Notice the top 4 sectors – account for 60% of S&P 500
From the above chart, A draw-down represents the peak-to-trough decline during a specific period of investment. In this case, the XLE dropped -29% in 2011 and -49% from mid-2014 to early 2016. XLE still remains -33% below previous peak levels. As oil prices have been halved, the energy sector and an investor of energy companies has been in a recession.
So look at for 4 sectors – technology, financials, healthcare, consumer discretionary
XLF – financials
XLV- health care
XLY – Consumer discretionary
dow for industrials and NDX for technology
source : delta market sentiment
People go to vegas when they feel they have good future prospects. If they are optimistic they go to vegas. So in bull market times both convention attendance and visitors to Vegas increase.
around 40 million people attended Vegas in 2016!! and about 6 million convention visits
Macau is about 3 million !!
By 1 pm today – the NASDAQ dropped about 31 points (the futures were up 45 points at one time last night). That shows to us a critical point that i have observed over many months now: stocks don’t always follow the futures.
Apple earned $1.67 a share, (up 18% YOY); sales : $45.4 billion (up 7% 3 months) That was well above what analysts expected Apple to earn and for sales ($1.57 a share on sales of $44.89 billion).
Volume was lower on the NYSE compared with the same time Noon EST, but higher on the Nasdaq, (The most intense trading in Apple shares — running about 5 times greater than the 50 days moving average of volume. Losing stocks led winners by 12-to-7 on the NYSE and by about 13-to-5 on the Nasdaq.
Solar energy stocks, the No. 1 industry group out of the 197 that IBD tracks, was Wednesday’s worst-performing
what’s more at the top? More of the top.
Last week all the indices hit all time high. How far is far enough?
when P/E is constant, then the risk premium is constant.
P/E has been hovering for S&P Index around 20.5 for the last and half year (DEC 2015 to June 2017) . earning increased from 100 dollars to 116 dollars around 16%
So mostly the gain in S&P came from the gain in real earnings of the companies!
So assuming just the earning to grow by 10% (very reasonable..just the growth %) and P/E = 20.5 as constant
then S&P would be (116+10% of 116) * 20.5= 2615 – a gain of 144 points from today.
the leading economic indicators – % change has been positive for the last 10 months!
around 65 % of stock market is about its 75 days moving average.
Now value of companies according to the theory is based on discounted value of the cash flow. because of low interest rates companies can borrow much with little interest paid. Hence expansion, hence earnings growth!
“The market can stay irrational longer than you can stay solvent.” – John Maynard Keynes
It could have been a potentially good money making day. I should not have gotten out so early. Shorted at 9:40 am with 1 contract of NQZ14 and left way too early.
I was not prepared at all, and I only saw the signs later, much later.
What was the signs? Simple as before- Price and Volume.
4087 was a 1 month old support and resistance from above
Now, lets look at the 1 day 2 min chart, a 4500 volume contract! Just right at the open there were a rush of sellers.
By 9:48 am I should have seen this spike in volume, the tallest bar in the left .
afterwards there was not turning back. at 9:38am, 9:40 am, 9:42 am, and 9:44 am all great volume spikes and price decreasing.
Hope fully next time we will not miss it
accumulation distribution (money flowing in and out of the market) gets a grade of C to D. Which means that there is a net flow of money out of the market. (A, A+ is the best time to keep the money in the market).
Delta Market Sentiment Indicator is below 50.
So, the bottom line is this : Stay in the sidelines, till the big money (Mutual funds, Institutional investors) get back in.
PS: Source of the above article is Delta Investment Management newsletter and Investors Business daily.
I have gotten into all cash positions. Sold my etf, and mutual fund (I had one of each).
Growth funds have collapsed. Small-cap is lagging.
I have shifted all my monies into money market funds.
Stay on the side lines. Number 1 rule – Don’t lose money. Number 2 rule – don’t forget number 1. (I am not talking about cost of business or losing some money when you just got into a position and then because the market has turned on you, had to sell. That is expected).
Your only, and one and only indicator is the 75 day simple moving average (SMA). QLD and QQQ have both gone under it. Sell.
Once it comes back up the 75 day SMA – buy QLD or QQQ.
Now there is another option on the downturn – buy QID (It is reverse double of QQQ). It has just gotten above it’s 75 day SMA.