It's Just Another Steve Jobs Rumor, but...
Michael Goodman
12/30/08 - 03:19 PM ESTSAN FRANCISCO -- So much for any future one-on-one interviews with Apple(HMC Quote - Cramer on HMC - Stock Picks) CEO Steve Jobs running on the tech blog Gizmodo.
Citing a "solid source," the blog decided Tuesday to go where few have wanted to tread: pronouncing publicly that Jobs' health is declining rapidly. Gizmodo's source, who the blog says has been "100% correct" when passing along product scoops, says this is why Jobs wouldn't give his traditional keynote address at the company's MacWorld Expo in January, as the company announced earlier this month.
Jobs was diagnosed with a malignant but less aggressive form of pancreatic cancer in 2004, undergoing surgery to remove a tumor. Subsequent gaunt appearances in the past couple of years have continued, at the very least, to keep the CEO's health in the back of investors' minds.
The Gizmodo report infused a minor jolt into Apple's stock, which had been up more than 1% most of the session. Shares fell as low as $84.72, off 2%, before moving back recently to $85.79, down just 1%.
CNBC subsequently disputed the Gizmodo story, citing its own sources that no new news about Jobs existed and that his health is "just fine as far we as we know." These sources also reiterated that Jobs' absence from MacWorld was a result of the company's plans to no longer invest in the conference.
Buttressing the Steve-is-fine argument was a Reuters report that quoted a company spokesman as saying "if ever Steve or the board of directors decided that he was no longer capable of doing his job as CEO of Apple, I'm sure they will let you know."
Well, you would forgive an Apple shareholder for taking that claim with a grain of salt. Company executives have consistently fended off queries into Jobs' health, referring to it earlier this year as it a "private matter," a phrase continually proven false by the stock's swoon whenever a rumor of Jobs' ill health comes to the surface.
And it would pay to remember Peter Elkind's piece in Fortune earlier this year that disclosed that both Jobs and Apple's board knew about his original cancer diagnosis for nine months before disclosing it to shareholders.
In any event, it prevents anyone from automatically scoffing at Gizmodo and its "solid source."
Ultimately, investors have to understand that they're never going to really know anything about Jobs' health until they absolutely have to know by the strictest letter of the law.
As long as Jobs is at the helm, the stock will carry with it some unquantifiable degree of risk related to his health -- a company/CEO tie-in perhaps only surpassed by Warren Buffett and Berkshire Hathaway(BRKA.A Quote - Cramer on BRKA.A - Stock Picks).
The trick, as always, is calculating that risk against the huge opportunity for future upside that could be orchestrated by the man himself.
posted by Peter Greene
Wednesday, December 31, 2008
Tuesday, December 30, 2008
The Worst Predictions About 2008
Just about everybody got wrong-footed by 2008, but some people's mistakes were truly spectacular
By Peter Coy
Editor's Note: This new version of the "ten worst predictions about 2008" changes three of the ten based on feedback from online readers and BusinessWeek editors. CNBC's Jim Cramer and President Bush are still on the list, but with different predictions. Author Shelby Steele is off the list, replaced by a pair of BusinessWeek writers.
Here are some of the worst predictions that were made about 2008. Savor them—a crop like this doesn't come along every year.
1. "A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!" —Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008
At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8,500.
2. AIG (AIG) "could have huge gains in the second quarter." —Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008
AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.
3. "I think this is a case where Freddie Mac (FRE) and Fannie Mae (FNM) are fundamentally sound. They're not in danger of going under…I think they are in good shape going forward." —Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008
Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.
4. "I'm not an economist but I do believe that we're growing." —President George W. Bush, in a July 15, 2008 press conference
Nope. Gross domestic product shrank at a 0.5% annual rate in the July-September quarter. On Dec. 1, the National Bureau of Economic Research declared that a recession had begun in December 2007.
5. "I think Bob Steel's the one guy I trust to turn this bank around, which is why I've told you on weakness to buy Wachovia." —Jim Cramer, CNBC commentator, Mar. 11, 2008
Two weeks later, Wachovia came within hours of failure as depositors fled. Steel eventually agreed to a takeover by Wells Fargo. Wachovia shares lost half their value from Sept. 15 to Dec. 29.
6. "Existing-Home Sales to Trend Up in 2008" —Headline of a National Association of Realtors press release, Dec. 9, 2007
On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million—down 11% from a year earlier—in the worst housing slump since the Depression.
7. "I think you'll see [oil prices at] $150 a barrel by the end of the year" —T. Boone Pickens, June 20, 2008
Oil was then around $135 a barrel. By late December it was below $40.
8. "I expect there will be some failures. … I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system." —Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008
In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup (C) needed an even bigger rescue in November.
9. "In today's regulatory environment, it's virtually impossible to violate rules." —Bernard Madoff, money manager, Oct. 20, 2007
About a year later, Madoff—who once headed the Nasdaq Stock Market—told investigators he had cost his investors $50 billion in an alleged Ponzi scheme.
10. "There's growing evidence that parts of the debt markets…are coming back to life." —Peter Coy and Mara Der Hovanesian, BusinessWeek, Oct. 1, 2007.
Oops.
Coy is BusinessWeek's Economics editor.
posted by Peter Greene
By Peter Coy
Editor's Note: This new version of the "ten worst predictions about 2008" changes three of the ten based on feedback from online readers and BusinessWeek editors. CNBC's Jim Cramer and President Bush are still on the list, but with different predictions. Author Shelby Steele is off the list, replaced by a pair of BusinessWeek writers.
Here are some of the worst predictions that were made about 2008. Savor them—a crop like this doesn't come along every year.
1. "A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!" —Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008
At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8,500.
2. AIG (AIG) "could have huge gains in the second quarter." —Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008
AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.
3. "I think this is a case where Freddie Mac (FRE) and Fannie Mae (FNM) are fundamentally sound. They're not in danger of going under…I think they are in good shape going forward." —Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008
Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.
4. "I'm not an economist but I do believe that we're growing." —President George W. Bush, in a July 15, 2008 press conference
Nope. Gross domestic product shrank at a 0.5% annual rate in the July-September quarter. On Dec. 1, the National Bureau of Economic Research declared that a recession had begun in December 2007.
5. "I think Bob Steel's the one guy I trust to turn this bank around, which is why I've told you on weakness to buy Wachovia." —Jim Cramer, CNBC commentator, Mar. 11, 2008
Two weeks later, Wachovia came within hours of failure as depositors fled. Steel eventually agreed to a takeover by Wells Fargo. Wachovia shares lost half their value from Sept. 15 to Dec. 29.
6. "Existing-Home Sales to Trend Up in 2008" —Headline of a National Association of Realtors press release, Dec. 9, 2007
On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million—down 11% from a year earlier—in the worst housing slump since the Depression.
7. "I think you'll see [oil prices at] $150 a barrel by the end of the year" —T. Boone Pickens, June 20, 2008
Oil was then around $135 a barrel. By late December it was below $40.
8. "I expect there will be some failures. … I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system." —Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008
In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup (C) needed an even bigger rescue in November.
9. "In today's regulatory environment, it's virtually impossible to violate rules." —Bernard Madoff, money manager, Oct. 20, 2007
About a year later, Madoff—who once headed the Nasdaq Stock Market—told investigators he had cost his investors $50 billion in an alleged Ponzi scheme.
10. "There's growing evidence that parts of the debt markets…are coming back to life." —Peter Coy and Mara Der Hovanesian, BusinessWeek, Oct. 1, 2007.
Oops.
Coy is BusinessWeek's Economics editor.
posted by Peter Greene
Friday, December 26, 2008
our morning comments
The Numbers Don't Lie ...
The reason we like statistical and technical analysis is for one simple reason, the number don't lie. The numbers are unemotional, they don't fall in love with stories, the don't get passionately bullish or bearish they just are what they are. Now the downfall of the numbers like any method of following the market is they are nowhere near perfect (but then again what is ?). However the numbers are a direct reflection of the market, they are not manufactured or manipulated. Again they are what they are and in that's the beauty of it.
When we say "the numbers" we talk about things such as new highs vs. new lows, advancing stocks vs. declining stocks, the continuous level of up volume versus down volume, the deviation in the VIX Index from its normal trend to name a few. Within FusionIQ we monitor even statistics such as the % of stocks that are in various scoring ranges such as; Bullish (stocks ranked 70 - 100), Neutral - (stocks ranked 40-70) and Bearish (stocks ranked less than 40). We also monitor the number of new BUY signals vs. new SELLS signals to see which way the markets near-term directional bias is tilting. Again not that these are perfect indicators but when they all start to align in either a bullish or bearish way it gives you a higher degree of confidence that you are on the right side of that market and that is what this game is all about. Stock picking to some degree is only as good as which way they market tide is going. (Though you will always get a few names that buck the trend the majority of issues move in sync with the market)
In fact one of the main determinants that moved us negative very early was the large number of stocks ranked in FusionIQ that fell into its bearish category six and nine months ago. Again not that the numbers are always right but when 65 % of all stocks in our ranking system are ranked lower than 40, that has to raise a red flag. As I said before we don't make the numbers but the fact that a large number of issues went below 40 rankings (the scores were clearly driven down as we know now by external factors as well as supply and demand) certainly demanded attention. When readings such as this are combined with other pieces of unbiased confirming evidence such as new lows every day in the cumulative advance-decline line for the S&P 500 and more new 52 week lows than 52 week new highs (consistently) it really connects the dots.That said most of these aforementioned indicators still have poor readings hence why we keep repeating that one should play it closer to the vest for now and make lighter capital commitments until these statistics improve off the lows .
