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AVALANCHE
There are about 10 of you out there that get and read the IBD, Investor's Business Daily, so let me say right up front that this intro comes right off the pages of Monday'd IBD.
Like any other financial publication, the news lags a days trading so Monday's article is talking about the week before.
But first a word to all of you loyal readers who made it through the end of my post last night and informed me that I had not inserted the photo of the view from our deck in Utah. Here it is.
Ok, as you can see there is a lot of snow in them there mountains. It was almost a record year. There was plenty of snow and there still is. I don't know if any of you understand the mechanics of an Avalanche, but they usually start with layer after layer of snow over time. Then eventually you have a weak are under one of the layers. The catalyst for the actual avalanche is still understudy by Universities all over the world. We do know it is the combination of grain size of the snow, the crystalline characteristics, temperature, grade of the hill side and the list goes on and one until one day. AVALANCHE.
Well, if you look at the market of late, you have some interesting set ups for what could be an avalanche. This was brought to light by the IBD that shows quite a few of the IBD 50 (their really hot stocks) are trading below their 50 day average. Now when you observe an avalanche, usually you hear cracking, and little trails of snow flowing down the grade of a mountain before the section just let's go. Our little pieces of snow might be BIDU Biadu, SINA Sina, AH Accretive Health, SOHU SOHU.com, WLT Walter Energy, PAY Veriphone, OPEN Open Table, NTES NetEase, and IL Interlinks. They were all leading the charge in the last two upward cycles and are all drifting back beyond a comfortable level.
Now what do you do if one of your core holdings drifts below it 50 day moving average? First look at your profit. Consider taking some off the table. We are definitely in a market correction so buying on the dip is for the strong of heart or really stupid. "Never try and catch a falling knife." Now if you have full conviction and don't want to take a profit, do your homework on the stock and make sure the value is all but guaranteed and buy some more very gingerly. By all means make sure your stop orders are in place. |
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In The Market Today
We called for a .5% drop today. The Dow was down .38% and the S & P was down .62%. Average those and you got .50% Am I good or what?
That really was not to bad considering. The housing report was stinky (a financial term meaning below expectations.), the New Your Empire Report disappointed (We got that one wrong.), but we nailed the international capital trade report. Way down because the Chinese does not want our debt anymore. They are not alone.
Even Zimbabwe is worried about our dollar and our ability to pay down our debt. Now keep in mind Zimbabwe is the land of the 100 trillion dollar bill.
So these folk know a thing or two about inflation and debt and printing money. The Zimbabwe Government made this declaration. "The days of the U.S. dollar as the world's reserve currency are numbered."
Now all of this was against the backdrop of the International Monetary Fund's arrest for kidnapping and sexual assult. You could tell the talking heads on Bloomberg and MSNBC were happy to have something spicy to talk about. He was supposed to be in Brussels today to work out the details about the Greece debt bailout. He was the former French finance minister and was lenient with European concerns. His replacement may not be so amicable towards the likes of Greece, Portugal, Spain, etc.
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PIMCO = Bonds.
PIMCO is known as one of the best hdge funds around and it has almost always been bond centric. In 2009, they launched their first equity (Stock) fund called EQS Pathfinder. As you probably know if you hang on every word that Bill Gross utters, he is very bearish on Gov't Bonds. (From the international capital trade report this morning so is everyone else.) We only note this because today it was noted in one of my many economic newsletters, the EQS Fund, an equity fund has its largest holding in GOLD. Interesting. Now the newsletter I received (The S & A Digest, filled with doom and gloom and the world is going to end and you must sell everything now and buy gold and farmland.), points out that the fund is very small percentage of the PIMCO assets, but it is noteworthy that a PIMCO stock fund is holding commodities. | |
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More Of The Week Ahead
Today's Housing Market report was sad. Projected sales six months out, was the lowest in almost two years. The Housing Starts report comes out tomorrow and the expectation is 570,000 units. Permits were up a little last month so there is an expectation of hitting this 570,000 unit number. Look for a disappointment. If it comes in below 550,000 look for further erosion in the market. Later in the day, we have industrial production. Keep in mind that the Philly Index and the Empire index are both "tells" for industrial production. The Empire report disappointed today. We think the industrial production will disappoint as well. | |
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And For Dessert
As you can see the Cronastics Chart is a good indicator of nothing. At least we don't see it yet. It peaked on February 18 and bottomed in April. When the market went into correction at the end of April, so did the chart.We have 3 months of data and I am still not ready to call it predictive or ready to give up on it. Besides it has a cool name.
Salve Lucrum |
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BAGAKOAA;
I am not a professional investment advisor. Anybody reading my blog and investing accordingly must be out of their minds. I have made more money than I have lost. There are many more qualified people than I to actually tell you how to invest your money.
BAGAKOAA=Boys And Girls And Kids Of All Ages
Salve Lucrum=Latin for Hurrah for Profit. |
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