The uncertainty of this administration’s’ policies have come home to roost once again. I purposely use the word “roost” as we are nearing the final month of the Year of the Fire Rooster. In line with the astrological predictions, it has been a banner time. However, will those banner times continue? Today, Canada came out with a statement that they are convinced Trump will announce withdrawal from NAFTA. On top of that, China is reportedly thinking of halting the US Treasury purchases. This move would be in retaliation for any added tariffs Trump might impose on Chinese goods. Companies that have benefitted from NAFTA, General Motors...
The latest JOLTS survey from the BLS suggests nothing much has changed from that particular view of the labor market. The level of estimated Job Openings (JO) while down slightly over the last few months remains exceedingly high. By contrast, the rate of monthly Hires (HI) continues to be subdued, if at the high end of its recent range extending back to the middle of 2015. That really means the JOLTS data presents not one but two very distinct pictures of the employment environment. This is a relatively new divergence, one that opened up at the start of 2014 when JO spiked. The prior relationship that had existed going back to the origins of ...
I do not spend a lot of time on cyclical stocks and the industrials and materials sectors are not well represented in portfolios I manage. Lack of expertise is one reason, but another tricky part of investing in cyclical companies is that you need to have a decent sense of their business cycles and that is not easy unless you have some specific experience in the industry. That said, sometimes I dabble when I can get comfortable enough with the company and stock price simultaneously. In early 2016 that combination was staring me in the face after a sell-off in Boeing (BA) prompted me to buy at prices as low as $105 per share. I do not even r...
I do not spend a lot of time on cyclical stocks and the industrials and materials sectors are not well represented in portfolios I manage. Lack of expertise is one reason, but another tricky part of investing in cyclical companies is that you need to have a decent sense of their business cycles and that is not easy unless you have some specific experience in the industry. That said, sometimes I dabble when I can get comfortable enough with the company and stock price simultaneously. In early 2016 that combination was staring me in the face after a sell-off in Boeing (BA) prompted me to buy at prices as low as $105 per share. I do not even r...
Corrections are 10% pull backs, Recessions are 20% sell-offs. So far the real estate sector has seen a decline of about 5%. Normally I wouldn’t think to much about that, but there are a few things that I don’t like about the chart below: A perfectly formed rising channel that investors have had confidence in for a good while, has broken in a very big way, with a break away gap to the downside. There is a breach of a 200-day Moving average The fall is happening while the rest of the market (minus utilities) is experiencing incredible growth. But now, residential stocks like Toll Brothers (TOL), DR Horton (DHI), Lennar (LE...
(Audio length 00:11:38) On the back of a couple requests for Doc’s comments on the Uranium sector here we go. We look at the URA chart as well as Uranium Energy Corp, UEC. With the complete washout in uranium stocks over the past few years when this sector turns there are only a few companies left to invest it. We also follow up on the comments made earlier today by David Erfle regarding his bullish stance for the precious metals....
Another year another datapoint… Regular readers will be familiar with the first chart which shows the average daily returns for the S&P 500 across the year against the average level of the VIX across the year. This stockmarket seasonality map has been updated to include the 2017 data and the same conclusions and cautions hold. In this article we review this chart and explore seasonality patterns across a few key asset classes. The first thing to note about seasonality however is that it is imperfect, and can break down at times. That’s why I often say that seasonality should probably be one of the final factors you look at...
Wednesday was all about China. “China?! China.” U.S. investors woke up to the news that Beijing is considering “slowing or halting” Treasury purchases and the knee-jerk reaction was visible everywhere. Yields spiked (only to completely retrace as Treasurys pared losses following a solid 10Y auction): Gold rose: The dollar careened lower and EURUSD jumped (one natural way for the Chinese to diversify would be to increase their allocation of euro debt): And futs dipped: You’ll note that China may be reminding Trump that they have a way to fight back in the event the administration gets “tough” on trade. For more on wha...
386 Days Above The 200 Day Moving Average The record for consecutive new highs to start a year has been tied in the Nasdaq and the S&P 500 as stocks rallied again on Tuesday. As you can see from the chart below, the S&P 500 is in the 2nd longest streak where it has been above its 200 day moving average. Going back to 1957, this bull market has the top two records as the previous one ended in 2014 at 475 days. Going almost a record period without a 5% correction makes it almost impossible for the S&P 500 to fall below its 200 day moving average. This recent rally has caused the CNN fear and greed index to reach 76 out of 100 wh...
The U.S. Chemical is witnessing continued investments, strengthening export markets and robust demand across key-end markets like electronics, automotive and construction. These factors have helped the industry outpace the broader market over the past year despite many headwinds including sluggishness in China, weak demand in agriculture and damaging effects of the hurricanes. Industry Performance The Zacks Chemicals Diversified industry has outperformed the broader market over a year. The industry has gained around 30.7% over this period, topping S&P 500’s corresponding return of roughly 21.5%. Investments Continues to Drive Growth ...