Look for out S&P 500 and NASDAQ 100 pieces to be published this coming Monday.
Best.
Fusion Analytics Research Partners LLC
posted by Peter Greene
The reason we like statistical and technical analysis is for one simple reason, the number don't lie. The numbers are unemotional, they don't fall in love with stories, the don't get passionately bullish or bearish they just are what they are. Now the downfall of the numbers like any method of following the market is they are nowhere near perfect (but then again what is ?). However the numbers are a direct reflection of the market, they are not manufactured or manipulated. Again they are what they are and in that's the beauty of it.
When we say "the numbers" we talk about things such as new highs vs. new lows, advancing stocks vs. declining stocks, the continuous level of up volume versus down volume, the deviation in the VIX Index from its normal trend to name a few. Within FusionIQ we monitor even statistics such as the % of stocks that are in various scoring ranges such as; Bullish (stocks ranked 70 - 100), Neutral - (stocks ranked 40-70) and Bearish (stocks ranked less than 40). We also monitor the number of new BUY signals vs. new SELLS signals to see which way the markets near-term directional bias is tilting. Again not that these are perfect indicators but when they all start to align in either a bullish or bearish way it gives you a higher degree of confidence that you are on the right side of that market and that is what this game is all about. Stock picking to some degree is only as good as which way they market tide is going. (Though you will always get a few names that buck the trend the majority of issues move in sync with the market)
In fact one of the main determinants that moved us negative very early was the large number of stocks ranked in FusionIQ that fell into its bearish category six and nine months ago. Again not that the numbers are always right but when 65 % of all stocks in our ranking system are ranked lower than 40, that has to raise a red flag. As I said before we don't make the numbers but the fact that a large number of issues went below 40 rankings (the scores were clearly driven down as we know now by external factors as well as supply and demand) certainly demanded attention. When readings such as this are combined with other pieces of unbiased confirming evidence such as new lows every day in the cumulative advance-decline line for the S&P 500 and more new 52 week lows than 52 week new highs (consistently) it really connects the dots.That said most of these aforementioned indicators still have poor readings hence why we keep repeating that one should play it closer to the vest for now and make lighter capital commitments until these statistics improve off the lows .
Look for out S&P 500 and NASDAQ 100 pieces to be published this coming Monday.
Best.
Fusion Analytics Research Partners LLC
posted by Peter Greene
Wednesday, December 24, 2008
Our morning comments
I don't like to be a Bull or a Bear. I like to be impartial, sort of like Switzerland and let the weight of the evidence direct me. If the evidence suggests that the market has a better chance to go up I will employ long strategies. Conversely if the evidence suggests the market will go down I will raise cash and employ short strategies. So I try not to pick a side but rather let the data and unbiased/unemotional evidence steer me in the potentially right direction. Sometime the evidence screams bullish, other times bearish and still other times (like presently) the tea leaves are mixed. In this scenario it is best as I said yesterday to make smaller commitments until the evidence is more convincing. That said I believe the market is a discounting mechanism and the reason we dropped 46 % from the recent S&P 500 peak is because the market was anticipating the nasty headlines you see today and last week and probably over the next several months and boy when you read them it makes you not want to get out of bed today (lol !) However if it is in print then astute market players have long since factored in the news I believe. So as the horrendous headline news hits the tape each day watch it is important to watch how the market reacts. If it continues to drop and drop well then this news hitting the tape was not in fact discounted, however if we continue to rally on bad news then that would be a good sign.
Go ahead take a gander at today's collection of headline news:AP - New Jobless Claims Jump to 26-Year HighReuters - Durable goods drop 1 percent in AP - Oil falls towards $37, tracking global equity lossesAP - World markets slip after gloomy US economic dataReuters - Toyota's global sales mark worst in 8 yrs.In summary it is hard to put any stock in days leading up to the holidays since volume tends to be light and the real decision makers at large institutions leave early but we will know soon enough as the New Year approaches if the bad news is already baked in. My best guess is the market knows all this bad news already it is more trying to handicap how good the current bailout and multiple stimulus packages will work. If we go lower then the market is saying its not enough. If we can rally then the market is saying we believe the globally concentrated effort to stave of this chasm is going to work. Volume and internals will signal which way the market will go. Over the last 5 months there has been consistently more down volume than up volume, more decliners than advancers and more new lows than new highs (day after day after day). However of late the negative skew is dissipating so the idea now is to watch for the turn in internals the other way (i.e. a consistency of more up than down volume, more advancers than decliners and more new highs than new lows.) Technically the 50-day moving average stalled all the major indices recently (as well as the 9,000 level on the Dow). To get any sustained move up we need to break above these levels.Of note one group is starting to show some consistent strength in this mess; Biotechs. Keep your eye on this group as they may emerge as a leadership area of the market when the tape turns. We will put together a list of good looking biotech names for next Monday.
Happy Holidays !!
K Lane
posted by Peter Greene
Go ahead take a gander at today's collection of headline news:AP - New Jobless Claims Jump to 26-Year HighReuters - Durable goods drop 1 percent in AP - Oil falls towards $37, tracking global equity lossesAP - World markets slip after gloomy US economic dataReuters - Toyota's global sales mark worst in 8 yrs.In summary it is hard to put any stock in days leading up to the holidays since volume tends to be light and the real decision makers at large institutions leave early but we will know soon enough as the New Year approaches if the bad news is already baked in. My best guess is the market knows all this bad news already it is more trying to handicap how good the current bailout and multiple stimulus packages will work. If we go lower then the market is saying its not enough. If we can rally then the market is saying we believe the globally concentrated effort to stave of this chasm is going to work. Volume and internals will signal which way the market will go. Over the last 5 months there has been consistently more down volume than up volume, more decliners than advancers and more new lows than new highs (day after day after day). However of late the negative skew is dissipating so the idea now is to watch for the turn in internals the other way (i.e. a consistency of more up than down volume, more advancers than decliners and more new highs than new lows.) Technically the 50-day moving average stalled all the major indices recently (as well as the 9,000 level on the Dow). To get any sustained move up we need to break above these levels.Of note one group is starting to show some consistent strength in this mess; Biotechs. Keep your eye on this group as they may emerge as a leadership area of the market when the tape turns. We will put together a list of good looking biotech names for next Monday.
Happy Holidays !!
K Lane
posted by Peter Greene
ZZZZZZZZZZ
Expect a REAL quiet one today and Friday...
Equities close at 1pm and bonds at 2pm. There will be more people at Grand Central at noon than trading...
Nothing to read into yesterdays 100 point loos on the Dow, quietest 100 down of the year...
Start your egg nog early!
Scariest news yesterday was the suicide of a hedge fund manager that lost over a billion with Madoff. The even sadder it probably will not be the last..
posted by Peter Greene
Equities close at 1pm and bonds at 2pm. There will be more people at Grand Central at noon than trading...
Nothing to read into yesterdays 100 point loos on the Dow, quietest 100 down of the year...
Start your egg nog early!
Scariest news yesterday was the suicide of a hedge fund manager that lost over a billion with Madoff. The even sadder it probably will not be the last..
posted by Peter Greene
Tuesday, December 23, 2008
hearing MOC
Upstairs chatter that there's 8MM CIT to BUY on the bell .... down here we see only 215k to buy MOC thus far .... (update: S&P adjustment.... hearing 8.55 mill to buy)
posted by Peter Greene
posted by Peter Greene
Our morning comments
Our morning comments:
Yesterday's activity continued to reflect the continued lack of interest on the part buyers. Internals remained negative with decliners besting advancers, down volume outpacing up volume and new lows beating new highs. The only bright spot on the day was that volume also was sub par, most likely a reflection of the holiday season. However the low volume is probably also indicative of the general lack on interest in stocks right now by the investing public.
So overall we stand not much different from where we have been over the last several weeks. To summarize we have a market licking its' wounds (after a tremendous fall) yet it hasn't shown the ability to rally with any conviction. Conversely the pervasive selling has dried up (yet we still can't pop). On the other hand we have bad news after bad news on the economic front as well as the main pages (ie. Bernie Madoff story) yet the market has actually absorbed the bad news and not really gone lower (typically a positive sign). That said we still can't make any headway. It is enough for an investor to want to pull his/her hair out (if you're follicly blessed that is !)
