Archive for June 2014

Traders Corner   45 comments

The S&P 500 levels to watch today:

UPSIDE: 1963 (2 data points), 1968 (June 24th’s high and the all-time high), and 1971 (top of the Bollinger Bands).
LAST CLOSE: 1960, inside the 1957-1961 (7 data points) range.
DOWNSIDE: 1955 (June 9th’s high), 1947-1950 (5 data points), 1946 (20 day moving average), 1939-1944 (9 data points), 1937 (June 13th’s high), 1933 (June 17th’s low), 1924-1928 (5 data points and May’s high), 1922 (June 5th’s low), 1921 (bottom of the Bollinger Bands), 1918 (2 data points), 1915 (June 2nd’s low), 1909 (50 day moving average), 1897 (April’s high), 1883 (March’s high), and 1879 (100 day moving average).

S&P 500 Daily Momentum: Bearish
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bullish
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Flat (leaning negative)
Overall: With momentum technicals going both ways, that only leaves overbought/oversold technicals to shine any light on this market. On top of the technicals I usually follow, the McClellan Summation Index (the long-term version of the McClellan Oscillator) quietly slipped into overbought territory on Friday. However, Dave Fry’s headline from Friday tells the market story right now: “Window Dressing Season At Hand”. Today is the end of the month and quarter, so the professionals have to pretty up their portfolios. With light volume on the markets, it doesn’t take much buying to make your holdings look better. I would expect a pullback, but not today.

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Ed’s Daily Notes for June 30th   5 comments

For the week ahead, don’t expect much. With Friday’s Independence Day Holiday making this a short trading week in the U.S., the only big event will be the monthly U.S. Employment Report on Thursday (moved up a day due to the holiday). Will anyone still be paying attention, or will they be on vacation?

New York Times: Central Bankers, Worried About Bubbles, Rebuke Markets

An organization representing the world’s main central banks warned on Sunday that dangerous new asset bubbles were forming even before the global economy has finished recovering from the last round of financial excess.

Investors, desperate to earn returns when official interest rates are at or near record lows, have been driving up the prices of stocks and other assets with little regard for risk, the Bank for International Settlements in Basel, Switzerland, said in its annual report published on Sunday.

Recovery from the financial crisis that began in 2007 could take several more years, Jaime Caruana, the general manager of the B.I.S., said at the organization’s annual meeting in Basel on Sunday. The recovery could be especially slow in Europe, he said, because debt levels remain high.

“During the boom, resources were misallocated on a huge scale,” Mr. Caruana said, according to a text of his speech, “and it will take time to move them to new and more productive uses.”

The B.I.S. provides financial services to national central banks and also acts as a setting where central bankers can discuss monetary policy and other issues like financial stability or bank regulation. The board of directors includes Janet L. Yellen, chairwoman of the Federal Reserve; Mario Draghi, president of the European Central Bank; and the heads of central banks from Japan, China, India and many other countries.

Read the whole article.

It is amazing to me how the central bankers can worry about asset bubbles, when they are the ones responsible for blowing them.

Regardless, this is a big flashing yellow light to markets and investors. Whether the markets heed the warning remains to be seen.

Posted June 30, 2014 by edmcgon in Economy, Federal Reserve, News

Weekend Open Thread   Leave a comment

Normally, I wouldn’t post the weekend open thread this early, but I have a busy day ahead, and I am not sure when I will be home. So here is your place to discuss any topic you like.

In continuing with my “summer of one-hit wonders”, I offer you the song which was named the “#1 Greatest One-Hit Wonder of all Time” by VH1, Los del Rio’s Macarena:

Although Los del Rio formed in 1962, it wasn’t until Macarena that the duo had an international hit. The song itself has an interesting history (from Wikipedia):

As a result of their lounge act, Los del Río were invited to tour South America in March 1992 and, while visiting Venezuela, they were invited to a private party held by the Venezuelan empresario Gustavo Cisneros. Many prominent Venezuelans were in attendance that night, including former president Carlos Andrés Pérez.

