Market Timing 05 (Jan 16 - Apr 18)

[winston]

Market volatility a sign that investors are looking for excuses to sell off

Richard Harris says the skittish market indicates that the stable underlying economy has been priced into investments and it will take little to prompt a sell-off

US$60 billion of imports is equivalent to 12 per cent of China’s 2017 imports into the US; a US consumer will pay an extra 3 per cent – something, but not significant.

For the US consumer, US$60 billion is just 2.6 per cent of imports so the tax will add a meagre one-third of 1 per cent to overall costs.

The last time the market regrouped and consolidated, it took the whole of 2015 and 2016 to recover.

Source: SCMP

http://www.scmp.com/comment/insight-opi ... cuses-sell

[winston]

Four Signs the Market Has Hit an Extreme

Here's what to watch when things heat up.

1. Price divergence. Price reaches a new extreme, but a momentum oscillator such as RSI doesn’t.
2. Trading volume.
3. Price rejection.
4. Volatility.

Source: Bloomberg

https://www.bloomberg.com/news/articles ... an-extreme

[winston]

All these wild swings in the stock market could mean it's bottoming soon and will rebound

The S&P 500 has moved at least 1 percent on nine of the past 12 trading days, an unusual clustering of jumpy action.

Volatility has remained elevated, above 20 for the past 14 days, also an uncommon stretch of heightened agitation outside of a full-blown bear market.

All this might not amount to a truly washed-out, hated market. But it surely shows a lot of hot money has either gone up in smoke or has cooled off.

by Michael Santoli

"A market that swings violently in both directions without making any net progress is usually a sign of a reversal rather than a consolidation." By this, he says he means a potential reversal higher following this two-month tailspin.

Investor-sentiment measures of bullishness and how they've turned much more subdued since Feb. 5.
1. The American Association of Individual Investors: from 45 percent to 32 percent.
2. Daily Sentiment Index of futures traders on S&P 500: 61 percent to 26 percent.
3. Investors Intelligence investment advisors: 66 percent to 48 percent.
4. Ned Davis Research Crowd Sentiment: 76 percent to 57 percent.

While short-term funding costs are rising and financial conditions tightening from very loose levels, corporate-credit spreads suggest no serious economic weakness or financial contagion is stressing the system yet.

If better-than-expected earnings can't lift a market that looks cheaper after nine weeks of struggle, it could be a tell that the market is in the grip of something a bit more serious than a curtailment of over-extended optimism and valuation, after all.

Source: CNBC

https://www.cnbc.com/2018/04/11/wild-sw ... yptr=yahoo

[winston]

History’s Best Stock Market Indicator Is Flashing Red

by Alexander Green

After all, the S&P 500 is currently selling for 24 times trailing earnings. That’s a full 50% higher than its long-term average price to earnings of 16.

U.S. value stocks, for instance, are unusually inexpensive relative to growth stocks. International stocks are inexpensive relative to domestic stocks. And emerging market equities are the cheapest of all.

Source: Investment U

http://dailytradealert.com/2018/04/15/h ... shing-red/

[winston]

How You’ll Know the Bear Market Is Coming

By Jack Hough

A flattening of the yield curve is nothing to fear. It has happened during each of six prior Fed hiking cycles since 1980. The Standard & Poor’s 500 index has posted positive returns during each of those flattening periods, with a median return of 9%.

A yield curve inversion, on the other hand, has been a reliable predictor of stock market peaks and recessions. But timing matters.

Studying seven curve inversions since 1967, JPM finds that the S&P 500 [b]peaked between three months to 19 months after the inversion date,[/b] with a median of 11 months.

Recessions didn’t begin until another nine to 25 months after stocks peaked, with a median of 14 months.

Source: Barron's

https://www.barrons.com/articles/how-yo ... yptr=yahoo

[winston]

Why the bull market will be over by November

by Justin Spittler

1. Volatility soars just before major bull markets roll over and die
2. Jeff thinks we’ll see one more major rally before the market tops out six to seven months from now.

Source: Casey Daily Dispatch

http://thecrux.com/why-the-bull-market- ... -november/

[winston]

There’s Still Money to Be Made in U.S. Stocks

by Dr. Steve Sjuggerud

1. Keep riding the “Melt Up” for another 18 months – at least.
2. Then, shift gears completely and get more conservative.
3. Invest in alternatives to traditional stocks and bonds.

Source: Daily Wealth

http://dailytradealert.com/2018/04/18/t ... -s-stocks/

[winston]

In one chart: The VIX says the stock-market low may be in

by William Watts

Market action in line with previous ‘shock drops’: Canaccord’s Dwyer

The Cboe Volatility Index is a guide to human nature, says a prominent Wall Street bull. And that guide indicates the lows are in for the stock market and that new highs may be no more than months away.

Canaccord Genuity analyst Tony Dwyer has characterized the stock market’s early February plunge as a phenomenon known as a “shock drop,” in which a correction is sharp enough to cause the 10-week rate of change in the Cboe Volatility Index (^VIX), or VIX, to spike to 125.

Source: Yahoo Finance

https://finance.yahoo.com/news/one-char ... 05774.html

[winston]

Risk averseness in investing

Affin Hwang Asset Management Bhd MD Teng Chee Wai:

The market has been exciting. It is getting difficult to read and keeps everybody on their toes. Interestingly we don’t see redemptions. That is the interesting thing about Malaysia.

The lack of redemption isn’t just happening to us. We don’t get the sense that redemption is coming, which is really rare considering that volatility is so high.

This year, the key market we are looking at is China. Currently, our investment in China accounted for 45%-50% of our Asian equity portfolio (RM6bil). Within the Asia portfolio, we like the financial sector because of the increase in interest rates. The other sectors that we like are insurance within China on new products and expansion of network agencies.

We have exposure in the e-commerce technology sector such as Alibaba and Tencent. We have also taken position in Microsoft on its cloud business.

Source: The Star

https://www.thestar.com.my/business/bus ... investing/

[winston]

The Time for Patience Is Officially Over. Get Out.

by LEE ADLER

Now I’m worried that the usual rally into early May won’t happen.

I would still expect a bounce, but from where, and how big? The risk is that it will come from much lower and won’t amount to much.

So I think that the time for patience and gradual selling has come to an end. It’s time to be out.

Don’t buy the dips. Short the SPY on rallies. And hold on to our set it and forget it short, RWR, the REIT ETF.

Source: Sure Money

https://suremoneyinvestor.com/2018/04/t ... r-get-out/