The answer to where we are right now is simple - nowhere. With year end approaching and hopefully most off the tax loss selling done no one really wants to make any major bets until 2009. There are times when the market is directionless and this is just one of those times.
The good news is we won't stay directionless forever and when we do make a move it will be sharp and aggressive. The two possible outcomes will be as follows: (A.) We have one more aggressive sell-off that purges out the last of the selling and makes for a mega buying opportunity or (B.) we simply see a huge surge in up to down volume and advancers to decliners (simultaneously) from present levels and we get a violent rally from here. Either way volume will give us the clue as to when all the key players are back in the game. Remember volume levels equate to confidence and conviction and once the market is comfortable that the global economic bailouts and stimuli are working you will see a tremendous pick up in volume and that will be the key. In the interim if you are in the game keep your bets light (since the odds of winning are lower in a directionless tape) and watch and wait for the right hand (ie. explosive market internals) before you go all in.
Happy Holidays To All From The Staff At FusionIQ !!
posted by Peter Greene
Yesterday's activity continued to reflect the continued lack of interest on the part buyers. Internals remained negative with decliners besting advancers, down volume outpacing up volume and new lows beating new highs. The only bright spot on the day was that volume also was sub par, most likely a reflection of the holiday season. However the low volume is probably also indicative of the general lack on interest in stocks right now by the investing public.
So overall we stand not much different from where we have been over the last several weeks. To summarize we have a market licking its' wounds (after a tremendous fall) yet it hasn't shown the ability to rally with any conviction. Conversely the pervasive selling has dried up (yet we still can't pop). On the other hand we have bad news after bad news on the economic front as well as the main pages (ie. Bernie Madoff story) yet the market has actually absorbed the bad news and not really gone lower (typically a positive sign). That said we still can't make any headway. It is enough for an investor to want to pull his/her hair out (if you're follicly blessed that is !)
The answer to where we are right now is simple - nowhere. With year end approaching and hopefully most off the tax loss selling done no one really wants to make any major bets until 2009. There are times when the market is directionless and this is just one of those times.
The good news is we won't stay directionless forever and when we do make a move it will be sharp and aggressive. The two possible outcomes will be as follows: (A.) We have one more aggressive sell-off that purges out the last of the selling and makes for a mega buying opportunity or (B.) we simply see a huge surge in up to down volume and advancers to decliners (simultaneously) from present levels and we get a violent rally from here. Either way volume will give us the clue as to when all the key players are back in the game. Remember volume levels equate to confidence and conviction and once the market is comfortable that the global economic bailouts and stimuli are working you will see a tremendous pick up in volume and that will be the key. In the interim if you are in the game keep your bets light (since the odds of winning are lower in a directionless tape) and watch and wait for the right hand (ie. explosive market internals) before you go all in.
Happy Holidays To All From The Staff At FusionIQ !!
posted by Peter Greene
Stocks to Watch
From our research earlier this week
Like everyone we are always looking for new ideas to trade or invest in. We like to screen for stocks that act strong. These stocks that act strong tend to act strong typically for some reason. The reason just may not be obvious to everyone at the time. In a weak tape such as it has been this strength becomes even more obvious. Below we highlight some names that have held up well and could be a foundation to do some more digging for those looking for ideas.
All of these stocks listed below are ranked 94 of greater on FusionIQ's Master Technical Score.
Dollar Tree Inc. (DLTR)
Citizens Inc. (CIA)
Shenandoah Telecommun Co (SHEN)
Thoratec Corp (THOR)
Telecommunication Systems-a (TSYS)
Royal Gold Inc. (RGLD)
Allegiant Travel Co (ALGT)
Nci Inc (NCIT)
Lhc Group Inc (LHCG)
As always, check with your own financial consultant to see if any investments are right for you...This is for information only
posted by Peter Greene
Like everyone we are always looking for new ideas to trade or invest in. We like to screen for stocks that act strong. These stocks that act strong tend to act strong typically for some reason. The reason just may not be obvious to everyone at the time. In a weak tape such as it has been this strength becomes even more obvious. Below we highlight some names that have held up well and could be a foundation to do some more digging for those looking for ideas.
All of these stocks listed below are ranked 94 of greater on FusionIQ's Master Technical Score.
Dollar Tree Inc. (DLTR)
Citizens Inc. (CIA)
Shenandoah Telecommun Co (SHEN)
Thoratec Corp (THOR)
Telecommunication Systems-a (TSYS)
Royal Gold Inc. (RGLD)
Allegiant Travel Co (ALGT)
Nci Inc (NCIT)
Lhc Group Inc (LHCG)
As always, check with your own financial consultant to see if any investments are right for you...This is for information only
posted by Peter Greene
RIP Wachovia & National City
As mentioned in this morning's Wall Street Journal, today the holders of Wachovia and National City will vote to be taken under. Two once powerful banking names have gone the way of the buggy whip....
Question is will anyone miss them???
posted by Peter Greene
Monday, December 22, 2008
add for the firm...article in Barron's
Saturday, December 20, 2008
ELECTRONIC INVESTOR
Calling All Number-Crunchers
By MIKE HOGAN
Separating potential winners -- and losers -- from the herd.
MARKETS LIKE THIS DEMAND A CLOSER LOOK before you leap. Fortunately, there are plenty of online resources to guide you.
Some are oriented toward fundamental analysis, some toward technical signals, and some, like FusionIQ (www.fusioniqrank.com), incorporate both, and more.
A research and money-management firm, FusionIQ has just made its quantitative stock- and sector-screening system available to retail investors. A monthly subscription buys you access to the kind of expensive, computer-based screening that quantitatively oriented investors, or "quants," enjoy.
FusionIQ subscribes to the Pareto Principle, which states that 20% of stocks will be responsible for 80% of future gains. Its huge nightly data crunch separates potential winners (and losers) from the herd. Being invested across multiple sectors for the "long term" may qualify as diversification, but it doesn't yield excess returns, explains CEO and longtime market analyst Barry Ritholtz.
"Buy-and-hold has been a jumbo money-loser this year," argues Ritholtz, the subject of a recent Barron's Q&A ("A Leading Bear Turns Bullish, Sort Of," Dec. 8). "You can't just sit around and say, 'Bear Stearns and AIG are great companies, and I'm a long-term investor.' "
FUSIONIQ'S MODELS blend fundamental and technical metrics to determine the strength of some 8,000 publicly traded equities. They identify the most tradable issues and sectors with the lowest component of risk. FusionIQ also finds issues with unusual short-term strength or weakness, issuing Buy and Sell signals accordingly. In general, FusionIQ recommends subscribers hold a rolling portfolio of 15 to 20 issues for the intermediate term.
Beyond that, it identifies trading opportunities. FusionIQ models pinpoint highly ranked issues whose prices suddenly gap up 5% or more on high volume (and other conditions). They also issue alerts when analysts with good track records offer earnings forecasts outside peer estimates, and when short squeezes are in the offing -- that is, when a highly shorted issue exhibits enough relative strength to force short sellers to cover their positions and boost the price further.
"We don't care why stocks move," says Ritholtz, "We just rely on our objective models to alert us to the opportunities."
posted by Peter Greene
Thursday, December 18, 2008
morning comments
The S&P 500 flirted with the 920 (close to the 925 bullish close we spoke about yesterday) and then faded closing down small on the day. Another backing and filling nightmare.
News overnight and this morning...GM and Chrysler reopen merger talks after Chrysler idles factories for at least a month. FDX just met lowered earning and is cutting CEO salary as well as a hiring freeze; stock jumped $2 on that. We still have FDX ranked a very poor 15 technical in our Fusion IQ rankings...any trade into the name would require a tight stop.
New chart focus on IQ today, and trading idea VRX
posted by Peter Greene
Wednesday, December 17, 2008
close, but no cigar yet
S&P got close to that 925 we spoke about this morning...then the sell off...
programs anyone?
posted by Peter Greene
Morning comments
Good morning: Daily CommentsFed and company on Tuesday showed they would throw every last weapon at the recession, maybe the shoes are next. As we stated in our S&P Review piece from December 4th (The Keep It Simple Stupid Post) the 30 day moving average had proven to be a major residence that we thought once taken out would mean a move to 900 on the S&P 500. On December 8th we got that move, and the sell off that came after reversed yesterday (finally, the first intraday moves looked almost like shock).
We continue to see a range bound market with our bias to continue to add small to positions on the long side on pull backs. A close above 925 on the S&P would be a bullish sign that we may test 985 or even 1000. Near term support is 876, and a close under 848 would signal a possible retest on the 800 S&P level.
