S&P: The silence is deafening

[Tape Reader]

Anyone else think it is the Death Knell?

[whodoyoulike]

After all, it is Sunday. Wait until tomorrow then get out of my way.

[Valuist]

A LOT of technical damage done last week. I think only a fool would consider it a buying opportunity. Of course, people said that in summer of 2000 about the Nasdaq.

[lamboguy]

the markets went up for the last 7 years with no volume, lets see what the volume looks like on the way down.

[plainolebill]

All of Asia down hard as of 11:30PM Pacific time, lead by Shanghai - down 7.5%. Should be another interesting day for US exchanges.

[Hoofless_Wonder]

Wild open. Was getting dizzy watching the bid/ask stack gyrate around at the open, after the futures on the /ES froze lock limit down. The Plunge Protection Team had to make a stick save for the Ages today.

Not sure if it's a death knell, but it certainly does feel like the music stopped in the game of musical chairs. If nothing else, one should be thinking of unloading some of those stocks with outrageous P/Es and gathering up some more solid performers - if you want to stay long.....:)


Couldn't make a trade now if I wanted, as TD Ameritrade and the Think or Swim platform is locking me out.

[whodoyoulike]

Wild open. Was getting dizzy ...

Couldn't make a trade now if I wanted, as TD Ameritrade and the Think or Swim platform is locking me out.

I've haven't run into that problem (not with TD A). If it wasn't a one time glitch, I'd move to another.

Did you contact them to find out why this was occurring?

[Valuist]

CNBC is such a joke. You have the biggest 3 day fall (point wise, not % wise) in the Dow and a dead cat bounce rally today, and all is well. One guy was on rationalizing the high valuations, then he claims the market "realized" they were a bit high. So the market "corrects" in 3 days, and everything is ok.

It doesn't work that way. Technical damage has been done. And big snap back rallies are a trademark of bear markets. Some of the biggest one day gains occurred in 2008. But the snap back rallies only get a portion back what was given away. There's more downside in this market.

[plainolebill]

Nice head fake today.

[highnote]

I notice that the S&P has not crossed the 50 day exponential moving average. If you look at the chart the S&P was getting way above the 50 day ema. So maybe it was overbought?

Back on July 10 I got a sell signal when the Value Line Index hit 497.23 -- a 4% drop from a recent high. However, the S&P did not give a sell signal. The Value Line is a little more sensitive due to its composition.

I got a sell signal on Aug 20 when the S&P dropped 4% from a recent high and hit 2035.73 and then the next day I got another sell signal when it dropped to 1970.89.

And of course, yesterday, Monday, Aug 24 I got a big sell signal when the declining volume outpaced the advancing volume on the big board by a ratio of 9-1.

So right now, I've got 3 different sell signals from 3 different indicators. That's a pretty strong sentiment.

I will be sitting on the sidelines for awhile.

I might trade some options. I made good money back in 2009 when option premiums were high and the stock market was rebounding.

The challenge this time is knowing if the market will rebound. So far, all the indicators are bearish. But if I see any signs of stabilization and the option premiums are high then there might be some good trades to be made.

[Hoofless_Wonder]

I've haven't run into that problem (not with TD A). If it wasn't a one time glitch, I'd move to another.

Did you contact them to find out why this was occurring?

I did not. I was on the road and didn't have time to look into it. According to this article, I was not the only one who had problems with TDA (using the TOS platform for trading futures).

http://www.zerohedge.com/news/2015-08-25/august-2015-flash-crash-through-eyes-retail-investors

The selloff overwhelmed some online brokerage firms as investors tried to access trading accounts amid a plunge in the markets. Clients at TD Ameritrade Holding Corp. and Scottrade Inc. reported problems logging on to their accounts and executing trades. Scottrade experienced a 230% spike in trading volume on Monday morning, a spokeswoman said.

...

To Christina Elizabeth, it was “a life-changing 20 minutes.”

The painter from Phoenix was one of millions of Americans who watched in horror as the U.S. stock market sank like a boulder Monday morning, a plunge that topped more than 1,000 points before many investors had finished their breakfast cereal.

Ms. Elizabeth, 31 years old, tried in vain to sell at least some of the shares in her TD Ameritrade Holding Corp. account, but was unable to log in amid a crush of others rushing to do the same. By the time she was able to access the site, she was down $6,000

I was logged in from the night before (I went long in the /ES), and woke up to find the futures locked limit down. The stack had 2400+ in the ask, and 7 in the bid. Ouch. Got a margin call the next morning, though by that time my account was well into the green.... :)

[Robert Goren]

If you are in the markets and have not yet panicked and sold everything, I suggest you panic now. This is going to get real ugly soon.

[Valuist]

I think a lot of people are getting fooled by the snapback rallies of Wednesday and today. If you look at the biggest one day gains (point wise) in history, most were either in 2008 or 2000, years of two vicious bear markets. The biggest percentage one day gains were mostly in the 1930s; again a long bear market. Bear market rallies can be extremely strong; most likely from many short positions being closed out. Volatile markets may be great for short term trading, but they are very unhealthy to invest in.

[highnote]

I think a lot of people are getting fooled by the snapback rallies of Wednesday and today. If you look at the biggest one day gains (point wise) in history, most were either in 2008 or 2000, years of two vicious bear markets. The biggest percentage one day gains were mostly in the 1930s; again a long bear market. Bear market rallies can be extremely strong; most likely from many short positions being closed out. Volatile markets may be great for short term trading, but they are very unhealthy to invest in.


Agreed. I will stay on the sidelines until things stablize.

[PaceAdvantage]

What did I miss? :lol: :lol: :lol: :lol:

[_______]

If you are in the markets and have not yet panicked and sold everything, I suggest you panic now. This is going to get real ugly soon.

This is the problem with most individual investors and why they never get close to market returns. They run out of the store as soon as the sale starts.

We have had 6 years of sub normal volatility. Having a market that goes up AND down is a return to normality, not a frightening departure.

Banks are in great shape (low leverage, good balance sheets) to survive any economic downturn. Not that there is much evidence of a serious downturn on the horizon. And serious market declines not correlated to a recession are rare.

This is a blip. Hopefully most people who had a plan didn't panic. Plans only work when you actually follow them.

[highnote]

This is the problem with most individual investors and why they never get close to market returns. They run out of the store as soon as the sale starts.

We have had 6 years of sub normal volatility. Having a market that goes up AND down is a return to normality, not a frightening departure.

Banks are in great shape (low leverage, good balance sheets) to survive any economic downturn. Not that there is much evidence of a serious downturn on the horizon. And serious market declines not correlated to a recession are rare.

This is a blip. Hopefully most people who had a plan didn't panic. Plans only work when you actually follow them.

Good points!

I got a sell signal a few weeks ago and went about 50% into cash. I've been waiting for a pullback so I can buy. I've also gotten a buy signal since then, but because of the volatility, that buy signal was followed by a sell signal. So this seems like a market being driven by uncertainty.

The last time we had a lot of volatility was right before the 2008 crash. The current rate of volatility is not nearly as dramatic as 2008, but I am playing it on the safe side.

I may have sold a couple stocks too soon, but I'll consider the loss cheap insurance.

