support, large caps test range lows.  Neither is that positive.

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Midcaps, Small Caps Hold The Fort

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MARKET SUMMARY

- Horrid 3-letter stock earnings, poor 2015 guidance, weak economic data send NYSE large caps lower.
- Midcaps, small caps hold the fort.
- This is what happens when you favor one class of companies over a level playing field.
- Durable goods orders plunge, revisions are really bad, business investment down of course given oil and gas is no longer investing.
- Despite the selling, AAPL and others ride in and perhaps assist SP400 in holding the market.
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Greece Elections A Suprise But Not

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MARKET SUMMARY

- Large cap indices test as we want, small and midcaps eager, start their January Effect move.  Late but perhaps it will be effective.
- Greece elections a surprise but not.
- New normal investment: lots of mergers.
- Dallas Fed suffers loss of oil pressure.
- CBO new calculations show ACA costs explode past expectations.
- MSFT, UTX show earnings are still not that great.
- Decent action is setting up at least a run at the last highs.

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Time to Run With the Bulls?

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On Friday, we noted that the S&P 500 had recently experienced two 5-day declines within ten days of the first one starting. Although the number of historical occurrences are few (the pattern had only been seen 4 other times in history) and the result would seem to be counterintuitive, we also noted that such price action has tended to be bullish for stocks over the ensuing weeks and months.
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QE is All Stocks Want

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MARKET SUMMARY
- QE, apparently from anywhere, is all stocks want.
- Earnings in need of some improvement
- Stock indices pause after a strong Thursday EU QE move.
- SP400 midcaps look at becoming leaders.
- Good moves, more leaders showing up, now can the indices break up the toppy patterns?

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Indices Breaking Next Resistance

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MARKET SUMMARY
- ECB QE a done deal, stocks hold early gains, accelerate late.
- Indices breaking next resistance, now face the next big tests as they move toward the prior peaks.
- Layoffs again, and again the good jobs take the hits.
- And we thought the gas tax proposal was bad.
- Friday, stocks moving, indices still have something to prove.
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For Now It’s Up To The ECB

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MARKET SUMMARY

- Low to high move sticks, after a bit of effort.
- Weaker earnings, layoffs versus housing starts, ECB QE reports, central bank pre-moves.  Stocks higher but still up in the air.
- Large cap indices still have to take out this resistance.
- Same leadership tries to lead the market.
- For now it is up to the ECB.  Great position for the market, right?

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Stocks Throw Away Early Gain

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MARKET SUMMARY

- Stocks throw away an early gain, rebound to get it back.
- Most indices add to the Friday rally, but the pattern character does not change.
- Waiting on ECB, China stimulus credited with the gain, but don’t forget the dollar/yen.
- GDP readings, forecasts not good but spur stimulus talk.
- Layoffs return.
- Bullard: time to ‘get going’ with rate hikes because FFR is 400BP below where it should be.
- Assuming ECB will launch QE.  Perhaps the best the announcement can do is avoid a selloff?
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Friday Was Classic Short Covering

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MARKET SUMMARY
- Stocks rallied Friday but indices are struggling.
- IEA lowers estimates for non-OPEC production, so hike taxes.
- Senator Durbin proposes raising the tax to $1.00/gallon.
- Friday was classic short covering action ahead of a 3-day weekend.

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Add U.S. Growth to List of Worries

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Apparently investors can now add the state of U.S. growth to their list of worries. Whether or not the worry is warranted will likely continue to be debated for some time. For example, economists tell us there is nothing to fear but fear itself at the present time due to the fact that the trend of the U.S. economic data remains positive. However, even the most ardent bulls will have to admit that the majority of the data seen over the past month has come in on the punk side.
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Leaders Start to Break Down in Numbers

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MARKET SUMMARY

- Some things different, some things the same.
- Stocks blow a lead.  Again.
- Leaders start to break down in numbers.
- Swiss bank cries ‘every currency for itself!’
- Philly Fed tanks, New York rises, Jobless Claims jump.
- Oil collapse has benefits but not near term.
- Stocks breaking down good patterns, but after 5 downside days, the weekend, the uncertainty of so many things, stocks may rebound on short covering.

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Holding Up Again But Not More Than That

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MARKET SUMMARY

- Futures lower, double down on December retail sales.  Come back, but only just enough to hang on.
- Leaders continue hold up.  For now.
- January Effect?  January Defect?
- Retail sales fall far below expectations.  Copper crashes.  NRF reports good holiday sales.
- Gallup reports US diving in business creation rank, more companies die than are born.
- Okay, holding up again but not more than that.

