Andrew Thrasher is the person I turn to whenever I have questions about Volatility and the $VIX. I know he tracks the data much more closely that I do and he does a good job of simplifying what may seem like complicated concepts. With the current market environment pricing in very low volatility moving forward, one can argue there is too much “complacency” towards stocks. Historically, corrections are sparked from this sort of setup. Who better to bring on to the podcast for this special Volatility Episode than Andrew Thrasher, winner of the 2017 Dow Award for his paper on Forecasting a Volatility Tsunami. In this conversation we talk about the current volatility regime, the VIX curve looking out into early 2020 and how he incorporates breadth data to supplement his volatility analysis. I really enjoyed this conversation and it seems like the perfect time to talk about Volatility! [Read more…]
Earth Breaks Out To All-Time Highs
If you weren’t too busy reading reports of upcoming recessions, you may have noticed that the MSCI World Index broke out to new all-time highs this month. The award for best ETF Ticker goes to the good folks at iShares: $URTH
After a 21-month bear market, the planet Earth is now starting a new leg higher. I continue to believe very strongly that if stocks are above last year’s highs, it is incredibly irresponsible not to be aggressively long. [Read more…]
The Wisdom in WisdomTree ETFs
There is information everywhere. We analyze both the Indexes and the ETFs. We look at markets all over the world priced in both local currency and in US Dollars. We often use Gold as the denominator as well as the Indexes themselves to analyze relative strength. It’s one big giant web of money flow.
Today I want to call your attention to an interesting divergence that has come at important turning points in the past. Specifically I’m referring to the Wisdom Tree Hedged Exchange Traded Funds for Europe and Japan: $HEDJ and $DXJ respectively. These funds are priced in local currencies as opposed to most other ETFs around the world that are priced in US Dollars.
First, here is the Europe Index Fund priced in Euro breaking out to all-time highs. I’ve been chuckling to myself a lot lately because when was the last time you could say the words “Europe” and “all-time” highs in the same sentence with a straight face? [Read more…]
Better Questions For Better Answers
Technical Analysis doesn’t give us all the answers. But it certainly goes a long way in helping us ask the right questions. That’s really what this is about. No one knows what is going to happen next. Contrary to popular belief, this makes it an even playing field (don’t @ me). Where the advantage truly lies is in those who analyze the behavior of the market vs those who ignore it.
There are many investors, most in fact, who completely disregard the behavior of the market in favor of some other brilliant strategy they believed they’ve come up with. My point is, if at the end of the day, price is the only thing that will pay us, why not start and end the entire process with the study of that price?
Not to get too philosophical on you guys, but just try to think about the things you’re thinking about. What are the questions you’re asking? Because you certainly don’t have the answers. You have no answers, and neither do I. We have, what we think, are higher probability and lower probability outcomes. But we don’t actually know. [Read more…]
The Relentless Buying Pressure in US Stocks
In this Episode of Allstarcharts Weekly, Steve and I discuss the relentless buying pressure in stocks throughout the first half of November. Even when the Dow Jones Industrial Average did not register a positive day, the market didn’t really go down either. In fact, we’ve just seen the two smallest down days in the history of the Dow Averages that date back to the 1880s. This is what we’re talking about here. Some might think we’re overbought, but I would argue that the overbought readings are just normal characteristics of uptrends. They should be overbought. I still think the Dow sees 30,000.
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Is Dow 30,000 Next? A Chat with David Keller in Las Vegas
I was in Las Vegas this past week for a bunch of meetings and conferences. There was a lot going on in that city. There were traders and analysts at every hotel on the strip. It was really cool to see old friends and, of course, meet new ones. I personally found myself in a half dozen hotels arguing about markets and seeing a bunch of live music. Check out this video I shot at the Santana show at Mandalay Bay.
On Thursday afternoon I was hanging out at Bally’s with David Keller talking about Stocks, Bonds, Gold, Copper, Sector Rotation, Market Breadth, Sentiment and the current market conditions. This one was short and sweet but we covered a lot: [Read more…]
Safe Havens Stuck Below Overhead Supply
When stocks are in strong uptrends, they tend to not only do well on an absolute basis, but they outperform their alternatives as well. Two obvious ones are Gold and Bonds.
So if stocks are going to fall hard, like so many people keep telling me, we are likely to see a bid in Precious Metals and US Treasury Bonds. As it turns out, however, we’ve only seen the exact opposite – bonds and metals struggling below overhead supply.
Back in August I made the case that if stocks were going much higher, as we thought they would, then the S&P500 will hold support at the late December lows relative to both Gold and Bonds. You can watch that short video here. This is what that chart looks like now: [Read more…]
US Financials Hit All-Time Highs In Total Return
You can now add the Financial Sector Index to your list of new 52-week highs. This is further evidence of expansion in upside participation, not contraction. Breadth improvements like this keep adding up, there’s no denying that. It’s hard to make the argument that Financials are underperforming when they’re hitting new 10-month highs relative to the S&P500, which is the exact opposite of underperforming.
Rotation rotation rotation. It’s the lifeblood of a bull market.
Remember when the bears were arguing that it was defensive rotation and the market was being driven by Utilities and Staples? Well both of those sectors are actually down YTD relative to the S&P500 and still making new relative lows.
So yes, positive rotation is what we’re seeing.
Today we’re looking at Financials pushing up against their historic 2007 highs for the 3rd time: [Read more…]
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