As we stated over a week ago, the market’s ability to shake off the bad news of the unemployment numbers was a good sign, and now the Madoff swindle news seems to have been ingested. All this bad news and moving up or sideways is a base building. Just a lot of recycling of shares happening now...Hedge funds trading the dips and selling the “hot potato” at rallies.
posted by Peter Greene
We continue to see a range bound market with our bias to continue to add small to positions on the long side on pull backs. A close above 925 on the S&P would be a bullish sign that we may test 985 or even 1000. Near term support is 876, and a close under 848 would signal a possible retest on the 800 S&P level.
As we stated over a week ago, the market’s ability to shake off the bad news of the unemployment numbers was a good sign, and now the Madoff swindle news seems to have been ingested. All this bad news and moving up or sideways is a base building. Just a lot of recycling of shares happening now...Hedge funds trading the dips and selling the “hot potato” at rallies.
posted by Peter Greene
Tuesday, December 9, 2008
Monday, December 8, 2008
Fusion in Barron's
Good Monday morning:
In case you are like a lot of people this weekend getting your Christmas tree or actually shovelling the snow we got, you may have missed this weekend’s Barron’s. Our own Barry Ritholtz was the featured interview of the week.
Here is the link: http://online.barrons.com/article/SB122852213723784245.html?mod=b_hpp_9_0002_b_this_weeks_magazine_home_right
Also the article is below.
SATURDAY, DECEMBER 6, 2008
INTERVIEW
A Leading Bear Turns Bullish, Sort of
Barry Ritholtz, CEO and Director of Equity Research, FusionIQ
By ROBIN GOLDWYN BLUMENTHAL
AN INTERVIEW WITH BARRY RITHOLTZ: Getting ready for a "significant" rally.
FOR THE PAST FIVE YEARS, BARRY RITHOLTZ HAS BEEN entertaining, educating and elucidating readers of his blog, The Big Picture (http://bigpicture.typepad.com/). Among the noteworthy calls that the savvy lawyer and sometime-trader has made: identifying a credit bubble a few years ago, and a recommendation to short AIG back in February, when the share price was flirting with $80; it's now about $1.80.
Chris Casaburi for Barron's
"There's upside here for a trade. Over the past 100 years, we've only seen the relative strength of the S&P 500 drop to this level five times…Each time, it has been a major buying opportunity, although not necessarily a major bottom." –Barry Rithotlz
Lately, the 47-year-old Ritholtz, with his business partner, Kevin Lane, has had a chance to put some of those ideas to work at FusionIQ, a firm that manages nearly $100 million in separate accounts. Amid the wholesale destruction on Wall Street, Fusion has produced single-digit gains on its long-short portfolios, and has kept the average losses on its long-only accounts to single digits. Ritholtz, whose book Bailout Nation is due early next year from McGraw-Hill, can be trusted to call 'em as he sees 'em. To find out what the contrarian is now warming up to, read on.
Barron's: What's your global outlook?
Ritholtz: In 2006, I was probably the most bearish guy on the Street; now at a table of industry people, I'm the bullish guy. We've cut this market in half; that doesn't mean it can't go lower. We're in a medium recession. If this turns into a deeper, more prolonged recession, all bets are off.
Are we are testing a real low here?
There's no doubt we're looking at an extremely oversold market. But by the end of the week, that oversold condition could be worked off. There's upside here for a trade. Over the past 100 years, we've only seen the relative strength of the S&P 500 drop to this level five times, and each time, it has been a major buying opportunity, although not necessarily a major bottom. If you look at 1929, it was a low but it wasn't the low, and there was a bounce. It was the same thing after Sept. 11 -- from Sept. 21, you had a 40% bounce in the Nasdaq before you went down to make all-time lows.
Will the market drift?
It's flapping up and down. There is a significant rally, 20% or 30%, waiting to happen. But there's also the possibility of a lower low, as we get deeper into the recession, if things take a terrible turn for the worse.
Whenever you're fragile, you don't have the ability to absorb that next blow. My fear is that some economic issue arises and you don't have the resiliency to deal with it. We're economically stretched very, very thin. Things seem to be getting healthier at an ungodly cost, one which we will be dealing with the unintended consequences of for decades. We're really at the fork in the road. Everybody on Wall Street is wondering if we're going to see a year-end rally of any substance, or, if we're heading down to 7100 on the Dow, or 850 on the Nasdaq. [On Friday, those indexes were at about 8200 and about 1430, respectively.]
What say you?
We're waiting for a couple more things to line up: Some clarity on earnings, which we won't have for a while, some sort of resolution on these bailouts, and some sign from the new administration that, unlike the outgoing group, we have a plan -- "Here's what we're going to do about credit, banks, the economy, GM." We wouldn't be surprised to see earnings seriously damaged.
Wall Street is still way too high. They started out the year at earnings of $103 a share on the S&P 500 for 2008, which got them to 1600 on the index. We came in at $65 a share, and that may have been too bullish. The good news is that most of corporate America outside of the financial sector has healthy balance sheets, lots of cash, and is running very lean.
Except for the auto industry.
The auto industry is a whole other story. The auto industry is a story of terrible management, misguided unions, and government intervention.
What's your impression of the bank bailout?
[Treasury Secretary] Hank Paulson is really the imperfect messenger for this bailout. Remember that Paulson is one of the five executives who went to the SEC in 2004 to beg, 'Please, let us lever up more. Please let us go to [a leverage ratio of] 30 or 40.' It is bad enough that he helped create the crisis. It appears that this whole response is completely ad hoc.
Do you see any guiding principle?
It is, how do you give money to banks who need capital and not say, 'By the way, you're cutting your dividend.' What's happening instead is they're saying, 'Here is money: Give it out as dividends and bonuses.' It is unbelievable. There is no clawback. It is unconscionable.
So, what does it take to invest in this kind of world? How do you stay out of trouble?
We have a number of internal rules. The most important is that we always have a stop-loss. When the trade is working out, we use trailing stop-loss, meaning that the higher the stock goes, the higher the stop-loss. When the market starts heading south, we get taken out. We screen for short squeezes, and we've found that they're very often present at the beginning of a major move up.
We back-tested [price/earnings ratios] and found they have no forecasting ability. Whenever people do an analysis of a stock, the tendency is to create a snapshot at a given moment. We try to build a moving picture of a stock. For instance, if you know you're in an all-time peak in home sales, and the Fed is in a tightening regime, why own a stock in a homebuilder?
The builders have been pretty beaten down, though.
I've been the biggest bear on housing on the Street for four years now. Housing is halfway through. We're not even close to the bottom in housing. The stocks were always cheap, so it's not a valuation question.
Given the uncertainty in the market at large, what appeals to you right now?
We've been trading the two-to-one leveraged [exchange-traded funds].
One is the Ultra S&P ProShares [ticker: SSO] -- for every dollar the Standard & Poor's 500 moves, it moves two dollars. And there's also Ultra Triple Q ProShares [QLD], the Nasdaq 100-version of the SSO. The flip of the QLDs are the QIDs, which are the negative two-for-ones on the Nasdaq. We're starting to look at that. We are now running about 70% cash, which is inordinately high, but some of the names we're watching, and have owned in the past, are NuVasive [NUVA], a medical-device company, Stanley Works [SWK], a great infrastructure story, LG Display [LPL] and Luminex [LMNX]. Industries we like are infrastructure, defense, biotech and medical devices.
Why ETFs?
We're normally bottom-up stockpickers. But when we're looking at all these individual stocks and war-game them, we end up saying there's this risk and that risk. Here's an example: JPMorgan [JPM] is probably the best house in a bad neighborhood. It had a nice run, then it pulled back; do we want to own JP Morgan? What's the risk? They've already acquired Bear Stearns. They have to be looking at Goldman Sachs [GS]. They have to be looking at putting the house of Morgan back together. If that happens, what happens to the stock price of JPMorgan? You could lose 15%, 20% overnight. Every time we look at individual stocks, we end up with that analysis.
We spent a lot of the year running a good chunk of cash. Some of that is discipline; a lot of that is staying away from things that are really trouble. The trade that caused so much trouble for people -- long financials -- we're at the point where some of the financials are starting to look attractive.
Would you give us a name?
Citigroup [C] at $5. The interesting thing about Citigroup is that if there's anything that's legitimately too big to fail, Citigroup is it. If you think the consumer and retail sector are having a hard time, imagine if Citigroup were allowed to go belly-up. People would hunker down in their homes and stop buying all but the necessities.
I didn't really buy that Bear Stearns was too big to fail, although there was the argument that they could take JPMorgan down. Citibank is one of those things that cannot be allowed to go belly-up. It's enormous. It's the equivalent of AIG.
What else do you like?
We like infrastructure, plays like Stanley Works, and we expect there will be some stimulus to build ports, bridges, and expand the electrical grid. Defense is another sector we like, though it's less so of the Boeing s [BA] and more of the specialty-defense names, like AeroVironment [AVAV], which makes small, pilotless drones.