My next "buy" level is at S&P 1968.

[reckless]

A lot of this market meltdown was due to the headlines in China, plus the scared hedge fund gonivs who didn't want their portfolios to show any concentration of Chinese companies, or oil companies or commodities and materials, and the like.

But, the real underlying story that hardly ever gets mentioned in the media when volatility runs amok is the real reason why such gyrations occur, imo.

The real reason is the overwhelming amount of monies invested in the market these past few years are invested in ETFs that are programmed along with buy/sell algorithyms.

When the hedgies and other institutions decide to get out fast, ETFs get sold -- and the underlying stocks in that ETF portfolio must get sold as well.

ETFs are the mlilennial version of 'portfolio insurance' which didn't work in the 1980s and won't work again.

[Saratoga_Mike]

Volatility is driven by credit spreads (i.e., wider = higher volatility and vice-versa). Credit spreads are driven by deteriorating industry/macro fundamentals.

[whodoyoulike]

A lot of this market meltdown was due to the headlines in China, plus the scared hedge fund gonivs who didn't want their portfolios to show any concentration of Chinese companies, or oil companies or commodities and materials, and the like.

But, the real underlying story that hardly ever gets mentioned in the media when volatility runs amok is the real reason why such gyrations occur, imo.

The real reason is the overwhelming amount of monies invested in the market these past few years are invested in ETFs that are programmed along with buy/sell algorithyms.

When the hedgies and other institutions decide to get out fast, ETFs get sold -- and the underlying stocks in that ETF portfolio must get sold as well.

ETFs are the mlilennial version of 'portfolio insurance' which didn't work in the 1980s and won't work again.

Interesting points about ETFs, I don't know if you wrote this before or after but they've been writing how these algorithms have contributed to the recent decline. And, the unexpected imbalances between the ETF sales and the underlying stock values.

[highnote]

Interesting points about ETFs, I don't know if you wrote this before or after but they've been writing how these algorithms have contributed to the recent decline. And, the unexpected imbalances between the ETF sales and the underlying stock values.


Yesterday I got a big buy signal from one of the indicators I use. The Zweig advance/decline ratio.

The last time the indicator gave a buy signal was July 2009. That was the start of a huge bull market.

I just went long today after being 50% in cash for the past few months.

One of the stocks I bought this morning is Wisdom Tree (WETF). They are a big player in issuing ETFs. The stock is up nearly 7% today.

The other stocks I bought today are GLW, LQDT, ZUMZ and PCCC. I might buy some other stocks tomorrow. These were the most interesting ones.

FINL looks interesting, but I need to do a bit more research.

I made a lot of money in 2009 selling covered calls on the stocks I bought, but I would have made more just by buying the stocks and not hedging with options. Too often the stocks got called away before the options expired. I made a profit on the stocks and on selling the option premium, but hedging might not have been the correct strategy. I hedged because after the big crash of 07 I was hesitant to jump back in with both feet.

I was right about the direction, but underestimated the strength of the bull market.

Today is a similar scenario. How strong will this bull market be (if it is a bull market) and how long will it last?

I'm guessing about a 15% gain in the S&P, but I need to go back and look at the historical data under similar circumstances.

[sammy the sage]

bold move highnote...wish you b.o.l....

[highnote]

bold move highnote...wish you b.o.l....


Thanks! I'll need it because I had a typo in my model.

The Zweig 10 day average advance/decline ratio indicator is actually 1.70 to 1, not 2-1.

Still, this momentum indicator shows that the bull sentiment is strong as investors have been pushing up the price of stocks for the past couple of weeks.

Last October 31 of 2014 the indicator hit 1.72-1. The S&P was 2018 that day. I predicted it would hit 2116. It hit 2117 on April 24, 2015.

When the adv/dec ratio is 2-1, history suggests that the S&P will have a 10% rise within 6 months. So I'm looking for the S&P to make it to somewhere near 2225 between February and May. Then you can sell in May and go away until the elections.

Hillary is the favorite in the U.S. presidential betting markets. Maybe the market understands this and figures there will be political stability for the next 5 years since a Democratic regime change would not be as dramatic as the change a Republican regime would bring?

[PaceAdvantage]

What fundamental reason does this market have to rally to new highs?

Because the FED might not be raising interest rates as soon as we thought?

That's actually a BAD sign... :lol: :lol: :lol: :lol: :lol:

I love the way this market works...there is a storm a comin'...there has to be...the drop in August was merely the first drip of a dam burst.

[Saratoga_Mike]

What fundamental reason does this market have to rally to new highs?

Because the FED might not be raising interest rates as soon as we thought?

That's actually a BAD sign... :lol: :lol: :lol: :lol: :lol:

I love the way this market works...there is a storm a comin'...there has to be...the drop in August was merely the first drip of a dam burst.

QE4?

[PaceAdvantage]

All I can say is I'm glad I'm a short term trader/investor. I would not be able to sleep at night if I were in this for the long haul... :lol: :lol: :lol: :lol:

[Saratoga_Mike]

And if I was short-term trader, I'd starve to death.

[PaceAdvantage]

Well, I can't say I'm all short term. I do have a 401k and a ROTH IRA...

[highnote]

What fundamental reason does this market have to rally to new highs?

Because the FED might not be raising interest rates as soon as we thought?

That's actually a BAD sign... :lol: :lol: :lol: :lol: :lol:

I love the way this market works...there is a storm a comin'...there has to be...the drop in August was merely the first drip of a dam burst.


Corporate earnings have been decent: http://www.bloomberg.com/news/articles/2015-10-12/u-s-index-futures-are-little-changed-before-earnings-this-week

Perhaps decent earnings reports are why the market has risen the past week or so? Perhaps investors are buying into momentum?

Where else besides the U.S. has a reasonably strong economy to go along with a stable political system?

I don't know the answer, but I do know the trend is up and the old adages "The trend is your friend and don't fight the Fed" are usually good advice.

[Saratoga_Mike]

Corporate earnings have been decent: http://www.bloomberg.com/news/articles/2015-10-12/u-s-index-futures-are-little-changed-before-earnings-this-week

Perhaps decent earnings reports are why the market has risen the past week or so? Perhaps investors are buying into momentum?

Where else besides the U.S. has a reasonably strong economy to go along with a stable political system?

I don't know the answer, but I do know the trend is up and the old adages "The trend is your friend and don't fight the Fed" are usually good advice.

Very few companies had reported at the date of this article. From Oct 13 to Oct 16, 92 companies reported (only includes companies with analysts' estimates), 44 beat expectations, 18 were in line and 30 missed estimates. That means 48% of companies during the week beat expectations, compared with an historical beat rate of roughly 65%, a kind of lousy week for earnings.

[PaceAdvantage]

And don't forget, expectations have been tamed WAY DOWN, so it's not all that hard to beat this time around...

[Saratoga_Mike]

Between June 30, 2015 and Sept 30, S&P 500 earnings estimates were reduced by approximately 5%.

[highnote]

Maybe it's a case of reverse psychology towards another old adage "Buy on the rumor, sell on the news"?

Earnings are average or below average so now is the time to buy to get in early on underpriced stocks before the earnings start to look good and drive prices up?

