Saturday, June 29, 2013

A Quick Break From the Regularly Scheduled Programming- Get Through That Plateau

I thought I would take a quick break from the investment/economic centric posts and bring a little more diversity here for a moment. I am avid power lifter and runner in my spare time. In my pursuit of expanding my understanding of these sports I found the posting of one Elliot Hulse - a power lifter out of Florida who makes a great deal of videos concerning strength training and about becoming a stronger version of yourself in all aspects of your life. Although the below video is more powerlifting/body building centric, the advice given can be applied to all aspects of life, as who has not reached a plateau that needs to be broken out of. Enjoy.

Friday, June 28, 2013

Santelli Is the Best Commentator on CNBC

Not only that, he appears to be the only one with ability to think. Here is a Santelli two-fer....

The Dark Side of Analyst Coverage: The Case of Innovation

This appears to be some interesting research about the negative effects of company innovation and analyst coverage.

The synopsis reads.....

In our paper, The Dark Side of Analyst Coverage: The Case of Innovation, forthcoming in the Journal of Financial Economics, we examine the effect of analyst coverage on firm innovation and test two competing hypotheses. We find that firms covered by a larger number of analysts generate fewer patents and patents with lower impact. To establish causality, we use a difference-in-differences approach and an instrumental variable approach. Our identification tests suggest a causal effect of analyst coverage on firm innovation. The evidence is consistent with the hypothesis that analysts exert too much pressure on managers to meet short-term goals, impeding firms’ investment in long-term innovative projects. Finally, we discuss possible underlying mechanisms through which analysts impede innovation and show a residual effect of analyst coverage on firm innovation even after controlling for such mechanisms. Overall, our study offers novel evidence of a previously under-explored adverse consequence of analyst coverage, namely, its hindrance to firm innovation.

Is Now the Time to Sell Gold?

6/27 Trading Day Edition of Volume Off the High

Not a lot going here with the market up on lower overall volume.

6/27 Trading Day Edition of High Volume High

Just a few names making new highs with volume on an overall low volume market day....

S&P 500 Price/Volume Heat Map for 6/27 Trading Day- Short the Utilities.

The S&P 500 gained for a third day in a row, increasing in value by 60 basis points. This is as money flowed into financials and discretionary stocks.

The heat map largely reflects the strength in both of these sectors, with most the stocks gaining with some volume support, especially in the financial sector. Despite this dynamic, the SPY continues to trades higher on lighter volume levels over the subsequent three days. Additionally, the SPY closed towards the low of the trading range in yesterday's trading. This suggests to me that the rally just a retracement of the downtrend, a function of operators pulling in money before another sell off. See the chart below the heat map.

I am noticing some interesting dynamics in the utility sector. although the group gained 20 basis points in yesterday's trading, the gains were focused in a handful of names. In contrast, the heat is showing general weakness in the sector constituent trading. This is as the XLU or the Utility Spider ETF is trading higher on lighter volume, again indicating a lack of support for the now higher price. We may just see XLU trade down another 10% or so, and in fact I think this is low risk short opportunity here. I will making some trades in the portfolios today.

Thursday, June 27, 2013

Deflation and Depressions- Is There An Empirical Link?

What I Am Reading/Watching 6/27/13- Links and Charts

Gold prices pressured by force liquidation, which is a sign of a bottoming process- Rogers

Bill Gross is out with his latest investment outlook (tipping point) and it is a must read for any investors.  The quick takeaway...
                   1) Yields and risk spreads were far too low two months ago.
                   2) Global markets were too levered and now they are derisking.
                   3) The bond market ship is not sinking. Expect low but positive returns in future years.
                   4) Don’t panic. Yell at someone!

The article is great in the context of thinking that risk is increasing across 'all' investment markets simultaneously. Although Gross may be proven correct in his thesis that bond yields will retrace due to the reasons cited, it should be noted that yields have broken the ceiling that has been in throughout most of 2012.

10-year treasury yield

30-year treasury yield

 Lastly the TBT of the inverse 20-year treasury ETF

There does appear to be volume support to the breakout on the TBT, but the yields and a pullback in the price of the TBT should be watched closely for the next move.

MISH is also buying and holding the miners

Political Calculations calls (and has called) it- housing is in a second bubble.

U.S. Median New Home Sale Prices vs Median Household Income, 1967-2013

Taper the Taper Talk- Peter Schiff...... seems like more than few believe that economy is weaker than otherwise thought and that the steepening of the yield curve may have more to do with the repricing of risk across all assets.

Even the Fed's Lacker thinks growth will remain subdued.

The propaganda to make us fear inflation is just that propaganda- don't fear inflation.

The rise and fall of the robot- HFTs rise and fall

6/26 Trading Day Edition Of Volume Off the High

Just realized amongst the hustle this morning that I never published the latest volume off the high list...

Five Ways to Spark Better/Creative Thinking

Here are 5 ways to get new input that will have you creating more and better ideas continuously.
  1. Choose a new way to get to work. This may seem like a small thing, but by going out of your way to find new ways to get to work you are changing your input naturally. You will see new things, think about new things and make new connections.
  2. Ask a child how they would solve a problem. Children are not stuck in their ways the same way as adults can be. To them everything is possible. Even if the solution they present is not perfect or even practical it is very likely that it will spark new ideas in your own head.
  3. Pick a random magazine to read. Computer programmers have their own favorite magazines, architects know which magazines are hot for architecture and so on. The problem with this is that everybody will be subject to the same stream of ideas. By going into a magazine store and randomly picking a magazine that might be about knitting and then actually reading it you will most likely find that the things you are thinking about have been solved already in another domain. Free ideas (except for the price of the magazine)!
  4. Force yourself to make connections. This is a little game you can play with yourself, pick random things around your house (or even better, out of a bag) and force yourself to make connections between the object and the problem or project you are working on. Keep doing it for 10-15 minutes and see what happens.
  5. Self impose limits. By imposing limits on yourself your brain will have to work overtime and really get out of its own patterns. If you work with tools, remove the tool you use most frequently and ask yourself how you can accomplish a task in this new situation. Or, why not force yourself to explain a problem without using “shop talk”.
Via Lifehack

What About Money Causes Economic Crises?

Some food for thought concerning the Austrian school of economics.

I may just have to try Tor. Not that I believe that anyone is watching (or cares), but it provides a piece of mind to know that no one can.

S&P 500 Price/Volume Heat Map for 6/26 Trading Day- Setting Up For a Downdraft

Continuing the gains from the previous day, the S&P 500 increased in value by about 100 basis points largely on gains from the more cyclical sectors. That said......

The price/volume heat map is weaker versus the 6/25 trading day. This is as overall volume levels flowing into equities dwindles. For comparative purposes, I show the heat map for both yesterday's trading day and for trading on Tuesday. It should be obvious that the price/volume dynamics are weakening, and this weakening is occurring across all sectors. I continue to think we could trade into the 1,610 level on the S&P 500, but that any further increase is setting up equities for a decline into low-to-mid 1,500 level.

Heat Map- 6/26

Heat Map- 6/25