There's a list of interesting biotech and medical-devices companies, which are insulated from the economic cycle. We just bought Cubist Pharmaceuticals [CBST], which addresses the anti-infective market. In the same way the Internet bubble gave rise to Web 2.0, Facebook and blogs, the Genentechs of the world and all the developments that took place throughout the 1990s have led to the current new wave of specialized therapeutics. Over the next 10 years, we're going to see a universe of breakthroughs based on the previous 20 years' work. The first order of business on Jan. 20 [presidential-inauguration day] is allowing stem-cell research, and that's going to lead to a number of significant breakthroughs. Medical devices and gene therapies are ripe areas. The problem is, they're very volatile and very speculative, and not necessarily safe for the ordinary household.
What stocks are you shorting?
We've been short Jefferies & Co. [JEF] for a while. They're similar to the various asset gatherers: In this environment, it becomes very challenging to hold on to key people. The best guess is, they're suffering along with the rest of the sector, only they don't have the strength or the size to do things that a Goldman Sachs or a Morgan Stanley or Wachovia can.
Table: Ritholtz's Picks
What about gold?
Gold is really quite interesting here, as are the gold miners. We own no gold now, and we own no gold mines, but we are watching them. The question is, at what point does this deflationary cycle roll over to the point where things start to get better?
We were among the loudest inflation hawks for the past few years. When oil was $147 a barrel the joke was, which was going to hit $6 a gallon first, premium gasoline or skim milk?
In March, we said we are through the worst part of the inflation cycle and now we should see deflation as the economy starts to roll over. And that is pretty much playing out. The bugaboo with all that is you just had the Fed triple its balance sheet. The Bernanke printing presses are running full speed. That ultimately has to hurt the U.S. dollar; it ultimately has to be inflationary.
Has gold bottomed?
I don't know where gold bottoms. We recommended gold for the first time in 2002 or 2003. It was strictly an inflation trade, thanks to Greenspan. And then when the GLD gold ETF first came out, we recommended that. Gold has a date with $1,500 somewhere in the future [up from $763 an ounce now], but whether it makes that move from 700 or from 400, I have no idea. You just can't print that much paper and debase the currency and not see some sort of reaction.
Anything else look interesting?
We always tell people when things are really good you have to make emergency plans. You know, the time to read that card on the seatback in front of you is not when the plane is heading down. When things are really awful like they are now, that's when you start making your wish list. I have never owned Berkshire Hathaway [BRK], but if it was cheap enough I'd buy it.
A level, please?
$85,000 to $95,000 [versus $98,000 recently].
Where else might you be deploying some of that cash?
One client said to me, "I'm tired of hearing bad news. I don't care what it is, what can you tell me that is good?" I told him to make a list of things he's wanted to own, but has been afraid to buy or unable to because of the cost. I don't care if it is art, trophy properties, vacation homes, collectible automobiles or boats. Figure out what you are willing to pay, and I can all but guarantee you that by the time we are done with this deflationary cycle, many of those objects will be available at your price. I wouldn't be surprised if, when everything is said and done, a lot of these things are off by 50% or worse.
Thanks, Barry.
E-mail comments to mail@barrons.com
posted by Peter Greene
In case you are like a lot of people this weekend getting your Christmas tree or actually shovelling the snow we got, you may have missed this weekend’s Barron’s. Our own Barry Ritholtz was the featured interview of the week.
Here is the link: http://online.barrons.com/article/SB122852213723784245.html?mod=b_hpp_9_0002_b_this_weeks_magazine_home_right
Also the article is below.
SATURDAY, DECEMBER 6, 2008
INTERVIEW
A Leading Bear Turns Bullish, Sort of
Barry Ritholtz, CEO and Director of Equity Research, FusionIQ
By ROBIN GOLDWYN BLUMENTHAL
AN INTERVIEW WITH BARRY RITHOLTZ: Getting ready for a "significant" rally.
FOR THE PAST FIVE YEARS, BARRY RITHOLTZ HAS BEEN entertaining, educating and elucidating readers of his blog, The Big Picture (http://bigpicture.typepad.com/). Among the noteworthy calls that the savvy lawyer and sometime-trader has made: identifying a credit bubble a few years ago, and a recommendation to short AIG back in February, when the share price was flirting with $80; it's now about $1.80.
Chris Casaburi for Barron's
"There's upside here for a trade. Over the past 100 years, we've only seen the relative strength of the S&P 500 drop to this level five times…Each time, it has been a major buying opportunity, although not necessarily a major bottom." –Barry Rithotlz
Lately, the 47-year-old Ritholtz, with his business partner, Kevin Lane, has had a chance to put some of those ideas to work at FusionIQ, a firm that manages nearly $100 million in separate accounts. Amid the wholesale destruction on Wall Street, Fusion has produced single-digit gains on its long-short portfolios, and has kept the average losses on its long-only accounts to single digits. Ritholtz, whose book Bailout Nation is due early next year from McGraw-Hill, can be trusted to call 'em as he sees 'em. To find out what the contrarian is now warming up to, read on.
Barron's: What's your global outlook?
Ritholtz: In 2006, I was probably the most bearish guy on the Street; now at a table of industry people, I'm the bullish guy. We've cut this market in half; that doesn't mean it can't go lower. We're in a medium recession. If this turns into a deeper, more prolonged recession, all bets are off.
Are we are testing a real low here?
There's no doubt we're looking at an extremely oversold market. But by the end of the week, that oversold condition could be worked off. There's upside here for a trade. Over the past 100 years, we've only seen the relative strength of the S&P 500 drop to this level five times, and each time, it has been a major buying opportunity, although not necessarily a major bottom. If you look at 1929, it was a low but it wasn't the low, and there was a bounce. It was the same thing after Sept. 11 -- from Sept. 21, you had a 40% bounce in the Nasdaq before you went down to make all-time lows.
Will the market drift?
It's flapping up and down. There is a significant rally, 20% or 30%, waiting to happen. But there's also the possibility of a lower low, as we get deeper into the recession, if things take a terrible turn for the worse.
Whenever you're fragile, you don't have the ability to absorb that next blow. My fear is that some economic issue arises and you don't have the resiliency to deal with it. We're economically stretched very, very thin. Things seem to be getting healthier at an ungodly cost, one which we will be dealing with the unintended consequences of for decades. We're really at the fork in the road. Everybody on Wall Street is wondering if we're going to see a year-end rally of any substance, or, if we're heading down to 7100 on the Dow, or 850 on the Nasdaq. [On Friday, those indexes were at about 8200 and about 1430, respectively.]
What say you?
We're waiting for a couple more things to line up: Some clarity on earnings, which we won't have for a while, some sort of resolution on these bailouts, and some sign from the new administration that, unlike the outgoing group, we have a plan -- "Here's what we're going to do about credit, banks, the economy, GM." We wouldn't be surprised to see earnings seriously damaged.
Wall Street is still way too high. They started out the year at earnings of $103 a share on the S&P 500 for 2008, which got them to 1600 on the index. We came in at $65 a share, and that may have been too bullish. The good news is that most of corporate America outside of the financial sector has healthy balance sheets, lots of cash, and is running very lean.
Except for the auto industry.
The auto industry is a whole other story. The auto industry is a story of terrible management, misguided unions, and government intervention.
What's your impression of the bank bailout?
[Treasury Secretary] Hank Paulson is really the imperfect messenger for this bailout. Remember that Paulson is one of the five executives who went to the SEC in 2004 to beg, 'Please, let us lever up more. Please let us go to [a leverage ratio of] 30 or 40.' It is bad enough that he helped create the crisis. It appears that this whole response is completely ad hoc.
Do you see any guiding principle?
It is, how do you give money to banks who need capital and not say, 'By the way, you're cutting your dividend.' What's happening instead is they're saying, 'Here is money: Give it out as dividends and bonuses.' It is unbelievable. There is no clawback. It is unconscionable.
So, what does it take to invest in this kind of world? How do you stay out of trouble?
We have a number of internal rules. The most important is that we always have a stop-loss. When the trade is working out, we use trailing stop-loss, meaning that the higher the stock goes, the higher the stop-loss. When the market starts heading south, we get taken out. We screen for short squeezes, and we've found that they're very often present at the beginning of a major move up.
We back-tested [price/earnings ratios] and found they have no forecasting ability. Whenever people do an analysis of a stock, the tendency is to create a snapshot at a given moment. We try to build a moving picture of a stock. For instance, if you know you're in an all-time peak in home sales, and the Fed is in a tightening regime, why own a stock in a homebuilder?
The builders have been pretty beaten down, though.
I've been the biggest bear on housing on the Street for four years now. Housing is halfway through. We're not even close to the bottom in housing. The stocks were always cheap, so it's not a valuation question.
Given the uncertainty in the market at large, what appeals to you right now?