Cisneros had arranged for a local flamenco teacher, Diana Patricia Cubillán Herrera, to do a small performance for the guests, and Los Del Rio were pleasantly surprised by Cubillán’s dance skills. Spontaneously, Antonio Romero Monge, one half of the Los del Río duo, recited the song’s chorus-to-be on the spot, as an accolade to Cubillán, but naming her “Ma’dalena” (Magdalena): “Dale a tu cuerpo alegría, Ma’dalena, que tu cuerpo e’ pa’ darle alegría y cosa’ buena'” (“Give your body some joy, Magdalene, ’cause your body is for giving joy and good things to”). In Andalusian culture labeling a woman “Magdalena” is to give her a faint association with Mary Magdalene’s reportedly seedy past, and more accurately describes her as being sassy or sensuous.

The song was originally recorded in 1992, and released in 1993 as a rumba. This was the first of six versions of the song that can be associated with Los Del Rio. Another version, a new flamenco rumba pop fusion theme with fully Spanish lyrics, attained significant success in Spain, Colombia and Mexico. It also became popular in Puerto Rico because of its use as an unofficial campaign theme song for then-governor Pedro Rosselló, who was seeking reelection under the New Progressive Party of Puerto Rico’s ticket. Being the base for many cruise ships, visitors to the island were constantly exposed to the song during their stay in Puerto Rico. This may explain how the song spread to—and became a hit in—cities with sizable Latino communities in the United States, particularly Miami and New York City.

In mid-1996, the song became a world wide hit when the Bayside Boys—a trio of producers composed of Mike Triay, Carlos de Yarza, and Jammin Johnny Caride—produced a remix of the song which added English lyrics. Jammin Johnny Caride, a radio personality at Power 96 in Miami, first learned of the “Macarena” when clubgoers at a club where he worked as a deejay requested the song. Caride brought the “Macarena” to his supervisors at Power 96 who asked him to create an English-language version of the song.

Caride recruited his two partners at Bayside Records, Mike “In The Night” Triay and Carlos de Yarza, to remix the original song. The new, English-language lyrics were written by Yarza and Triay. The trio, known as the Bayside Boys, added a new dance beat specifically targeted to American audiences with English-language lyrics sung by Carla Vanessa. The finished version was called “Macarena (Bayside Boys Remix).” The Bayside Boys remix hit number one on the Billboard Hot 100 in August 1996 and remained at the top of the chart for fourteen weeks.

While there are multiple covers of Macarena, none of them match the Bayside Boys Remix version. However, the most unusual version might be from the Bollywood movie Auzaar:

That’s it for me this week. Enjoy your Friday, and your weekend folks!

Posted June 27, 2014 by edmcgon in Music, Open Thread

Traders Corner   5 comments

The S&P 500 levels to watch today:

UPSIDE: 1963 (2 data points), 1968 (June 24th’s high and the all-time high), and 1970 (top of the Bollinger Bands).
LAST CLOSE: 1957, inside the 1957-1960 (6 data points) range.
DOWNSIDE: 1955 (June 9th’s high), 1947-1950 (5 data points), 1939-1944 (9 data points and the 20 day moving average), 1937 (June 13th’s high), 1933 (June 17th’s low), 1924-1928 (5 data points and May’s high), 1922 (June 5th’s low), 1918 (2 data points and the bottom of the Bollinger Bands), 1915 (June 2nd’s low), 1907 (50 day moving average), 1897 (April’s high), 1883 (March’s high), and 1877 (100 day moving average).

S&P 500 Daily Momentum: Bearish
S&P 500 Daily Overbought/oversold: Neutral
S&P 500 Weekly Momentum: Bullish
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Flat (leaning negative)
Overall: The S&P 500 made a trip down to the 20 day moving average yesterday, and bounced back up to close in the range it was in at the end of the day Wednesday. Considering it is the end of the month/quarter, and volume is low, I would expect the markets to be easy to manipulate by professional traders looking to make their month/quarter ending numbers. Don’t be surprised to see a mini-bull run here.