Again, I don't pretend to know the answer and it really doesn't matter why. All I know is that the trend is up. I'll continue to ride this trend until I get a sell signal.

Also, a lot of baby boomers and millenials are dumping money into mutual funds through their 401k plans with every paycheck. That money has to be put to work somewhere.

[highnote]

Wisdom Tree (WETF). They are a big player in issuing ETFs. The stock is up nearly 7% today.

The other stocks I bought today are GLW, LQDT, ZUMZ and PCCC. I might buy some other stocks tomorrow. These were the most interesting ones.



Off to a good short-term start. Let's see how these stocks hold up over a longer horizon.

I bought the 5 stocks above on Oct 15 and after the close today:

GLW is down 0.53%

LQDT up 1.37%

ZUMZ up 6.05%

WETF up 4.92%

PCCC up 4.67%

Any one that goes up 15% I will sell or put tight stops on.

I will sell any that goes down 10% with the logic that these are good companies that are undervalued in a strong market. So if the stock goes down then I probably am wrong about the stock. I am betting that they should go up since they have already been discounted. And 15% is my target because, on average, that has been the average gain of the broader market after a strong buy signal given by the Zweig momentum indicator.

[ReplayRandall]

“Black Swan” Risk Index Soars To A Record High

Take the time to read this, unless you like losing money:

http://www.valuewalk.com/2015/10/black-swan-risk-index-soars-to-a-record-high/

[highnote]

“Black Swan” Risk Index Soars To A Record High

Take the time to read this, unless you like losing money:

http://www.valuewalk.com/2015/10/black-swan-risk-index-soars-to-a-record-high/

It's always a good idea to protect against downside risk.

I either hedge with covered calls or by placing stop orders.

[ReplayRandall]

It's always a good idea to protect against downside risk.

I either hedge with covered calls or by placing stop orders.

Sounds like a plan.....unless.....well, you know what the worst scenario is. BTW, what the heck happened to Bad Company?

[highnote]

Sounds like a plan.....unless.....well, you know what the worst scenario is. BTW, what the heck happened to Bad Company?

Don't know. Never talked to him much. Others here would know more than me.

[Hoofless_Wonder]

“Black Swan” Risk Index Soars To A Record High

Take the time to read this, unless you like losing money:

http://www.valuewalk.com/2015/10/black-swan-risk-index-soars-to-a-record-high/

While this indicator did pick up on some major turns in the market, it looks like it didn't catch the 2008 rout at all. With all the shenanigans going on behind the scenes by the Fed, the Banks, the SEC and other financial "regulators", I wonder how accurate any technical indicator is.

We're coming up to a critical 2035/2040 level on the S&P. Futures were up 10 earlier, bounced off that level, and are now declining. If the market pushes higher from here and breaks above 2050 or so, it could go much higher. But it won't make any sense to me. The holiday season is looking like the Grinch is back, and discretionary disposable income seems to be on the decline (i.e., Harley).

I've been wrong many times declaring the top is in since mid 2009, so I'll pass on saying it again. But it seems the only thing holding up the market now is there's no other place to stash your wealth......

[highnote]

While this indicator did pick up on some major turns in the market, it looks like it didn't catch the 2008 rout at all. With all the shenanigans going on behind the scenes by the Fed, the Banks, the SEC and other financial "regulators", I wonder how accurate any technical indicator is.

I am looking at my model as we speak. In 2008, the S&P hit a high of around 1411 and fell to a low of around 909. That's a pretty big range, but it was predictable.

On January 4, 2008 there was a sell signal when the ratio of the volume of down shares exceeded the volume of up shares by a ratio of 9 to 1 or more. On the 15 and 17 this same sell indicator happened again, but this was probably just a continuation of the Jan 4 one. On Feb 5, 29 and March 6 and 14 there the same sell signal appeared. Notice the downward trend in the S&P:

On Jan 4 the S&P was 1411.
On Jan 15 and 17 it was 1380 and 1333
Jan 29 it was 1362
Feb 5, 1336
Feb 29, 1330
Mar 6, 1304
Mar 14, 1288

Mar 18 and Apr 1 had buy signals when the ratio was 9 to 1 for advancing volume over selling volume.

Mar 18 -- buy signal -- s&p 1330
Apr 1 -- buy signal -- 1370

This was a short rally because on Apr 11 the sell signal appeared

Apr 11, 1332

There was a long break to the next signal and it might have been wise to be out of the market until on July 2 there was a buy signal.

Jul 2, 1261

This was short lived rally. On Jul 8 there was a sell signal.

Jul 8, 1273

Jul 23, sell signal, 1282

Sept 4, 9 15 and 17 all had sell signals indicating a lot of weakness

The S&P on those days respectively were 1236, 1224, 1192, 1156.

This downward trend continued with sell signals on Sept 29, Oct 6, 7, and 9. The s&p those days was 1106, 1056, 996, 909.

The first sign of relief was on Oct 13 when there was a buy signal. The s&p was 1003.

From Oct 13 to Nov 24 there were 11 alternating buy and sell signals. This back and forth struggle with conflicting buy and sell signals continued into the first quarter of 2009.

I remember going 100% into cash during this period of volatility because I had no idea where the market was going. Apparantly, no one else did, either.

The first green shoot was on Dec 5, 2008. When the ratio of up stocks to down stocks over a 10 day period was 1.72 to 1. A 2-1 ratio is very strong, but 1.72 is close. This was followed by a buy indicator on Dec 9 and 30. The S&P was at 890 on Dec 30 and it had not hit bottom, even though there were very positive signs starting to emerge.

The S&P bottomed out on March 9, 2009 at 676.

This is when I jumped back into the market and starting buy stocks long and selling covered calls. It was an exciting time and I got excellent returns with very little risk because I was hedged on the downside and everything kept going up..

Alternating buy and sell signals kept appearing from January 2009 to July 2009.

The biggest sign of a turnaround happened on July 16 when the ratio of advancing volume to declining volume was over 28 to 1!!!

Then from July 23 to July 27 there were three straight days when the up stocks to down stocks ratio was over 2 to 1. It is rare to have this happen and is the strongest of the buy signals.

On July 16, 2009 the S&P was 940 and it looks like it peaked at 2130 in May of 2015 -- a six year bull run.

Sell signals started appearing this past July and that's when I went 50% into cash.

There were a couple more sell signals in Sept.

On Oct 5 there was a buy signal and that's when I went about 75% in stocks and 25% into cash.

Who knows what the future holds?



We're coming up to a critical 2035/2040 level on the S&P. Futures were up 10 earlier, bounced off that level, and are now declining. If the market pushes higher from here and breaks above 2050 or so, it could go much higher. But it won't make any sense to me. The holiday season is looking like the Grinch is back, and discretionary disposable income seems to be on the decline (i.e., Harley).

Housing starts are up. So that's a good sign.

I've been wrong many times declaring the top is in since mid 2009, so I'll pass on saying it again. But it seems the only thing holding up the market now is there's no other place to stash your wealth......

With low interest rates bonds are not attractive. Real estate is attractive because it is cheap to finance right now. That might explain why housing starts are up.