We've been trading the two-to-one leveraged [exchange-traded funds].
One is the Ultra S&P ProShares [ticker: SSO] -- for every dollar the Standard & Poor's 500 moves, it moves two dollars. And there's also Ultra Triple Q ProShares [QLD], the Nasdaq 100-version of the SSO. The flip of the QLDs are the QIDs, which are the negative two-for-ones on the Nasdaq. We're starting to look at that. We are now running about 70% cash, which is inordinately high, but some of the names we're watching, and have owned in the past, are NuVasive [NUVA], a medical-device company, Stanley Works [SWK], a great infrastructure story, LG Display [LPL] and Luminex [LMNX]. Industries we like are infrastructure, defense, biotech and medical devices.
Why ETFs?
We're normally bottom-up stockpickers. But when we're looking at all these individual stocks and war-game them, we end up saying there's this risk and that risk. Here's an example: JPMorgan [JPM] is probably the best house in a bad neighborhood. It had a nice run, then it pulled back; do we want to own JP Morgan? What's the risk? They've already acquired Bear Stearns. They have to be looking at Goldman Sachs [GS]. They have to be looking at putting the house of Morgan back together. If that happens, what happens to the stock price of JPMorgan? You could lose 15%, 20% overnight. Every time we look at individual stocks, we end up with that analysis.
We spent a lot of the year running a good chunk of cash. Some of that is discipline; a lot of that is staying away from things that are really trouble. The trade that caused so much trouble for people -- long financials -- we're at the point where some of the financials are starting to look attractive.
Would you give us a name?
Citigroup [C] at $5. The interesting thing about Citigroup is that if there's anything that's legitimately too big to fail, Citigroup is it. If you think the consumer and retail sector are having a hard time, imagine if Citigroup were allowed to go belly-up. People would hunker down in their homes and stop buying all but the necessities.
I didn't really buy that Bear Stearns was too big to fail, although there was the argument that they could take JPMorgan down. Citibank is one of those things that cannot be allowed to go belly-up. It's enormous. It's the equivalent of AIG.
What else do you like?
We like infrastructure, plays like Stanley Works, and we expect there will be some stimulus to build ports, bridges, and expand the electrical grid. Defense is another sector we like, though it's less so of the Boeing s [BA] and more of the specialty-defense names, like AeroVironment [AVAV], which makes small, pilotless drones.
There's a list of interesting biotech and medical-devices companies, which are insulated from the economic cycle. We just bought Cubist Pharmaceuticals [CBST], which addresses the anti-infective market. In the same way the Internet bubble gave rise to Web 2.0, Facebook and blogs, the Genentechs of the world and all the developments that took place throughout the 1990s have led to the current new wave of specialized therapeutics. Over the next 10 years, we're going to see a universe of breakthroughs based on the previous 20 years' work. The first order of business on Jan. 20 [presidential-inauguration day] is allowing stem-cell research, and that's going to lead to a number of significant breakthroughs. Medical devices and gene therapies are ripe areas. The problem is, they're very volatile and very speculative, and not necessarily safe for the ordinary household.
What stocks are you shorting?
We've been short Jefferies & Co. [JEF] for a while. They're similar to the various asset gatherers: In this environment, it becomes very challenging to hold on to key people. The best guess is, they're suffering along with the rest of the sector, only they don't have the strength or the size to do things that a Goldman Sachs or a Morgan Stanley or Wachovia can.
Table: Ritholtz's Picks
What about gold?
Gold is really quite interesting here, as are the gold miners. We own no gold now, and we own no gold mines, but we are watching them. The question is, at what point does this deflationary cycle roll over to the point where things start to get better?
We were among the loudest inflation hawks for the past few years. When oil was $147 a barrel the joke was, which was going to hit $6 a gallon first, premium gasoline or skim milk?
In March, we said we are through the worst part of the inflation cycle and now we should see deflation as the economy starts to roll over. And that is pretty much playing out. The bugaboo with all that is you just had the Fed triple its balance sheet. The Bernanke printing presses are running full speed. That ultimately has to hurt the U.S. dollar; it ultimately has to be inflationary.
Has gold bottomed?
I don't know where gold bottoms. We recommended gold for the first time in 2002 or 2003. It was strictly an inflation trade, thanks to Greenspan. And then when the GLD gold ETF first came out, we recommended that. Gold has a date with $1,500 somewhere in the future [up from $763 an ounce now], but whether it makes that move from 700 or from 400, I have no idea. You just can't print that much paper and debase the currency and not see some sort of reaction.
Anything else look interesting?
We always tell people when things are really good you have to make emergency plans. You know, the time to read that card on the seatback in front of you is not when the plane is heading down. When things are really awful like they are now, that's when you start making your wish list. I have never owned Berkshire Hathaway [BRK], but if it was cheap enough I'd buy it.
A level, please?
$85,000 to $95,000 [versus $98,000 recently].
Where else might you be deploying some of that cash?
One client said to me, "I'm tired of hearing bad news. I don't care what it is, what can you tell me that is good?" I told him to make a list of things he's wanted to own, but has been afraid to buy or unable to because of the cost. I don't care if it is art, trophy properties, vacation homes, collectible automobiles or boats. Figure out what you are willing to pay, and I can all but guarantee you that by the time we are done with this deflationary cycle, many of those objects will be available at your price. I wouldn't be surprised if, when everything is said and done, a lot of these things are off by 50% or worse.
Thanks, Barry.
E-mail comments to mail@barrons.com
posted by Peter Greene
Friday, December 5, 2008
FusionIQ Morning Market Comments (12-05-08) ... Another Stellar Day ...
Yesterday remained another stellar day according to the tape (not the sarcasm !) as the NYSE scored 2:8 decliners for every one advancer and declining volume bested advancing volume by a rate of 3.59 to 1. The NASDAQ fared no better with 2.37 decliners for every advancer while down volume bested up volume by an alarming 6:17 to 1 ratio. This clearly paints a picture that distribution is still the dominant theme and there is still supply in the market place until we can see these ratios reverse course consistently with advancers trouncing decliners and up volume trouncing down volume we are likely to see another retest and possibly a new low. Like we said the other day anecdotal stories of investors burying their heads in the sand by hiding statements in their draws and refusing to look at the carnage is not the type of sentiment one sees at ultimate lows. Real lows are formed even after substantial declines investors are still calling for the end of the world (not looking for the silver lining).
We are starting to believe this drop is still the concern stage but not yet the capitulation. During major corrections investors go through three phases in this order; Denial, Concern and Capitulation. The Denial phase is the first leg down and investors brush it off because the previous bull run had been so good to them and also saw corrective phases along the way. The Concern phase is when the correction goes much deeper than the investor originally thought and has now cause grave concern. However that grave concern still searches for hope of a comeback. Intermittent rallies along the way sometimes alleviate the concern momentarily. However after the many minor rallies continue to fade (even after a very deep correction from the peak) one last sell-off drains the last hope out of anyone clinging to the log of hope. It is this last sell down that brings in the capitulatory action and that my friends sets the low. While I am an optimist by nature I do need to read the tea leaves and anecdotal sentiment evidence objectively and at this point complacency still seems to be the general theme.
THE MARKET WILL TELL YOU WHEN IT HAS BOTTOMED IF YOU LISTEN: THERE WILL BE FEAR IN EVERYONE'S VOICES AND IRRATIONAL BEHAVIOR IN THEIR ACTIONS AND THROUGH ALL THE BAD HEADLINE NEWS THE MARKET WILL BREAK BUT WILL SNAP BACK WITH A VENGEANCE. THIS HAS NOT YET HAPPENED. THE RALLIES FAIL BECAUSE THEY ARE MET WITH TEPID BUYING AND SHORT COVERING, HOWEVER AT SOME POINT THE REAL BUYERS (SUSTAINABLE BUYING) WILL STEP IN AND IT WILL BE OBVIOUS.
posted by Peter Greene
We are starting to believe this drop is still the concern stage but not yet the capitulation. During major corrections investors go through three phases in this order; Denial, Concern and Capitulation. The Denial phase is the first leg down and investors brush it off because the previous bull run had been so good to them and also saw corrective phases along the way. The Concern phase is when the correction goes much deeper than the investor originally thought and has now cause grave concern. However that grave concern still searches for hope of a comeback. Intermittent rallies along the way sometimes alleviate the concern momentarily. However after the many minor rallies continue to fade (even after a very deep correction from the peak) one last sell-off drains the last hope out of anyone clinging to the log of hope. It is this last sell down that brings in the capitulatory action and that my friends sets the low. While I am an optimist by nature I do need to read the tea leaves and anecdotal sentiment evidence objectively and at this point complacency still seems to be the general theme.
