In line with the theme of the previous post, I am going to illustrate a thought process that anyone can employ. One of the hallmarks of a strong economy is the strength of the consumer sector, especially in what is labelled as 'consumer discretionary'. This sector encompasses companies that sell consumables or luxuries, including such … Continue reading Needs vs Wants
The Big Picture
May Update
We are well past the initial bomb blast that hit the markets in mid February. The panic selling that ensued was a function of an un-quantifiable outside force which hit the markets without much warning. Over the months, the nature of the threat has been identified and there are measures being taken globally to address … Continue reading May Update
Contrarian Ideas
The majority of articles that I've written are concerned with finding the best investment vehicles when they are most in demand, hence the focus on relative strength and momentum. There is another school of thought that views investments from an entirely different perspective, that is from a contrarian and necessarily longer term horizon. Investing in … Continue reading Contrarian Ideas
Where Is The Action?
When the media refers to "the market", the normal reference is to the Dow Jones Industrial Average. As we know, the Dow is only a very narrow measure of stock market activity. Though its constituency changes over the years to better reflect the most dynamic sectors of the US economy, it does not necessarily measure … Continue reading Where Is The Action?
Tactic Update
We've been able to logically navigate the swings in the market thus far using some technical tools, some logic and as always, a bit of luck. Much of what has moved markets has been unpredictably external to market dynamics and we are still under some uncertainty in that regard. The activity in the markets reflects … Continue reading Tactic Update
Progress Status
The panic selling that overwhelmed the markets over the last month has subsided. The VIX indicator has come off of its violent spike in mid February with a current reading of 44 versus a peak of 82 just about a month ago. While this statistic has fallen off the high, we are still in an … Continue reading Progress Status
Internals
Beyond the obvious actions of price and volume, there are also measures of the internal state of the markets that give clues as to long term health and potential trend inflections. Breadth, or the measure of advancing issues versus declining issues can reveal whether a market's present trend is flagging and about to either pause … Continue reading Internals
Next Tactics
In a previous article, we discussed the possible scenarios for market direction once peak volatility passed. Once bottoming bars were established by the doji shaped candles (labelled climax low on the chart below), the risk reward parameters are established and projections can be made. With specific reference to the Dow Jones index, the first fibonacci … Continue reading Next Tactics
Leaders And Laggards
As hoped for, the period of peak volatility has passed ( for now) and stock prices have bounced off their panic lows. We witnessed some genuine capitulation as some daily price bars showed extreme intraday fluctuations, falling to new lows only to close near the opening prices. As we've discussed, such price bars are a … Continue reading Leaders And Laggards
Possible Scenarios
One of the most infamous sentiments in the investment arena is, "this time it's different." Every major sell off in the history of publicly traded stock markets have elicited those sentiments from observers both amateur and professional. While normal ebbs and flows can be reasonably explained in real time, when a big sigma selloff occurs, … Continue reading Possible Scenarios
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