This week I was over at the Nasdaq in Times Square discussing the current market environment with Frances Horodelski on Canada’s Business News Network. The weight of the evidence is suggesting a cautious stance up here after all of our upside targets have been hit in recent weeks. Remember, we’ve been bullish stocks, globally since late January, and in the U.S. since early February. When our upside objectives are hit, it’s time to reevaluate. That’s what we’re doing now. [Read more…]
It is very difficult, if not impossible, to put all social media stocks into one category. We do our best with ETFs like $SOCL, but they can be heavily skewed by certain stocks and it ignores others with smaller market caps. Also, what does a company LinkedIn have to do with Yelp or Yahoo? I think we need to be careful grouping them into just one category, and keep in mind that they are all individuals with their own problems as well as their own unique positive qualities.
In this week’s members-only letter we discuss the following topics:
- What Do We Do With The U.S. Indexes Now? S&P500, DJIA, etc
- The Best Trade In Precious Metals: Gold & Silver
- About That Squeeze Higher in Chinese Stocks
- My Favorite Energy Trade Today
- What Are We Going To Do About This Messy Bond Market?
- The Best Tech Stocks: Apple, Microsoft, Google or Facebook?
- What Does The Weight-Of-The-Evidence Suggest About Risk-Appetite?
This has been a pretty simple one coming into 2016. Not all charts are as clean as this, so it’s hard for me to argue against selling Growth and buying Value. The longer-term trend has been to buy Growth stocks and sell Value stocks since 2006. This strategy has worked well, except maybe during 2012, but even that correction came within the context of a much larger bull market in Growth vs Value stocks.
Today we are looking at a ratio of the Russell 1000 Growth Index Fund vs the Russell 1000 Value Index Fund (IWF / IWD). This is a weekly line chart going back to the low in 2006 showing prices trending higher between 2 converging uptrend lines: [Read more…]
In honor of Superbowl 50, we created a countdown of what we consider to be the most important 50 charts in the world. These include U.S. Stocks and Sectors, International Indexes, Currencies, Commodities, Interest Rate Markets and Global Intermarket relationships. Some of these are more actionable than others, but collectively I think they truly tell the story of global market risk, or risk aversion for that matter.
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Here is the video in full (audio begins immediately, video gets going after 30 seconds)…..Enjoy! [Read more…]
Momentum is a word that gets thrown around a lot. I personally like to measure momentum using a 14-period relative strength index (see here), but different people have different definitions. Fine. For today, we’ll argue that “momentum” stocks are those listed in the MSCI USA Momentum Index. Looking at these stocks as a group, I think they are going to continue to get destroyed going forward, particularly relative to the rest of the market.
First of all, forget this whole FANG thing. I don’t know who made that up or why people like to limit it to just 4 stocks. I think it’s stupid. They have nothing to do with one another and there should be others included in the list. In fact, in November I wrote a piece about how FANG stocks are this cycles Four Horseman (See here) and was further evidence at the time that made us very bearish U.S. Stocks heading into December and January. That obviously worked out very well. [Read more…]
I don’t know what’s going to happen tomorrow or next month or next year. No one does. But today I just want to keep it real and bring up an interesting development that is difficult for me to ignore. It’s no secret that the stock market currently has terrible breadth as only a handful of names were able to make new highs a couple of weeks ago and the only index to make a new high was the Tech-heavy large-cap Nasdaq100. The rest of them all put in lower highs (which is characteristic of a downtrend).
As the cliché goes, “This is a market of stocks, not a stock market”. But cliché or not, it’s true, and also under appreciated. When the market as a whole is making new highs, you want to see that being confirmed by a larger number of stocks and sectors also putting in new highs. The last thing you want to see is the opposite, as we are seeing today (and in the Fall of 2007 coincidentally?). If you recall, as the major averages were hitting new highs in October of 2007, only a few individual stocks were still hitting new highs. A popular group of those were being referred to as “The Four Horsemen” at the time as they were some of the only names still holding up. This group included, Google, Apple, Amazon and Research in Motion (Blackberry).
I remember this time very clearly as there was an ongoing joke at work that if you weren’t trading these 4 names, why bother even coming in? This is strictly anecdotal, of course, but an interesting coincidence that the media is constantly referencing a new group of stocks called “FANG”. The label for this group may not have been made up yesterday, but the frequency of mentions continues to grow. The FANG stocks include Facebook, Amazon, Netflix and Google. The question I pose today: Is FANG this cycle’s Four Horsemen?
I don’t know the answer and neither does anyone else reading this right now. But I find it very difficult to ignore the similarities between these two groups of stocks. Remember, like the 4 Horsemen, these FANG stocks have nothing to do with each other. Sure, they’re in the Internet space. They are each part of the Dow Jones Internet Index which is the only sector I see still hitting new highs recently (I guess Twitter’s stock must have not gotten the memo).
Take a look at each of the FANG charts. Then take a look at how many stocks are hitting new highs compared to how many were doing so a year or ago and a year before that. Compare this lack of participation sort of environment to that in 2007. Also look at the opposite scenario in the first quarter of 2009, where most stocks and sectors had already bottomed out in the 4th quarter of 2008. The “Market of stocks”, if you will, bottomed out in Q4 2008. It wasn’t until March of the following year that the indexes themselves put in their ultimate lows. To me we are looking at the opposite scenario today.
What do you guys think? Am I way off or perhaps on to something here?
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Tags: $QQQ $SPY $FB $AMZN $AAPL $NFLX $GOOG $RIMM $BBRY
This week I was over at Fox Business following up on two recent appearances on the show where we discussed Internet and Social Media Stocks. After this big breakout in the Social Media sector this month, we break it down to a few of my favorite component.
Here is the video in full:
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Tags: $FB $TCEHY $SOCL $FDN $LNKD $TWTR