THE MARKET WILL TELL YOU WHEN IT HAS BOTTOMED IF YOU LISTEN: THERE WILL BE FEAR IN EVERYONE'S VOICES AND IRRATIONAL BEHAVIOR IN THEIR ACTIONS AND THROUGH ALL THE BAD HEADLINE NEWS THE MARKET WILL BREAK BUT WILL SNAP BACK WITH A VENGEANCE. THIS HAS NOT YET HAPPENED. THE RALLIES FAIL BECAUSE THEY ARE MET WITH TEPID BUYING AND SHORT COVERING, HOWEVER AT SOME POINT THE REAL BUYERS (SUSTAINABLE BUYING) WILL STEP IN AND IT WILL BE OBVIOUS.
posted by Peter Greene
The government says employers axed 533,000 jobs in November, the most in 34 years, and the unemployment rate rose to 6.7 percent. It was dramatic proof the country is careening ever deeper into recession. The Labor Department's report shows the crucial employment market deteriorating at an alarmingly rapid clip, and handed Americans some more grim news right before the holidays (Remember: this is WITH U.S. automakers currently at some positive level of employment)
posted by Peter Greene
posted by Peter Greene
Thursday, December 4, 2008
Fusion S&P Review
Sometimes in life and the markets the KISS method (Keep It Simple Stupid) works the best. In an era of
high tech math, computational algorithms and new data streams sometimes something simple works
the most effective. That said as seen above the S&P 500 has been and continues to trend lower below
its’ down sloping 30-day moving average (red line and blue arrows). This average (for whatever reason)
has provided short-term resistance like clockwork since the decline began back in August and once
again repelled the most recent rally off the lows on Monday. However this is the shallowest pullback from
the 30-day moving average resistance and the quickest subsequent attempt to move back above it (after a decline)
since this all began. That said we will be watching trading activity closely the next couple days. We would view it
technically significant from a near-term (trading) perspective if this index could finally move back above its’ 30-day
moving average (and the 900 level on the S&P) as it would suggest a tradable rally (from the long side) may ensue.
From Kevin Lane, Chief Market Technician
posted by Peter Greene
Fusion Morning Market Comments - December 4th 2008
The up to down volume ratios on both the NASDAQ and the NYSE yesterday were both modestly impressive registering ratios of 4.4 to 1 and 3.6 to 1 respectively , however the accompanying ratios of advancers to decliners was not so impressive at 1.59 to 1 and 1.97 to 1.
Because not more stocks participated in the rally today's bump was more likely continued short-covering. To get a more sustainable, long lasting move up we need to see a show of force on the part of institutions (collectively still the largest players in the marketplace). The way you observe this is to see heavy volume and additionally to see both the up to down volume ratios and the advance to decline ratio BOTH register aggressive days simultaneously. These kind of readings would suggest institutions are stampeding back into the market with real buying power.
Again until we see this happen there may be violent rallies to makes some opportunistic trades, however don't expect a steady durable move up.
by Peter Greene
Because not more stocks participated in the rally today's bump was more likely continued short-covering. To get a more sustainable, long lasting move up we need to see a show of force on the part of institutions (collectively still the largest players in the marketplace). The way you observe this is to see heavy volume and additionally to see both the up to down volume ratios and the advance to decline ratio BOTH register aggressive days simultaneously. These kind of readings would suggest institutions are stampeding back into the market with real buying power.
Again until we see this happen there may be violent rallies to makes some opportunistic trades, however don't expect a steady durable move up.
by Peter Greene
Wednesday, December 3, 2008
Market Bottom
We are at or near the bottom..A bike messenger at the elevator just told me to "stay out of the stock market 'cuse you'll lose all your money."
This is the exact opposite of the 1999/2000 Internet bubble top when everyone I met had stock tips. Some of the best from the shoe shine guy.
Of course my barber was an expert in currency arb. Changing his US dollars for Mexican Peso's then getting the higher rates in the Mexican banks....Worked out because he retired in Mexico and didn't need to bring the trade back (it would have been a net loss).
by Peter Greene
This is the exact opposite of the 1999/2000 Internet bubble top when everyone I met had stock tips. Some of the best from the shoe shine guy.
Of course my barber was an expert in currency arb. Changing his US dollars for Mexican Peso's then getting the higher rates in the Mexican banks....Worked out because he retired in Mexico and didn't need to bring the trade back (it would have been a net loss).
by Peter Greene
Morning Comments
Yesterday's market activity continued to look more like a bounce and short covering after the previous days near 700 point sell-off. When investors keep looking for a lasting low they typically don't materialize. Market bottoms form when even after a significant decline investors are continue calling for Armageddon. At the 2002 lows I distinctly remember even at the lows investors where calling for another 20% not saying we are down x percent therefore we have to rally.
This time around anecdotal sentiment seems to be more complacent as investors mantra is we are down 45 %. Additionally we see continue to more activity in the new 3 to 1 leveraged long financial ETF as opposed to the 3 to 1 leveraged short financial ELF vehicle. I have also recently heard of stories from financial planners that their customers are not looking at their statements. Again at lows statements by investors typically sound more like, " I am getting out of stocks before they go to zero" or " I am not investing in stocks anymore they are too risky." At this point we don't hear those statements which suggest to us the market needs to get more scary for investors. So this happens or the skew of up to down volume and advancers to decliners are more positively skewed (such as 5:1 or greater ratios on the same day for both metrics) the bounces are to be viewed as fleeting and not durable.
Posted by Peter Greene
This time around anecdotal sentiment seems to be more complacent as investors mantra is we are down 45 %. Additionally we see continue to more activity in the new 3 to 1 leveraged long financial ETF as opposed to the 3 to 1 leveraged short financial ELF vehicle. I have also recently heard of stories from financial planners that their customers are not looking at their statements. Again at lows statements by investors typically sound more like, " I am getting out of stocks before they go to zero" or " I am not investing in stocks anymore they are too risky." At this point we don't hear those statements which suggest to us the market needs to get more scary for investors. So this happens or the skew of up to down volume and advancers to decliners are more positively skewed (such as 5:1 or greater ratios on the same day for both metrics) the bounces are to be viewed as fleeting and not durable.
Posted by Peter Greene
Bail-out application
Thanks to Barry (big picture blog link on the right) for posting this first...too funny!!
Click for a larger image
Original source:
Bruce FeirsteinVanity Fair, December 1, 2008, 9:47 amhttp://www.vanityfair.com/online/politics/2008/12/bailout-application-leaked.html
by Peter Greene
Click for a larger image
Original source:
Bruce FeirsteinVanity Fair, December 1, 2008, 9:47 amhttp://www.vanityfair.com/online/politics/2008/12/bailout-application-leaked.html
by Peter Greene
Tuesday, December 2, 2008
Can Detroit be saved?
by Peter Greene
So the story is that the leaders of Ford, General Motors and Chrysler are kicking it old school. Road trip cross-country.
Can you imagine the great tunes these knuckleheads are listening too?
Anyway, can the US Auto industry be saved? Yes, however they may be owned by the Japanese. Toyota, et al are doing pretty well making cars in the US, their workers are well paid, happy and making car/trucks that Americans want to buy.
I know that this story is not what the "big 3" (laughable) want you hear. They want to invoke flag, country, apple pie, blah, blah, blah.
The true story is that the companies are run worse than a 3rd grader's lemonade stand. When you run your company into the ground, it failed. If you opened a restaurant made bad food would you expect the government to give you a payout to keep making bad food? NO !!! People need cars and trucks, this country, save this world, did not wake up and all decide to start riding bikes or traveling by horseback again.
If that restaurant failed, and people still wanted to eat out in that area a new place(s) would open up. That is what has and will happen to the auto industry. MAYBE, after GM goes chapter 11 and reorganizes with better management (including merging with Chrysler) it can become a good car maker again...Ford may not be savable at all !
That's my rant for this morning...GM, F and Chrysler executives get off the road and get to the courthouse to file those Chapter 11 papers, TODAY!
GE yield 8%
I guess if a stock goes low enough the yield must improve....
Today GE said their earnings will be at the low end of guidance, however they are keeping the dividend in place (for now)...If GE goes to the Uncle Sam well expect that nice yield to go away...
Today GE said their earnings will be at the low end of guidance, however they are keeping the dividend in place (for now)...If GE goes to the Uncle Sam well expect that nice yield to go away...
Monday, December 1, 2008
Officially a RECESSION
The worst kept secret in the country we are officially in a recession per NBER...
Started Dec 2007
The committee identified December 2007 as the peak month, after determining that the
subsequent decline in economic activity was large enough to qualify as a recession.
http://www.nber.org/cycles/dec2008.pdf
Started Dec 2007
The committee identified December 2007 as the peak month, after determining that the
subsequent decline in economic activity was large enough to qualify as a recession.
http://www.nber.org/cycles/dec2008.pdf
Rumors from Big money
I saw this via bloomberg, it is a post on the Microsoft/Yahoo rumours from this weekend...