[highnote]

One of the stocks I bought this morning is Wisdom Tree (WETF). They are a big player in issuing ETFs. The stock is up nearly 7% today.

The other stocks I bought today are GLW, LQDT, ZUMZ and PCCC.

WETF up 14% since I bought it on Oct 15. The rest are up, too.

[PICSIX]

WETF up 14% since I bought it on Oct 15. The rest are up, too.

Very nice!! :ThmbUp:

[Hoofless_Wonder]

WETF up 14% since I bought it on Oct 15. The rest are up, too.

Congrats. Your earlier post on the 2008/2009 timeframe reads a lot like "How I Trade for a Living" by Gary Smith, who is not a technical trader.

Let us know when you get a sell signal..... :)

Nice up move in the market today, just over the 100 DMA. It's scary to be long in this environment, but I might have to go long if we get a kissback on the S&P around 2035.

[PaceAdvantage]

Well, Amazon threw a profitable quarter at us, so I guess everyone in the pool and BUY BUY BUY!! :lol: :lol: :lol:

I think this market is insane. I'd rather it went down, but I won't get killed if it goes up...I'm well positioned at the moment for the most part.

I just sit here shaking my head wondering why the buying was so damn keen today...we're headed for new highs? Really? Shocking if true...

This whole monetary policy driving the market...ECB says they're open to more QE...yippie!!! It all just smells real bad to me...but I'm no economist...so I guess I'm going to miss out on one huge rally... :lol: :lol:

[highnote]

Well, Amazon threw a profitable quarter at us, so I guess everyone in the pool and BUY BUY BUY!! :lol: :lol: :lol:

I think this market is insane. I'd rather it went down, but I won't get killed if it goes up...I'm well positioned at the moment for the most part.

I just sit here shaking my head wondering why the buying was so damn keen today...we're headed for new highs? Really? Shocking if true...

This whole monetary policy driving the market...ECB says they're open to more QE...yippie!!! It all just smells real bad to me...but I'm no economist...so I guess I'm going to miss out on one huge rally... :lol: :lol:


I read a report where housing starts are up. That would seem to signal confidence in the economy. Low interest rates are a factor, too, though.

Dow futures are up 43 this morning and S&P futures are up 4.

Sometimes there is no easy explanation of why the market is going up. Don't fight it. Like another old Wall Street saying goes, "The market can stay irrational longer than you can stay solvent."

[highnote]

Let us know when you get a sell signal..... :)


I will!

Here are some "monetary" indicators. Remember, don't fight the Fed!

The Federal Reserve Discount Rate was last changed on Feb 19, 2010. It stands at 0.75%. A negative point will be added to my model when this is raised, but that will not necessarily mean it is a sell signal. A one point or even a 2 point raise still means pretty low rates and consumers could probably still finance a home under 6 or 7 percent. A raise in the Fed Rate coupled with other negative factors might give off a sell signal, but not by itself.

The Federal Reserve Requirement stands at 10%. The last change was on Dec 29, 2011. If it goes up this would be another negative indicator, but not necessarily enough to be a full blown sell signal.

Non-seasonally adjusted installment debt has been falling and stands at 4%. That is the lowest since the end of 2011. This is a good sign. People are reducing their debt. Maybe low interest rates are helping people pay down their debt more easily? A sell signal is given when this goes above 9%. I've been keeping this stat since 2007 and it hasn't hit 9%, yet. When it does that will be a bad sign.

The Momentum Indicators:

The average of the advancing stocks to declining stocks ratio for the past 10 days is 1.32 as of today. It hit 1.70 last week. That's bullish. Wednesday there was a premature selloff -- probably profit taking as decliners led advancers about 2.75 to 1. Yesterday advancers led decliners by 3-1. So that was a nice bounce-back and would seem to indicate that this market is still strong.

Back on the 5th of October the advancing volume to declining volume ratio was 16-1. Anything over 9-1 is a buy signal.

The S&P and Value Line Indices also gave buy signals when they rose 4% from their most recent lows. The S&P fell to 1867 back on Aug 25 -- a sell signal because it had fallen 4% below a recent top. That meant that the next buy signal would be when the S&P rose 4% to 1942. It did that about 2 days later. And has not fallen 4% since then. Sometimes you get whipsawed with this indicator, but better to lose money on commissions than on stock price declines. I speak from experience when I thought I was smarter than the model and lost money as the market kept falling far more than 4%.

So the Fed/Monetary indicators and the Momentum indicators are all giving neutral or buy signals. I just don't see enough negative indicators to want to sell.

Also, politically, if the betting markets are correct and a democrat will win the presidency, that is good for the market for a couple of reasons.

1. The market historically does better, on average, with democratic presidents.

2. The markets like stability. A regime change from democrat to democrat is less drastic that democrat to republican (or vice-versa).

Of course, if Trump wins the repub nomination and then the presidency, all bets are off. But for now, it looks like the stock markets and the betting markets are betting a democrat is going to win. So until that trend changes I will consider that a buy indicator.

[highnote]

FYI -- I sold ZUMZ. Of the 4 stocks I bought on Oct 15, this is the only one to go down. It fell 5% today so I unloaded it at a small loss rather than hold it and risk a bigger loss. I still like the stock, but I'll wait until it settles down.

Jesse Livermore was an advocate of cutting losses quickly when stocks do not act the way you anticipated.

GLW, LQDT, WETF and PCCC are all moving up nicely with gains of 3.9%, 2.74%, 19.74% and 5.22% respectively.

WETF is the big winner -- up nearly 20% in a little over a week.

S&P is up another 25 as I write this. No signs of a selloff, yet. The momentum looks to be to the upside. Advancers lead decliners 60/40.

[highnote]

WETF now up over 20% from $15.65 to $18.77 since I posted here that I bought it on October 15.

This analyst from Citi says to keep selling it and his price target is $12.

http://finance.yahoo.com/news/citi-keep-selling-wisdomtree-competition-143152785.html

My research showed that it was undervalued on Oct 15 and with strong market momentum it was a good buy.

Could it be that the market momentum is what is making this stock go up and not good fundamentals? To be safe, I will sell and lock in a profit when it falls 10% from a peak.

[highnote]

Here are the closing prices of the S&P over the past 5 weeks:

09/25 1931
10/02 1951
10/09 2014
10/16 2033
10/23 2075
10/30 2079

5 straight weeks of gains. That is good momentum. It was back on Oct 5 that I got a buy signal.

By the way, the stocks I wrote about buying back on Oct 15 are all doing well.

GLW up 9.8%
LQDT up 1.62%
WETF up 22.94%
PCCC up 15.51%

I also bought ZUMZ and then sold it after it started going down. It's back to about even now. It's hard to know whether to sell it and take the loss or hold it and hope you don't lose more.

As far as the overall market, short term, I don't see any major signs of a selloff.

Today the advancing stocks outnumbered declining stock 53%-45%, but declining volume outnumbered advancing volume 51%-45%. This happens occasionally, but I've never found any pattern with this stat and what happens the following trading day.

It could be it is a signal for a reversal and the market will start heading down? It would be interesting to study this.