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The Word of the Day Was Volatility

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If one was out and about yesterday and unable to view the intraday action, the end result of the trading session may not have produced much of a reaction as the Dow fell 27 points, the S&P dropped 5, and the NASDAQ gave up just 3. However, anyone watching the day unfold knows that there was a lot more to the story.
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Market Needs Some Decent Earnings

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MARKET SUMMARY

- Stocks blow a big lead.  Manage to hold the same support.
- Germany said to still be against QE, early earnings fail to inspire, yen still gaining against the dollar.
- OPEC still whining about US production
- Indices manage a decent hold, leadership challenged but hanging in.
- Bids need to return, and that means the market needs some decent earnings.
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Time to Assess Your 2014 Portfolio Performance

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There is so much to keep track of these days. There is the crash in oil prices. The terror in Paris. The political drama in Greece. The unexpected decline in interest rates. Inflation expectations. The QE program in Europe. The Fed’s next move. China’s new stock market. The global economy. And of course, there is the state of the earnings season.
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Leaders Split As Some Look Great

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MARKET SUMMARY

- Two days up, two days down.
- Indices at support, handle it in different ways.  At least SP500, NASDAQ fill the gaps, bounce.
- Leaders split as some look great, others under pressure.  Big names? Ugly.
- Since QE ended, stocks flat and struggling to hold the trend, bonds exploding higher.
- Pros and cons for the market almost six months out from QE’s end.
- Oil’s role in 2015.
- Near term it is lick log time for stocks.

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Jobs More of the Same

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MARKET SUMMARY
- Stocks cannot hold an early jobs, Fed-speak bounce.
- Jobs more of the same as headlines show improvement but hollow improvement.
- Indices at next resistance, and next test in the recovery.

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Is QE to Blame For All The V-Bottoms?

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There has been a lot of talk about the fact that the S&P 500 has displayed a remarkable tendency to produce a “V bottom” during the majority of the pullbacks seen over the last couple of years. Including yesterday’s action, the blue chip index has put in a total of 10 such “V bottoms” since the end of 2012. Doing the math, this means that the market has “V’d” about 5 times a year in the last two years whereas in the prior 62 years, the “V’s” were seen only about once every year and a half.
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Thursday’s Strong Surge

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MARKET SUMMARY

- Wednesday’s bounce becomes a Thursday strong surge.
- Nothing like some Fed-speak to turn a market.  Has to.  The Fed cannot afford a real selloff.
- More stocks setting up moves, but still not a majority.
- Jobs report covering or a real move to higher highs?  Playing good stocks upside, keeping an eye on the door.
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A “V Bottom” Appears to be Underway

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The primary purpose of this daily missive is to identify the current drivers of the stock market action. The idea is that if we can understand why stocks are doing what they are doing in the near-term, we are unlikely to be fooled by a really big, really important move.
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More Need to Step Up on This Recovery

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MARKET SUMMARY

- A bit oversold, yen weakens, oil firms, ADP beats. Conditions ripe for a stock bounce.
- Good percentage gains on the recovery, charts not a sure thing.
- Germany softens toward Greece, helps the market hold its gains.
- OPEC continues complaining about others with the audacity to try and make money in oil production and sales.
- Some leaders rally well, others sell.  More need to step up on this recovery.
- Jobs feared better in December, causing short covering.  Likely continues Thursday.

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Worried About Growth in the U.S.?

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In what is being dubbed as the worst start to a new year in ages, oil, Russia, and Greece are capturing most of the headlines. However, there may be another factor lurking which could be causing some investors to fret. Namely, the state of the U.S. economy.
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Economic Data Triggered Selling

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MARKET SUMMARY
- Stocks started higher, almost convinced the skeptics, but the economic data triggered more selling.
- Small caps, midcaps, SOX played catch down to the large caps.
- Q4 data continues a bit light as ISM Services misses, Factory orders down again.
- Oil still diving.  Bonds still soaring.  Yen still bouncing.
- Small caps test near the 200 day, bounce. Now is the time.
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The Worries Are Back. Greece is Back.

