Archive for News
Market Update – US Dow Jones DJ30
Posted by: | CommentsThis market “refuses to die”,
What a rally! No matter what the bad news is, disappointing jobless claims, Goldman Sachs fraud investigation or even volcanic ash over Europe, the Stock Market participants are in good spirits.
Now I am not a “perma” Bear, but now is a time to be a little careful. We have just kicked off earnings season and things are looking positive so far. But lets be clear about this, we need an amazing round of earning reports, including revenue growth, not just earnings growth due to companies cutting expenses by making more and more people redundant. Why do we need a great earning season? We need it just so we can maintain these levels in the Stock Market.
The last time I checked the Price Earning of the S&P500 was at 21. Historically, a P/E of the major US indexes has not been sustainable over 25. In 2000 we reached a PE of nearly 45 on the S&P500 and we all know what followed. So, I would not say the market is at a huge discount today. However, there are still plenty of bargains.
Technical Analysis of the Stock Market
As I has discussed many times in the lessons on RSI / TSV / ROC / Momentum, we need to look to divergences of the Price & Price / Volume indicators with price. I believe we have one such divergence occurring with the SP-500, DJ-30 and the NASDAQ Composite.
RSI Divergence DJ-30
Now I am not saying cash in your chips right now, the market is in a short / medium term uptrend. Simply be on maximum alert and keep your stop losses tight.
As Charles Dow said…
“A trend is in effect until it gives definite signals of a reversal”
We do not have a definite sign of reversal yet. We have simply some early warning signals.
Is the rally in the S&P500, DJ-30, Russell 3000, NASDAQ still alive?
Posted by: | CommentsWe can see over the last few days that the rally seems to be petering out in the US Stock Markets. It is always of great importance that we buy stocks as the market is about to rise, or in a continued uptrend. This allows us to maximize our profits and minimize our losses. To have a check on the future direction of the market it is helpful to compare and contrast the major indices to see if they are all still moving in the same direction or a few are flagging, see Dow Theory.
The graphic below compares the S&P 500 (SP-500), the Dow Jones Industrial’s (DJ-30), the Russell 3000 (RUA-X) and the Nasdaq Composite Index (COMPQX).
Chart Setup
Daily Bar – Candlesticks
- Moving Averages – 10 – 20 – 200
- RSI – Relative Strength Index 14, MA 14
- Time Segmented Volume 20 – MA14
Read More→
The Big Short – Inside the Doomsday Machine – You have to see this interview.
Posted by: | CommentsI wanted to share you the interview with Michael Lewis the author of “The Big Short – Inside the Doomsday Machine”, its fascinating. John Stewart the host of the Daily show is hilarious but also has a good grip of current affairs, he also highlights the important aspects of Michael Lewis’ book. This video highlights the exact reason why you should only trust yourself when it comes to your investments. A handful of investors saw what was really happening. A quote from the interview is really compelling, Michal Lewis says;
“they [most of the Wall Street firms including AIG] figured out that there was an awful lot of money to be made from lending money to people who shouldn’t be lent money [sub-prime mortgages]; and when you do that you create lots of risk, the only way you can get that risk out there and get lots of people to take it is to disguise it. So they got really good at disguising the risk, they got so good they disguised it from themselves, they fooled themselves, it’s kinda like if you tell a lie often enough you start to believe it”, “it does not occur to anyone to say this is wrong we have to stop doing this”….”Lehman Brothers was cooking it’s books”
Need I say more. These risky sub prime investments were disguised as Triple A “AAA” rated investments. Unbelievable, but true.
Enjoy the video, skip forward to minute 14 in the video for the interview.
Click on picture to jump to the Daily Show Site.
Economics Rap Keynes versus Hayek – Entertainment & Education
Posted by: | CommentsYou have to watch this for the entertainment factor. However there is an underlying lesson of the opposing sides in the economics debate. Interventionist economics with the associated stimulus and demand driven economic thrust which dragged the west out of the depression was led by Keynesian thought, versus Hayek’s prospectus proffered by Margaret Thatcher which dragged Britain out of the 1970’s gloom into the modern world. This video is funny, educational and really cool, at least for us stock market buffs.
One thing is for sure the direction of the market, as highlighted in my forthcoming book and training course, is dictated by the business climate, which is dictated by the economic principles practiced during the era. The modern era of the west is driven by Keynsian economics, which leads to boom and bust. But who is to say the Heyekan prospectus would yield riper fruit. The day when economists agree and find the right path will be the day hell freezes over. One thing is for sure, the power and wealth of nations is dictated by the success of the economies that drive them.
Boom and bust details are highlighted in a previous post. Boom and Bust
Good night.
All credit to the folks at http://econstories.tv for a top video.
p.s. Keynes was British not American and Hayek was Austrian.
Chapter 1 – Essential Stock Market Knowledge – Fundamentals
Posted by: | CommentsExcerpt from Chapter 1 of the Liberated Stock Trader Book and accompanying Liberated Stock Trader Training Course
Fundamental Analysis – the real Positives and Negatives
Positives
Understanding macro economics can help in assessing future business climate. The future business climate will dictate the direction of the stock market.
Using fundamental data provides early warnings ! On a long term view fundamentals can provide insights into the effect of Fiscal and Monetary Policy on the direction of global markets.
Being able to accurately value a business can help understand the gap between actual stock price and actual worth – Value Investing
Value Investing which is based on fundamentals alone pays well in the long term !
Fundamentals are the only way to determine the overall health of an economy and therefore how beneficial the climate is for doing business.
Understanding Industry & Sub Industry Business climates provides greater insights !
Easy access to analysts reports based on fundamental data.
Coca Cola Buying Coca Cola Enterprises CCE – Trading the news
Posted by: | CommentsWhat a great example of my previous article related to trading the news.
A typical example of when big news hits the market those with superior news sources can trade it. In takeover situations prices rocket to just under the bid price of the buying company. In US out of hours trading the stock price of Coca Cola Enterprises Ticker:CCE rocketed from $19.25 to $25 a 25%+ gain, on the news that Coca Cola will be making an acquisition, adding over $2 billion to the worth of this company. $2 billion is a lot to add to the value of a company overnight, this was the bit hitters trading.
If you had a news source that delivered this information to you 30 minutes ahead of everyone else and you are geared up to trade in an absolute instant you could have made good money here. Especially if you had leveraged your money with Option Calls. In and out in an instant. Those that were in early are probably selling as we speak.
Can the private investor compete with the Wall Street old boys network of news? Not really, that’s why I do not trade the news!