[Robert Goren]

October 2015 was very good month for stocks, up 9%, I believe. If I had any money, however, I would not been part of the party, because I avoid the stock market in October because that was where some the biggest sell offs have occurred. I 'd give up a possible 10% gain to avoid possibly having my money cut in half.
I still do not like stocks. The rest of the world is in recession. Who knows what is happening in China except it ain't good. With so much of our economy tied to the world economy and the Chinese in particular, it is hard to optimistic. With GOP in charge of both houses of congress and they have adopted some the ideas of the extreme left when it comes to helping business like getting rid of the Import-Export Bank, I see tough sliding for business until a new president is elected. While Hillary would not be the best president ever for business, she sure in heck be a lot better than some, if not all of the republicans. When I hear people like Cruz talk about keeping our money supply tied to Gold, I cringe. I cringe even more when I fail to hear another republican say how crazy that is.

[highnote]

October 2015 was very good month for stocks, up 9%, I believe. If I had any money, however, I would not been part of the party, because I avoid the stock market in October because that was where some the biggest sell offs have occurred. I 'd give up a possible 10% gain to avoid possibly having my money cut in half.

My indicators don't signal a selloff. The selloff happened in August this year. Obama has one more year in office and interest rates are still low. There are a lot of baby boomers still dumping money into 401k plans every month along with millenials.

But I can understand the tendency to play it safe and preserve capital.

[highnote]

Still no signs of a selloff, but I did read an article today that Yellen is talking about raising interest rates in December. Still, even if rates go up a percentage point stocks will still be more attractive than bonds, in my opinion. Unless bonds pay 7% interest then stocks are still more interesting.

There was a time when 30 year U.S. T-bills paid 7%. A million dollars worth of them would produce an income of $70,000 per year. That's a nice income for a retiree.

Nowadays you might get 4% dividends from relatively safe stocks, but the price of the stock can decline, so stocks are riskier. This means you have to find underpriced stocks that you think will appreciate in value by 7% per year. It is not easy to grow a retirement portfolio by 7% per year, year in and year out.

[highnote]

My model still indicates the market will go higher. So that's the way I'm playing it.

I posted on October 15 some of the stocks I liked. Here is how they've done since then:

GLW up 10.98%
LQDT 0.00%
WETF up 31.82%
PCCC up 10.39%

I also bought more WETF on October 23 and it's up 10.93%

I bought ZUMZ on Oct 15 at around 17.98. It fell in price shortly thereafter and I sold at a small loss. It stands at around 14.68 today. That was the only stock that did not "act" right. Jesse Livermore preached that if a stock didn't act right then get rid of it.

[highnote]

LQDT is not acting the way I thought it would. I just read an article that there has been a lot of insider selling of the stock. So maybe I will give up on it, too. However, it has excellent metrics and is underpriced based on its outstanding fundamentals. Maybe it makes sense to write calls against it?

[ReplayRandall]

LQDT is not acting the way I thought it would. I just read an article that there has been a lot of insider selling of the stock. So maybe I will give up on it, too. However, it has excellent metrics and is underpriced based on its outstanding fundamentals. Maybe it makes sense to write calls against it?

You're correct on selling of stock. Looked at the last month's action on insidertrading.org, seeing nothing but 3 large sells by board of directors/officers for the company....No buying at all:

http://insidertrading.org/?sort_by=acceptance_datetime&asc=&symbol=lqdt&date_from=2015-10-17&date_to=2015-11-18&submit=+GO+

[_______]

I sold covered calls on PSX ($95 Dec 18th) and LMT ($225 Jan 15th) this morning. Both are in overvalued territory according to m*, s and p, and most important fastgraph analysis.

PSX has been a monster all year. LMT I bought 2 years ago and while defense remains a sector I want exposure to, I think the run up has been overdone. Paris seems to have been the exclamation point. Won't mind at all if these get called away but will look to get back into PSX if it happens as they are a good company with exceptional management.

[highnote]

You're correct on selling of stock. Looked at the last month's action on insidertrading.org, seeing nothing but 3 large sells by board of directors/officers for the company....No buying at all:

http://insidertrading.org/?sort_by=acceptance_datetime&asc=&symbol=lqdt&date_from=2015-10-17&date_to=2015-11-18&submit=+GO+

I unloaded LQDT today -- a day too late. My intuition was correct, but my timing was bad. I took a 15% loss, but decided it was better to cut my losses now rather than hope the price recovers. Should have sold at breakeven yesterday. :D

[highnote]

I sold covered calls on PSX ($95 Dec 18th) and LMT ($225 Jan 15th) this morning. Both are in overvalued territory according to m*, s and p, and most important fastgraph analysis.

PSX has been a monster all year. LMT I bought 2 years ago and while defense remains a sector I want exposure to, I think the run up has been overdone. Paris seems to have been the exclamation point. Won't mind at all if these get called away but will look to get back into PSX if it happens as they are a good company with exceptional management.


PSX looks like a good stock -- lots of positive metrics. LMT has some good metrics, too, but I like PSX better.

PSX looks like the more likely to get called away.

[highnote]

You're correct on selling of stock. Looked at the last month's action on insidertrading.org, seeing nothing but 3 large sells by board of directors/officers for the company....No buying at all:

http://insidertrading.org/?sort_by=acceptance_datetime&asc=&symbol=lqdt&date_from=2015-10-17&date_to=2015-11-18&submit=+GO+


I wonder if the insider selling was done for tax purposes given that the end of the year is almost here -- tax loss selling?

Maybe they will buy back the stock next year?

[ReplayRandall]

I wonder if the insider selling was done for tax purposes given that the end of the year is almost here -- tax loss selling?

Maybe they will buy back the stock next year?

Looking further back since the start of 2014 until today, the last buy from the officers of this company was on June 6th, 2014.....Hope this answers your question:

http://insidertrading.org/index.php?sort_by=buy_sell&asc=1&symbol=lqdt&date_from=2014-01-01&date_to=2015-11-18&submit=+GO+

[highnote]

Looking further back since the start of 2014 until today, the last buy from the officers of this company was on June 6th, 2014.....Hope this answers your question:

http://insidertrading.org/index.php?sort_by=buy_sell&asc=1&symbol=lqdt&date_from=2014-01-01&date_to=2015-11-18&submit=+GO+

This is interesting information. I'm not sure what it means other than the directors don't have much confidence that the price will go higher.

[RaceBookJoe]

I wonder if the insider selling was done for tax purposes given that the end of the year is almost here -- tax loss selling?

Maybe they will buy back the stock next year?

Insider selling always seems like a negative, but insiders can sell for any number of reasons. When I see it, I make notes/use caution. Insiders usually buy for only 1 reason though, for profit.

[_______]

Not all insiders are created equal. I would pay more attention to insider buying at small to medium sized companies. In larger corporations, information is more dispersed and only the CEO and CFO may have the complete picture. I would entirely ignore what directors are doing as they are the last to know what's really going on.

CEO and CFO buys are all that matter at large cap companies. Expand that to others in the C suite at small and medium companies. Understand that no one wants to go to jail so a buy is unlikely to be a short term signal of exceptional news. It really just indicates they expect good things in the long run. I wouldn't trade on this. I would take it as a further positive on a company where you've already done your due diligence and think it's undervalued.