Ed’s Daily Notes for June 27th   Leave a comment

Bloomberg: Bullard Predicts Fed Rate Increase in First Quarter of 2015

Shhhh! Don’t let the markets hear this:

Federal Reserve Bank of St. Louis President James Bullard predicted the central bank will raise interest rates starting in the first quarter of 2015, sooner than most of his colleagues think, as unemployment falls and inflation quickens.

Asked about his forecast for the timing of the first interest-rate increase since 2006, he said: “I’ve left mine at the end of the first quarter of next year.”

“The Fed is closer to its goal than many people appreciate,” Bullard said today in an interview with Fox Business Network. “We’re really pretty close to normal.”

The Federal Open Market Committee is debating how long to keep the benchmark interest rate near zero after completing a bond-purchase program that’s set to end late this year. The committee repeated on June 18 that it expects the rate to remain near zero for a “considerable time” after the purchases end.

And when the Fed raises rates…

Bloomberg: World Bank Says Emerging-Market Calm May Turn Volatile

Developing economies enjoying “remarkably favorable” financing conditions in recent months remain susceptible to changes in investor sentiment that could crimp capital inflows, a World Bank report said.

“Current market conditions are supportive to developing-country prospects in the short term, but could encourage investors to underprice risk and borrowers to increase leverage,” the Washington-based lender said in a report today. “This might set the ground for sudden spikes in volatility and sharp adjustments to adverse news.”

Since March, long-term interest rates and market volatility declined to “unusually low levels,” narrowing bond spreads and putting downward pressure on borrowing costs, the report said. This triggered “a renewed search for yields which supported the demand for developing-country assets and currencies,” according to the report.

If long-term U.S. bond yields rise 100 basis points, or 1 percentage point, developing economies could experience a 50 percent drop in capital inflows, which would have “potentially destabilizing consequences” for some, the report said.

Ironically, the Federal Reserve itself may be the cause of the next economic black swan event.

Posted June 27, 2014 by edmcgon in Economy, Federal Reserve, News

June 26th: Ed’s Daily IRA Summary   Leave a comment

I made up yesterday’s losses in my lone daytrade today, although this wasn’t my standard daytrade:

OVERALL: 0.39%
Dow: -0.13%
NASDAQ: -0.02%
S&P 500: -0.12%

Posted June 26, 2014 by edmcgon in Open Thread, Portfolio

Traders Corner   21 comments

The S&P 500 levels to watch today:

UPSIDE: 1963 (2 data points), 1968 (June 24th’s high and the all-time high), and 1970 (top of the Bollinger Bands).
LAST CLOSE: 1959, inside the 1957-1960 (5 data points) range.
DOWNSIDE: 1955 (June 9th’s high), 1947-1950 (5 data points), 1939-1944 (8 data points and the 20 day moving average), 1937 (June 13th’s high), 1933 (June 17th’s low), 1924-1928 (5 data points and May’s high), 1922 (June 5th’s low), 1918 (2 data points), 1915 (June 2nd’s low and the bottom of the Bollinger Bands), 1905 (50 day moving average), 1897 (April’s high), 1883 (March’s high), and 1875 (100 day moving average).

S&P 500 Daily Momentum: Bearish
S&P 500 Daily Overbought/oversold: Neutral
S&P 500 Weekly Momentum: Bullish
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Flat
Overall: The S&P 500 reversed course yesterday, after Tuesday’s drop. The longer trends are still to the upside, but beware: Any news-driven drop could be especially painful here. It would be a 2.75% fall to the 50 day moving average, and a 4.28% fall to the 100 day moving average. If the news were really bad, to the 200 day moving average, it would be a 7% collapse.