Always consider hidden risks
Desloges CFA is a professional investment consultant/ blogger/ trader
with over 25 years of experience working on the buy and sell-side. I
have researched and invested in traditional and alternative asset classes and
worked at Pensions Funds, International Banks and Dealers. More...
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Insight July 26 Nasdaq 100 Index ETF QQQ: Outperforming SPY? What strikes me the most, is that the relative volatility (ratio of Nasdaq 100 Volatility Index over the SP500 Volatility Index) is almost at its highest since June 24. Canadian Corporate Bonds ETF XCB: Back at the Support Zone? But the most interesting factor is that we are now back testing the Major Resistance Trendline from that huge falling wedge pattern that is so critical for Bulls to hold. Breakouts Reflect Shift In Markets Even if the S&P 500’s breakout above 2,134 holds, some “give back” or even a retest of prior resistance may be needed to bring in additional “waiting for a pullback” buyers. Investors Are Relying On ‘Dangerous Rationalizations That Have Never Held True In The Past’ Still, history shows that the Fed has never been able to prevent the sort of bust that necessarily follows this sort of boom in financial assets unsupported by fundamentals. Hot July Markets & Late-Summer/Autumn Buying Opportunities Gains of this magnitude for July, however, have frequently been followed by a late-summer or autumn selloff and better buying opportunities than now. About Everything | Warning: Earnings Smaller Than They Appear There’s been a lot of hoopla so far this year about corporate America’s growing use of “pro forma” accounting—or its growing aversion to U.S. generally accepted accounting principles (GAAP), depending on how you think of it. July 25 US Dollar Index: At Major Crossroads? We are getting near the Major Resistance Trendline that started back since December 2 2015 Fina cial Sector (XLF) : Weekly Tentative Breakout? n Bulls still have a lot of work to do as the Financials are the only sector were we did not have either a new high or a breakout Cdn Utilities Sector ETF XUT: Near Breakout? And more surprising, the Canadian Utilities Index (XUT) is out performing Canadian long bonds (iShares Core Canadian Long Term Bond Index ETF (XLB)) since June 21 2016. Speculative Extremes and Historically-Informed Optimism Every market cycle in history has drawn valuations to levels that have offered disciplined investors far higher return prospects than are available at present Are Stocks Coiling For Another Big Move? The S&P Mid-Cap Index is trading in the tightest 8-day range in over 20 years; is a big move imminent? Will the FOMC Halt the Dollar's Advance? The US Dollar Index rose to its highest level in four months to approach the 61.8% retracement objective of the slide since last December's peak just shy of 100.60 Signs of Excessive Bullish Sentiment This big rush into SPY says investors have suddenly become exceedingly interested in being invested in SPY lately, and whenever the crowd rushes in like this, it is a sign of excessive bullish sen timent. The Bond Market Riddle Is Not A Riddle The UST market, among other bond classes, as it goes only lower (in yield) tells us that the economy is getting worse (which is what we actually find here and all over the world). July 21 SP500 and the Yen: Follow the Yen my Dear? But the most interesting technical factor is usually when we have the correlation between the Mighty SP500 and the Yen getting near 1, then we are at risk of tiny corrections in the SP500. Technology Sector ETF (XLK): Breakout? As most of us were expecting the Financial Sector to Breakout, it was a surprise that finally it was the Technology Sector ETF XLK. Fund Managers' Current Asset Allocation - July Remarkably, allocations to cash are now even higher than in February, and fund managers are now underweight equities for the first time in 4 years Complacency Is Creeping Back Into The Stock Market With stocks’ steady drift through all-time high territory, investors’ relative near-term volatility expectations have plummeted to near record lows Earnings Update: Let There Be Growth…Please With price-to-earnings ratios above the norm, we would like to see some genuine growth for a fundamental-based price multile exppansion How Do The Stock-Bond Charts Look Now? T he S&P 500 vs. long-term Treasuries chart has not cleared the hurdles... July 20 US Dollar Index and SP500: A Stealth Move? But very few of us realize that for a foreigner looking at the SP500 Index on a Macro Basis (so in US Dollar Index - DXY times the SP500 Index) we did not reach yet a new high ever Financial Sector (XLF) : Tentative Breakout? But what is interesting indeed is that at a time were the Financial Sector is only catching up to the Mighty SP500 Index, we have been testing the past few trading sessions a Major Daily Resistance Trendline that started back since July 23 2015 Dollar Bull Case Intact: It is All About the Perspective It is broadly based on the divergence between the US and most other major economies. A Little-Noticed Kink in Smart-Beta ETFs Might Blindside Buyers Turns out, one of the hottest parts of the $2.3 trillion ETF industry has a little-noticed quirk with the potential to blindside users. My Fellow Americans, More Volatility Lies Ahead The air is getting thinner on Wall Street as stocks rise ever higher, with the S&P 500 trading at more than 25x GAAP earnings and investors rationalizing the irrational. "End of the Game" Near as Corporate Defaults Surge Across the Globe, Says Expert Well, I don't think they're pricing in the two metrics that I think are very important: the default rate and the recovery rate. July 19 The VIX/Gold Correlation US Dollar and SP500: Higher Volatility Ahead? VIX/GOLD correlation getting near the 0.70 zone on July 18 2016 and VIX at 12.44, well below its 200 DMA (Day Moving Average) at 17.47, indicating higher volatility ahead as history suggest.Th SP TSX60 Index (XIU ETF): At Resistance Zone? Same technical pattern since July 14 2016 as we keep trying to break that resistance trendline with a weakening trading Volume. Record Bond and Stock Prices Sending the Same Message But the correct answer to this seeming conundrum is that both stocks and bonds are in a bubble, which is the direct result of unprecedented central bank credit creation. The Air is getting Thinner As the S&P Climbs Higher It's true that stocks and bonds' recent relentless climb has calmed most investors -- making them far less fearful of a possible major downturn (what I call the Bull Market in Complacency) 2007 Revisited: Is This Bull Is Running On Fumes? We are not throwing in the bear towel at all; it’s just going to take a little while longer for the marker to crack. Keep an Eye on 'Bitcoin' as The Next 'Financial Crisis' Starts People look at alternate asset classes when their confidence in traditional assets fades. July 18 Dividend Yield Chasing Experiment The market still favor the dividend stocks over the broad stock market indices lately Volatility Index (VIX): Seasonals at Work? So be careful reading too much into a VIX that is low, without trying to account for the seasonality US High Yield Corporate Bond ETF HYG: At Technical Crossroads? But looking at a Weekly chart on the HYG ETF, we have a Shooting Star Technical Patt
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