As others have stated selling occurs for many reasons and isn't much of a signal by itself.

[highnote]

Not all insiders are created equal. I would pay more attention to insider buying at small to medium sized companies. In larger corporations, information is more dispersed and only the CEO and CFO may have the complete picture. I would entirely ignore what directors are doing as they are the last to know what's really going on.

CEO and CFO buys are all that matter at large cap companies. Expand that to others in the C suite at small and medium companies. Understand that no one wants to go to jail so a buy is unlikely to be a short term signal of exceptional news. It really just indicates they expect good things in the long run. I wouldn't trade on this. I would take it as a further positive on a company where you've already done your due diligence and think it's undervalued.

As others have stated selling occurs for many reasons and isn't much of a signal by itself.

Good points.

[highnote]

http://www.marketwatch.com/story/us-stocks-set-to-open-higher-adding-to-weekly-gain-2015-11-20?siteid=yhoof2

The S&P 500 index logged its best weekly gain in nearly a year Friday after a series of strong earnings, particularly from retailers, helped boost the stock-market benchmark.

Comments from a number of Federal Reserve officials, along with minutes from the U.S. central bank’s October policy-setting confab, suggested that the path of interest-rate increases is likely to be gradual, which helped soothe some investors’ fears that the first hike in nearly a decade would shake the market.

The S&P 500 SPX, +0.38% rose 7.93 points, or 0.4%, to 2,089.17, notching a weekly gain of 3.3%, it best weekly gain since Dec. 19, 2014, according to FactSet data.

[ReplayRandall]

Wall Street got a little unnerved on Friday by the announcement of an unscheduled Federal Reserve meeting this Monday.

The Fed announcement said its board of governors would get together “under expedited procedures” at 11:30 a.m. Monday for a “review and determination … of the advance and discount rates to be charged by the Federal Reserve Banks.”

http://nypost.com/2015/11/20/feds-expedited-meeting-sends-shivers-through-wall-street/

[highnote]

Wall Street got a little unnerved on Friday by the announcement of an unscheduled Federal Reserve meeting this Monday.

The Fed announcement said its board of governors would get together “under expedited procedures” at 11:30 a.m. Monday for a “review and determination … of the advance and discount rates to be charged by the Federal Reserve Banks.”

http://nypost.com/2015/11/20/feds-expedited-meeting-sends-shivers-through-wall-street/


The old saying is "Low interest rates have long tails." It's been almost 7 years since the Fed has raised the discount rate. Even a small raise is not that big of a deal. Let's say interest rates go to 1%. So now you get 2% on your money in a savings account. Are people going to park their money in CDs and savings accounts or are they going to continue to buy stocks?

My feeling is that people will continue to buy stocks until they can get 7 or 8 percent interest in their savings accounts. Plus, I would imagine the interest rate increases will be small and gradual. I'd be surprised if the increase was 1/2 point or more.

[highnote]

S&P broke 2100 today. It hit a high of 2126 last July. So it looks like it is cycling back around to the top.

The market flashed some strong momentum signals October 5 and 12. Those were both Mondays. Typically, the market is down on Mondays. So when it gives off momentum signals on a Monday it is worth noting.

I am still long.

The stocks I touted on October 15 continue to do well.

GLW is up 11%
PCCC is up 12%
WETF is up 40%

I bought more WETF on October 23 and it is up 18%

[highnote]

The stocks are still in the black, but have fallen from their highs. So I put stops on them at 15% below their peaks -- just in case.

[PICSIX]

The stocks are still in the black, but have fallen from their highs. So I put stops on them at 15% below their peaks -- just in case.

You've got to get the Coke machine rocking in order to tip it over.....look out below!

[highnote]

You've got to get the Coke machine rocking in order to tip it over.....look out below!


The market seems to be nervous the Fed making an interest rate increase announcement at their next meeting.

[ReplayRandall]

The market seems to be nervous the Fed making an interest rate increase announcement at their next meeting.

Have a feeling, the time is close to hearing Randolph and Mortimer Duke yell out.....WHERE'S BEAKS? TURN THOSE MACHINES BACK ON! SELL! SELL! SELL!.....It's really going to get ugly, nose-diving into 2016.....

[highnote]

Even though the Fed might raise rates, it will probably only be a 1/4 point. So then you could get 1.25% on a savings account instead of 1%.

I don't think that will make much difference. Stocks will still outperform savings accounts and bonds. As long as interest rates stay below 8% people will choose stocks over bonds.

The Fed would have to raise interest rates by a full 1% before there is a big interest rate driven effect on the stock market.

I still have not seen any indication from any factors in my models that the market is headed for a fall. The P/E of the S&P is a little on the high side, but other than that I will remain bullish until I see a few strong bearish indicators.

[ReplayRandall]

I will remain bullish until I see a few strong bearish indicators.

I think a Black Swan event is imminent, coming from a chaos sector called ISIS......Don't say I didn't warn you.

[PaceAdvantage]

The FED rate increase is not the market mover. The FED rate increase is a given...the market expects this...it's been priced in long ago.

[highnote]

The FED rate increase is not the market mover. The FED rate increase is a given...the market expects this...it's been priced in long ago.


There is also options expiration on Dec 19. There has been a lot of volatility in the week or so. That's not a good sign. The big swings usually precede a crash. These swings have not been as big as the ones back in the summer of '07 ( or was it summer of '08?). I exited the market completely then. These mini swings are still cause for some concern. The VIX is almost at 20 and the S&P P/E ratio is high -- in the low 20s -- so some selloff should be expected. But overall, I am still bullish.

The market may have the Fed increase priced into it, but I would not be surprised that the market overreacts to an increase in the Fed rate in the short term.

[highnote]

I think a Black Swan event is imminent, coming from a chaos sector called ISIS......Don't say I didn't warn you.


I'm glad you bring up Black Swans because they are always imminent. That's why it's a good idea to use the "All Weather" portfolio concept recommended by Ray Dalio -- founder of the hedge fund Bridgewater.

He says there are 4 potential economic "seasons" (environments) and you should spread 25% of the risk across each one.

There are only two factors that cause the movement of asset prices:

1. The direction of prices
2. The direction of economic growth

The two factors combine to create 4 environments that cause the movement of asset prices:

1. Inflationary
2. Deflationary
3. Rising Economic Growth climate
4. Declining Economic Growth climate

Rising asset prices are caused by higher than expected economic growth and higher than expected inflation.

Falling asset prices are caused by lower than expected economic growth and lower than expected inflation.

Assets, such as stocks, have prices that are based on the future expectations of investors. When there is a "surprise" positive earnings announcement the stock of a company will go up. When there is a negative earnings report then the stock will go down. Those surprises are sort of mini Black Swans.

If stocks go down due to an increase in interest rates then bonds become more desirable. However, if there is inflation accompanied by falling interest rates then bonds will go up in price, but they will pay less interest.

So the key is to have your investments in the correct proportions in each of the 4 seasons of the "All Weather" portfolio so that the risk is spread equally among the seasons.