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So far at least, the New Year has been anything but happy for stock market investors. In short, traders have ignored the traditional seasonal pattern and have instead focused on the negative. So, the worries are back. Greece is back. And after yesterday, some fear appears to be back at the corner of Broad and Wall.
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The ‘Real Start’ of 2015 Gets Underway

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MARKET SUMMARY

- The ‘real’ start of 2015 gets underway and stocks are dumped.
- Friday’s decent large cap index patterns trashed.  Now it is up to the smaller issues to stage a January Effect move.
- Despite big hits in the large caps, many stocks ignore the selling.  They are the seeds of a new rally if they can hold after the selling dissipates.
- All kinds of news but the big news is oil breaking $50 intraday.
- Watching for support levels, bounces, how the indices react to moves, and how the smaller issues, holding their patterns, hold up.

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Stocks Start 2015 Uninspired

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MARKET SUMMARY
- Stocks start 2015 uninspired, but the index patterns are not that bad.
- Some good stock patterns hold out promise for the start of 2015.
- Years ending in 5, pre-election years, and the fourth year following three good years.  All positives for 2015.

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From Boring to Some Selling

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MARKET SUMMARY

- From boring to some selling, stocks start to test the run from mid-December.
- US housing data not that great (again), consumer confidence hangs in.
- World economic data continues to stumble but some are adding stimulus.
- Testing heading toward year end as some profits booked, but thus far just an easy test.
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A Year of Underperformance

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And so it goes. Now that the bull market is nearly six years old and has produced gains of more than 200 percent since March 9, 2009 (+213% to be exact), the popular press as well as a great many financial advisors appear to be climbing back aboard the buy-and-hold band wagon.
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SP500 Slips

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MARKET SUMMARY

- Quiet Christmas Eve session, basically flat, SP500 slips.

The Dow 30 added 6 points to its move above 18,000.  Half session, six points.  That about sums up the session.  As typical for this time of year the session was on the upside (except SP500).

Just not a lot of fireworks and thus we didn’t do anything with positions or new plays.  There was some good work on patterns put in, setting up some further upside.  Thus just wasn’t, of course, the day for many big moves.  There were a few solid moves as GPRO continued its bounce off support with another nice move while the biotechs repaired some of the Tuesday damage.  Mostly it was a quiet pre-Christmas session.
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Old School Stocks Day

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MARKET SUMMARY

- DJ30 hits 18K as SP500, DJ30, SP400 lead, biotechs, chips lag.
- GDP hits 5%, sort of.
- Durable goods orders disappoint.
- Oil trying to bounce but likely just in relief.
- Indices struggle to hang onto session gains, meaning Christmas Eve is likely not going much of anywhere.
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What Do The Cycles Say About 2015?

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With the Dow and S&P 500 now back at all-time highs (albeit by the skinniest of margins), and traders apparently following the seasonality play book, the question of the day is, where do we go from here?
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Riding the Move to Take Some Gain

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MARKET SUMMARY

- Christmas rally continues with SOX showing a solid technical move, DJ30 pushing 18K.
- Russia/China currency pals, Saudi Arabia waiting everyone out, Existing Home sales fall, North Korea loses its signal.
- Indices pushing back up to the December highs.
- Riding the move to take some gain, pick up a few new positions.

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Can the “V” Bottoms be Trusted?

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The question of the day (in this business, sometimes knowing the question is more important than having the answer) is whether or not the current joyride to the upside, which has taken the S&P 500 up nearly 100 points (97.91 to be exact) or +4.96 percent in just 3 days, can be trusted.
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After the Fireworks Friday Was Pretty Tame

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MARKET SUMMARY
- After the fireworks, kind of an anticlimactic expiration, but stocks still post gains.
- Not much news to drive stocks, but they didn’t need it.
- Modest gains but not the pullback yet for some new entries.

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Is Everything Fixed Now?

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C’est la vie. Another dip in the stock market has been followed by another violent “V” bottom. One minute the S&P 500 is down 5 percent on fears of, well, just about anything and everything, and the next, the market is back to flirting with all-time highs. That’s just the way the game has been played in 2014 as anyone looking to reduce their exposure during a potential crisis has been made to look pretty silly within a couple days.
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Funds Play Catch Up Again

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MARKET SUMMARY

- Stocks continue their surge, times two.
- No Fed buyer’s remorse, Swiss bank goes negative, oil tries to bounce.
- Funds play catch up again, perhaps unleashed too much in the short term.
- Looking to take gain if it is there, will have to be patient, like the Fed, in terms of new buys.
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‘Considerable Time’ ?