More Microhoo Rumors
By chris.thompson
Created 12/01/2008 - 10:47am
Feeling Lucky [1]
The Sunday Times of London [2] writes that Microsoft [3] is floating a new plan to manage and possibly buy Yahoo's [4] search function, handing the company a wad of cash and freeing it to focus on e-mail and Internet content. John Waples claims that Microsoft will offer a $5 billion loan to former AOL CEO Jonathan Miller and former Fox Interactive Media president Ross Levinsohn, who will find another $5 billion from other investors and buy 30 percent of Yahoo, plus the right to appoint three of the company's eleven directors. Under the deal, Microsoft will run Yahoo's search business for ten years, with a two-year option to buy it outright for $20 billion. Yahoo, which has seen its stock plummet to less than $10 a share this year, would receive an annual $2 billion in revenue from the deal.
Sounds great, right? But note the absence of any named source in the story, a longtime symptom of Britain's Sunday papers. Longtime tech journo Kara Swisher [5] called Levinsohn about the story, and Levinsohn dubbed it a "total fiction." Swisher also notes that Yahoo's present market cap is considerably less than the $20 billion Microsoft will supposedly offer for its search function, although this wouldn't be the first time someone broke the bank to buy a rival. Finally, Swisher writes that investor Carl Icahn, who as a Yahoo director would surely know if any such deal were in the works, recently bought a big new chunk of Yahoo stock. Icahn, Swisher claims, is smart enough to know such a move would immediately scream "insider trading" and land him in a heap of trouble.
Still, most analysts think some sort of Microhoo search arrangement is inevitable, and the search market will emerge as a duopoly if Google [6] is to be stopped at all. Currently, Yahoo and Microsoft together account for 29 percent of the total searches in the country, which would give them just enough muscle to compete with Google's 63.1 percent share. Individually, however, they've been helpless against Google's onslaught.
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Source URL: http://tbm.thebigmoney.com/blogs/feeling-lucky/2008/12/01/more-microhoo-rumors
More Microhoo Rumors
By chris.thompson
Created 12/01/2008 - 10:47am
Feeling Lucky [1]
The Sunday Times of London [2] writes that Microsoft [3] is floating a new plan to manage and possibly buy Yahoo's [4] search function, handing the company a wad of cash and freeing it to focus on e-mail and Internet content. John Waples claims that Microsoft will offer a $5 billion loan to former AOL CEO Jonathan Miller and former Fox Interactive Media president Ross Levinsohn, who will find another $5 billion from other investors and buy 30 percent of Yahoo, plus the right to appoint three of the company's eleven directors. Under the deal, Microsoft will run Yahoo's search business for ten years, with a two-year option to buy it outright for $20 billion. Yahoo, which has seen its stock plummet to less than $10 a share this year, would receive an annual $2 billion in revenue from the deal.
Sounds great, right? But note the absence of any named source in the story, a longtime symptom of Britain's Sunday papers. Longtime tech journo Kara Swisher [5] called Levinsohn about the story, and Levinsohn dubbed it a "total fiction." Swisher also notes that Yahoo's present market cap is considerably less than the $20 billion Microsoft will supposedly offer for its search function, although this wouldn't be the first time someone broke the bank to buy a rival. Finally, Swisher writes that investor Carl Icahn, who as a Yahoo director would surely know if any such deal were in the works, recently bought a big new chunk of Yahoo stock. Icahn, Swisher claims, is smart enough to know such a move would immediately scream "insider trading" and land him in a heap of trouble.
Still, most analysts think some sort of Microhoo search arrangement is inevitable, and the search market will emerge as a duopoly if Google [6] is to be stopped at all. Currently, Yahoo and Microsoft together account for 29 percent of the total searches in the country, which would give them just enough muscle to compete with Google's 63.1 percent share. Individually, however, they've been helpless against Google's onslaught.
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• Our Partners
User Agreement and Privacy Policy
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© 2008 Washington Post.Newsweek Interactive • All rights reserved.
Source URL: http://tbm.thebigmoney.com/blogs/feeling-lucky/2008/12/01/more-microhoo-rumors
Fusion mention in Business Week
Investing November 26, 2008, 5:00PM EST text size: TT
A Technical Analysis of the Recent Bear Market
There were some classic signposts, but also some head-fakes, along the way. The question is how to read the new signals
By Ben Levisohn
So much for fundamental research. The Standard & Poor's (MHP) 500-stock index is down 46% from the all-time high of 1576 it hit back in October 2007. At every step of its seemingly endless decline, investors have been told one thing: Based on the fundamentals, stocks are cheap. Yet shares continue to fall.
There's another way to analyze the market that can offer insight into such turbulent conditions. Technical analysts look at trends in stock prices and trading volume to discern whether investors are likely to continue selling or may be ready to reverse course and spark a rally. On Nov. 20, when the S&P 500 plummeted through its 2002 trough to close at an 11-year low of 752, they didn't like what they saw. Says analyst Todd Salamone of Schaeffer's Investment Research: "We've entered a black hole."
Despite warnings from investment gurus such as Burton Malkiel, author of A Random Walk Down Wall Street, against reading too much into technical analysis, academic studies have shown that it's not just mumbo-jumbo. Massachusetts Institute of Technology Professor Andrew Lo and two colleagues reviewed 31 years of market data in a March 2000 paper and concluded that patterns cited by technical analysts were useful in providing signals of future market moves.
The foundation of technical analysis starts with a chart of a stock's or a stock market's price. Analysts typically look at a bar chart, which simply shows a stock price's trading range for each day, or a candlestick chart, which shows where a stock opened, closed, and registered its daily high and low. They use the charts to determine whether a stock will become stuck in a trading range or break out of it to move significantly higher or lower. "Understanding the trend is the most important thing for successful investing," says Bart DiLiddo, chairman of investor software company VectorVest.
That's why such analysts, also called chartists, were alarmed on Nov. 20, when the S&P 500 dropped 54 points, the equivalent of over 500 points on the Dow Jones industrial average. It wasn't the size of the move—the S&P has dropped over 50 points 17 times this year. It was what the drop meant in the context of the charts.
A bit more background on technical patterns explains why analysts viewed Nov. 20's move with such concern. Technicians look for a level of "support," or a "bottom"—a price that a falling stock does not trade below. They also identify a level of "resistance," or a "top"—a price that rising shares won't trade above. And they look for recurrences of these levels. For instance, when a stock trades at a new 52-week high and then dips, analysts watch to see whether there are signs of further demand from investors to push the price higher—powering through the resistance—or whether the sellers will rule. If the sellers win, the market is said to have formed a "double top," a bearish signal. The reverse— a "double bottom"—is considered bullish when it holds. But on Nov. 20, a double bottom based on five years of data blew to pieces.
Most chartists layer a range of indicators over their charts. Some look at moving averages—the average price of a stock over a set number of days, recalculated each day by dropping the oldest day's price and adding the closing price from the most recent day. Others key in on divergences, behavior that doesn't fit the overall picture. Low volume in an upmarket, for instance, could indicate that the buyers are losing steam. Some technicians also perform fundamental research: They analyze a company's or stock market's earnings, revenues, and other business-related measures, and then use the technical factors to decide when to buy or sell.
It's a technique that helped many avoid the carnage of the last 12 months. What did they see that others didn't? The end of the bull market last year was a classic example of a double top. On July 13, 2007, the market peaked for the first time at 1,553 and started to fall before reversing itself in August. For the next two months, the market went up. But FusionIQ's Kevin Lane noticed that even as the overall market rose, prices of a majority of individual stocks were falling, a sign the rally was tapering off. The S&P closed at 1,565 on Oct. 9, 2007, an all-time high—though just barely. On Oct. 19, the S&P fell more than 60 points and the bear market began, according to technical analysts.
Like all investors, fans of technical analysis are seeking the bottom. Many thought the market had found one on Oct. 9, 2008. By then the S&P had fallen 75 points, completing a 22% drop that began on Oct. 1. For the next month the index bounced in a range, never trading much above 1,000 or below 820. While stuck in that band, the index had huge single-day moves of 5% or more.
As the market gyrated, chartists searched for signs that it was poised to head up or down. S&P technical analyst Mark Arbeter saw that 88% of New York Stock Exchange (NYX) securities had reached new 52-week lows on Oct. 10—a sign, perhaps, that the market was oversold. But he spotted a red flag. Each time the market dropped back, it would reverse and bounce a bit higher, but the bounces became smaller—a sign that selling pressure was starting to outweigh buyer interest.
On Nov. 19, the S&P 500 broke through the bottom at 820, closing at 792. Then the dam broke. The next day, the S&P 500 smashed through its next level of support—the October 2002 low—like "a knife cutting through butter," says Schaeffer Investment Research's Salamone. The best-case scenario for investors now would be a quick bounce and a drop that holds at 820. But few investors are betting on it.
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