Dalio suggests the following:

30% of your investments in stocks (stocks have 3 times the risk of bonds)
15% in short term treasuries
40% in long term treasuries
7.5% in gold
7.5% in commodities

Remember, the percentage allocations are based on risk.

When one segment does well you should selloff part of that segment to rebalance the portfolio.

Gold and commodities are in the portfolio to hedge against rapid inflation. In an inflationary environment gold and commodities will outperform.

The price of oil is in a deflationary mode now. This could eventually lower prices as it makes the costs of good less expensive. However, low prices should stimulate demand and eventually higher prices will result. If the cost of manufacturing goods decreases and that stimulates demand then stock prices should continue to rise in certain market segments as those companies report higher sales and earnings due to lower costs. So it probably makes sense to allocate the 30% of your portfolio that is in stocks across various market segments and industries.

Overall, I am still bullish on the market, but hedged -- in case of a Black Swan.

[PaceAdvantage]

There is also options expiration on Dec 19. There has been a lot of volatility in the week or so. That's not a good sign. The big swings usually precede a crash. These swings have not been as big as the ones back in the summer of '07 ( or was it summer of '08?). I exited the market completely then. These mini swings are still cause for some concern. The VIX is almost at 20 and the S&P P/E ratio is high -- in the low 20s -- so some selloff should be expected. But overall, I am still bullish.

The market may have the Fed increase priced into it, but I would not be surprised that the market overreacts to an increase in the Fed rate in the short term.Agree pretty much on all points.

[whodoyoulike]

...
I still have not seen any indication from any factors in my models that the market is headed for a fall. The P/E of the S&P is a little on the high side, but other than that I will remain bullish until I see a few strong bearish indicators.

Interesting that you've mentioned this P/E being a little on the high side. I'm bullish but very cautious. My funds haven't really gained very much this year. Uncertain whether it's worth the risk/reward to have very much invested given my intermediate outlook.

Have you been keeping track of the trend of S&P 500 earnings which is the other factor to be considered when discussing P/E ratios?

[highnote]

Interesting that you've mentioned this P/E being a little on the high side. I'm bullish but very cautious. My funds haven't really gained very much this year. Uncertain whether it's worth the risk/reward to have very much invested given my intermediate outlook.

Have you been keeping track of the trend of S&P 500 earnings which is the other factor to be considered when discussing P/E ratios?


I have not been keep track of the trend of S&P 500 earnings, but that's a good idea.

[highnote]

I lightened up some my positions and took profits on PCCC and WETF.

I still own GLW.

Another stock I owned (DIT) had a stop-loss on it and was hit today. I lost a little under 15% on DIT, but I've not been happy with the stock since I bought it a year ago.

I'm wondering how much of this selloff is end of year tax selling?

[PICSIX]

The market seems to be nervous the Fed making an interest rate increase announcement at their next meeting.

Yes, in the short-term, I believe the market's going down after the Fed announcement regardless:

1. It's suppose to go down with a rate hike.

2. No rate hike and traders are saying WTF, we've been told everything is peachy.....and down goes the market.

Long-term..... I see a final rally in the near future and then a collapse. DJIA forecast of 10,000 October-December 2016.

[highnote]

Yes, in the short-term, I believe the market's going down after the Fed announcement regardless:

1. It's suppose to go down with a rate hike.

2. No rate hike and traders are saying WTF, we've been told everything is peachy.....and down goes the market.

Long-term..... I see a final rally in the near future and then a collapse. DJIA forecast of 10,000 October-December 2016.

The larger the increase the bigger the selloff. If the Fed only raises a 1/4 point I don't see that having much of an impact to the downside for any length of time. In fact, a small raise might even cause the market to go higher. Given the action of the past few days it's hard to tell what the Fed might do.

A drop to Dow 10,000 would be around a 40% drop. That is well within the realm of likely scenarios.

My model issued a couple of sell signals today. 1.) The ratio of down volume to up volume on the NYSE was 9-1 and 2.) The S%P has fallen 4% or more from a recent peak.

I sold a few stocks. I kept my gold mining stocks and some dividend stocks like Phillip Morris and Plum Creek Timber. PCL is merging with Weyerhauser and that is pushing the price of PCL higher.

I also kept GLW. The stock has been going up the past few days even as the market was falling. It was up a buck today. So I figured there was something in the works. They announced a big deal with Du Pont today.

I have some Berkshire Hathaway. It's down about 12% since I bought it. I think I'm one of the few people in the world to lose money on them.

[whodoyoulike]

...
I also kept GLW. The stock has been going up the past few days even as the market was falling. It was up a buck today. So I figured there was something in the works. They announced a big deal with Du Pont today.

I have some Berkshire Hathaway. It's down about 12% since I bought it. I think I'm one of the few people in the world to lose money on them.

I own GLW and heard on TV that DOW would buy out the JV share with Corning which may have something to do with the rise. But, haven't read anything about it.

[highnote]

I own GLW and heard on TV that DOW would buy out the JV share with Corning which may have something to do with the rise. But, haven't read anything about it.


I skimmed an article, but didn't understand what the deal was about.

[whodoyoulike]

I skimmed an article, but didn't understand what the deal was about.

Your post reminded me to look it up which I just did on CNBC. It looks like DOW will pay about $4 Bln to own 100% of Dow-Corning. The buy out is probably in anticipation of the DOW - DuPont proposed merger. I just hope Corning will use the $$ productively because Dow-Corning was a pretty good JV.

[highnote]

Your post reminded me to look it up which I just did on CNBC. It looks like DOW will pay about $4 Bln to own 100% of Dow-Corning. The buy out is probably in anticipation of the DOW - DuPont proposed merger. I just hope Corning will use the $$ productively because Dow-Corning was a pretty good JV.

I think I read it correctly that after the merger they will split into 3 companies?

For that reason alone GLW is probably worth holding onto.

[whodoyoulike]

I think I read it correctly that after the merger they will split into 3 companies?

For that reason alone GLW is probably worth holding onto.

I saw something about a 3 company split but I thought it was related to the DOW - DD merger and nothing to do with GLW. But, I'll need to re-read an article regarding the split for clarification.

I think holding GLW would be a good idea for other reasons at this time. I've owned GLW for about 3 years.

[PICSIX]

Contrarian Indicator?.......Barron's published its 2016 Outlook issue this weekend, and not one of the top strategists it surveyed forecast that the S&P 500 would fall next year.

http://finance.yahoo.com/news/barrons-couldnt-one-person-thinks-171153142.html

[whodoyoulike]

Contrarian Indicator?.......Barron's published its 2016 Outlook issue this weekend, and not one of the top strategists it surveyed forecast that the S&P 500 would fall next year.

http://finance.yahoo.com/news/barrons-couldnt-one-person-thinks-171153142.html

I wish when respected pubs forecast the next year's outlook also show what they predicted for the current year as a reference point (maybe even compare several years worth to show how they tracked to actual).

I think another pub was forecasting S&P 500 of 2300 + for the year 2015 at the end of 2014.