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MARKET SUMMARY

- Stocks move higher into FOMC decision, double gains afterward
- ‘Considerable time’ still in the statement, but being dropped by a ‘patient’ Fed.
- Still looks like six months when you do the math.
- Oil at support, ready to bounce and should take stocks with them.
- Stock investors seem to like the Fed non-move, and if they want to rally, we will go with them.

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Is It All About Russia Now?

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Worries abound in the stock market these days as traders fret about the price of oil, deflation, high yield bonds, the global banking system, the economies of Europe, China, and Japan, what the Fed will do next (and when), and Russia. It’s that last one that seems to be attracting the most attention at this stage. As such, it is a good idea to understand why Russian stocks and the country’s currency has any bearing whatsoever on the stock and/or bond markets here in the good ‘ol USofA.
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Panicked Market? Check Out the Leaders.

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MARKET SUMMARY
- Stocks open soft, rally, then punt the gains.
- Russia, oil, the Fed, and everyone else all seem to have investors jumpy.
- Panic selling?  Seen a lot of panics, this isn’t one, at least yet.
- Indices close lower but positions are mostly green.
- FOMC is the next immovable object ahead for stocks.
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Monday Misdirection

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MARKET SUMMARY

- Stocks start higher, blow the gains and more as oil reverses back to negative.
- UAE says OPEC won’t cut production just to raise prices.  How gallant.
- US Production, Capacity sport impressive levels.
- NY manufacturing continues to lag, even contracts.
- World economies built on oil boom now struggling.
- Dow, SP500 and even NASDAQ testing next support but not yet much indication of a new bounce.
- Leadership hanging in but ranks thinning.

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Oil Remains Focal Point of the Market

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Oil continued to collapse on Friday, taking the stock market down with it. And while there were other stories that attracted some attention at the end of last week, including London’s airspace being closed and a downgrade of France’s sovereign debt rating, there can be little argument that oil remains the focal point of the market.
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Year-End Rally is Off the Rails

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MARKET SUMMARY
- Stocks and oil fall together.  Weaker world economy?  Increased supply?  Does it matter?
- Yearend rally is off the rails, but leaders continue holding the line, holding out the chance for a little Christmas magic.
- IEA cuts its oil forecast as well.
- Michigan Sentiment surges as citizens accept lower growth, lower standards of living as the new normal.
- Looking for indications of a new bounce attempt.  Some indicators gelling, but still has to show it.

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Continued Volatility Wears Out Momentum Bids

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MARKET SUMMARY
- Self-inflicted wounds: market surges upside then gives up a good chunk of gains worrying about a government shutdown.
- Afternoon fade neutralizes a good session as some indices still solid, others problematic.
- Retail sales rally as autos lead the way, aided of course by some historically high  seasonal adjustments.
- PBOC tightens in some areas then Thursday loosens in others.
- Norway pulls a surprise rate cut.  So much for the rock of western Europe.
- Yearend rally had its shot to renew on Thursday and kind of blew it.  Still can continue the move, but continued volatility wears out momentum bids.
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Why Stocks and Oil Are Joined at the Hip

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If your response to yesterday’s trash job in the stock market was something along the lines of, “Wait, what?” you are likely not alone. Tuesday the stock market dove 220 points in the early going and then recovered almost all of it into the close. Thus, it looked like the dip buyers appeared to be back with a vengeance. But then the very next day, the Dow dove -268 points and the dip buyers were nowhere to be found. So, what gives?
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Leaders Are Holding The Line

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MARKET SUMMARY

- Stocks struggle early, unable to keep Tuesday reversal momentum, sell off hard on ECB leak, OPEC cutting 2014 demand.
- SP500, RUTX holding the line, SOX looks fine overall, but looks as if more selling is coming to at least some of the major indices.
- Volatility killing the yearend rally, but leaders are holding the line.

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China Back In The News

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MARKET SUMMARY

- International issues hit stocks again, but they show intestinal fortitude, post a credible recovery.
- China stimulus not.  China tightens liquidity trying to forestall a bubble.
- Good enough recovery for the yearend rally.
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More Worries in the Oil Patch

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For a while on Monday morning, it began to feel like the Holidays had started early. While stocks had opened down on some new weak data in Europe, the indices recovered relatively quickly. No, make that almost instantaneously, as the opening down draft lasted a total of two minutes. And after the requisite rebound, things got fairly quiet for a couple of hours.
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