[lamboguy]

Contrarian Indicator?.......Barron's published its 2016 Outlook issue this weekend, and not one of the top strategists it surveyed forecast that the S&P 500 would fall next year.

http://finance.yahoo.com/news/barrons-couldnt-one-person-thinks-171153142.html
good one, thanks for pointing this out

[highnote]

I think another pub was forecasting S&P 500 of 2300 + for the year 2015 at the end of 2014.

The S&P is around 2000 now -- December 2015. It was around 2000 a year ago -- December 2014.

Based on the indicators my model was signaling this past October 2015, I predict it will get to about 2200 by April 2016 -- a 10% increase.

It's been flat for the past 12 months, so it would not be surprising to see it rise by 10% over the next 6 months.

"Interest rates" is the big unknown. If rates go up the market might go down, but it depends on the size of the increase, if any, and also the number of increases, if any.

I can't see a 1/4 point increase having much effect on the market. A half point or a full point increase would have a much bigger effect.

[ReplayRandall]

The S&P is around 2000 now -- December 2015. It was around 2000 a year ago -- December 2014.

Based on the indicators my model was signaling this past October 2015, I predict it will get to about 2200 by April 2016 -- a 10% increase.

Here are some facts that say the opposite:

"Since July 1, 2014 the S&P500 is up about 2%. Most people would assume that means that most stocks are trading around flat during that period of time. That is not the case. The great majority of stocks have declined. The number of stocks over their 200-day moving average has dropped from 74.3% to just 23.1% at the close this past Friday.

The reason for massive underperformance by fund managers and many individual investors in 2016 becomes extremely obvious. The vast majority of stocks have been trending down, while the benchmark indices are holding steady primarily due to a few bigger names. There simply is no easy way to beat the indices unless you are holding highly-concentrated positons in a few big-caps that are outperforming. If you hold an average stock, you just can't keep pace.

Obviously the reason that the major indices have been so misleading is caused by the way they are constructed. Most indices are capitalization weighted, so bigger names have much more influence. Strength in a few big-caps like Microsoft (MSFT) and Apple (AAPL) offset poor action in dozens of other stocks."

For the rest of this in depth opinion:

http://realmoney.thestreet.com/articles/12/13/2015/markets-worse-you-think-2-stats-1-chart-prove-it?cm_ven_int=homepage-latest-headlines

[highnote]

All good points. This shows the wisdom of Ray Dalio's advice about creating an "All Weather" portfolio. Unlike the weather on the planet Earth, you never know which season is coming next in the investment world. So you need to be prepared for any season.

Here are some facts that say the opposite:

"Since July 1, 2014 the S&P500 is up about 2%. Most people would assume that means that most stocks are trading around flat during that period of time. That is not the case. The great majority of stocks have declined. The number of stocks over their 200-day moving average has dropped from 74.3% to just 23.1% at the close this past Friday.

The reason for massive underperformance by fund managers and many individual investors in 2016 becomes extremely obvious. The vast majority of stocks have been trending down, while the benchmark indices are holding steady primarily due to a few bigger names. There simply is no easy way to beat the indices unless you are holding highly-concentrated positons in a few big-caps that are outperforming. If you hold an average stock, you just can't keep pace.

Obviously the reason that the major indices have been so misleading is caused by the way they are constructed. Most indices are capitalization weighted, so bigger names have much more influence. Strength in a few big-caps like Microsoft (MSFT) and Apple (AAPL) offset poor action in dozens of other stocks."

For the rest of this in depth opinion:

http://realmoney.thestreet.com/articles/12/13/2015/markets-worse-you-think-2-stats-1-chart-prove-it?cm_ven_int=homepage-latest-headlines

[whodoyoulike]

The S&P is around 2000 now -- December 2015. It was around 2000 a year ago -- December 2014.

Based on the indicators my model was signaling this past October 2015, I predict it will get to about 2200 by April 2016 -- a 10% increase.

It's been flat for the past 12 months, so it would not be surprising to see it rise by 10% over the next 6 months.

"Interest rates" is the big unknown. If rates go up the market might go down, but it depends on the size of the increase, if any, and also the number of increases, if any.

I can't see a 1/4 point increase having much effect on the market. A half point or a full point increase would have a much bigger effect.

Last year, the S&P 500 closed approx. at 2059 +/- and you're correct as of last Friday it was 2012 +/-. I'm not attempting to discourage or persuade you because I don't know anything other than having my opinion. As I mentioned I'm still bullish but very cautious and not bearish otherwise I'd be out of the market. Btw, I'll probably always have something invested in equities. I think credit liquidity will be the key concern going forward in the near term. I think there will be a lot of bankruptcies because so many energy companies will be or are squeezed for cash which is going to affect banks etc. It's been well over a year where the price of oil has cratered and all these companies were expecting (borrowing) a higher price. After all, they're going to have to start paying their loans back.

And, I enjoy discussing finance with you. Just as in handicapping races we pretty much have to have a strategy on what we're going to do because circumstances always seem to change.

[highnote]

I recently sold a bunch of stocks and am probably 50% in cash.

It sounds like we're on the same page. That could be good or bad. Either we know something others don't and we'll come out ahead or else we are following the wisdom of the crowds and will get burned. :D

Last year, the S&P 500 closed approx. at 2059 +/- and you're correct as of last Friday it was 2012 +/-. I'm not attempting to discourage or persuade you because I don't know anything other than having my opinion. As I mentioned I'm still bullish but very cautious and not bearish otherwise I'd be out of the market. Btw, I'll probably always have something invested in equities. I think credit liquidity will be the key concern going forward in the near term. I think there will be a lot of bankruptcies because so many energy companies will be or are squeezed for cash which is going to affect banks etc. It's been well over a year where the price of oil has cratered and all these companies were expecting (borrowing) a higher price. After all, they're going to have to start paying their loans back.

And, I enjoy discussing finance with you. Just as in handicapping races we pretty much have to have a strategy on what we're going to do because circumstances always seem to change.

[PaceAdvantage]

Some VERY hairy action early on today...anybody catch that? No real reasons given as to why...

From 10:12 :13 to 10:12 :29 the /ES futures dropped about 13 freakin points!

Then over the next four minutes, they went UP about 20 points!

I was checking my news feed but didn't see anything that I noticed anyway...

To complete the trifecta, the /ES proceeded to again DROP 16 points in less than a MINUTE from 10:16 :43 to 10:17 :11.

I was expecting some major crazy action after that display of fireworks, but they never really materialized...what the hell is brewing out there?

[highnote]

Last night the S&P futures were up, so I figured it would be a good day. I was surprised when the market was down a lot this morning. Then it went up and I figured it was going to be a good day. Then it went back down.

All I can figure is that it must be related to the Fed decision on interest rates that is coming soon.

I see that the S&P futures are up again tonight.

Some VERY hairy action early on today...anybody catch that? No real reasons given as to why...

From 10:12 :13 to 10:12 :29 the /ES futures dropped about 13 freakin points!

Then over the next four minutes, they went UP about 20 points!

I was checking my news feed but didn't see anything that I noticed anyway...

To complete the trifecta, the /ES proceeded to again DROP 16 points in less than a MINUTE from 10:16 :43 to 10:17 :11.

I was expecting some major crazy action after that display of fireworks, but they never really materialized...what the hell is brewing out there?