Thursday, October 27, 2011

Around the world in 8 charts

The charts tell the tale of the October rally. 

Since our last update on the global correction in stocks, shares have bottomed (at least in the short-term) and embarked on a powerful new rally. 

As noted in real-time on Twitter and StockTwits, the 1,250-1,260 levels were an important technical (and psychological?) level for the S&P 500 and US shares. The market busted through those levels this week amid a backdrop of hectic news concerning Europe's debt crisis. 

Here you'll find newly updated charts, from the SPX to the AWCI (MSCI World ETF), the Dow Industrials and Transports, the Nasdaq, the EEM (Emerging Markets ETF), the VIX, and TLT (long-bond ETF). 









This is still a very news-driven (some would say intervention-driven) market. Therefore, I want to either watch (or ignore) the action from the sidelines or keep a very tight reign on positions and risk. We'll see if the global share markets can continue higher on a stream of bad news, a sign of a potential bullish uptrend in the making.

Keep up with Finance Trends in real-time on Twitter and StockTwits. You can follow our RSS feed (full posts, always free) to catch all our posts.

Friday, October 21, 2011

Sotheby's vs. emerging markets


Performance comparison of "$BID indicator", Sotheby's vs. the $EEM (MSCI Emerging Markets) going back to 2003. You can see the close correlation throughout in this weekly chart. 

Check out a larger image of the same chart here

You can also see a 3 year performance view of Sotheby's vs. $ACWI (MSCI World stocks ETF) here on Chart.ly. 

As you'll see, the correlation between $BID and $ACWI is not as close, and Sotheby's easily outperformed the global shares ETF over this recent 3 year period.

Tuesday, October 11, 2011

5 predictions from 'Trader Vic' Sperandeo

Victor Sperandeo makes 5 "Frightening Market Predictions", as well as a few policy prescriptions for the USA in this Real Clear Markets piece. Here's a taste: 

"...1. The U.S. is going into recession.

This is being entirely caused by the woefully misguided fiscal policies of the Obama administration.

Their anti-business, socialist agenda is killing the "Golden Goose" (i.e. Capitalism). Raising the costs for small and big business via tax hikes, Obamacare, and massive regulation is in effect causing a capital "strike" by entrepreneurs. As a result, GDP is going to decline..." 

Recession is not the only thing on Trader Vic's mind. Head on over for a few thoughts on gold, the future of the EU, hyperinflation, and the global bubble in debt. 

Plus, a few key changes that may help the US fix its problems and change our course for the future (only wish Victor had some more time and space to really flesh these out). Check it out. 

Wednesday, October 05, 2011

Jeffrey Gundlach interview: deflation risk


Noted bond fund manager and DoubleLine founder, Jeffrey Gundlach speaks with FT.com about the economy, deflation risks, and his views on Treasury bonds. 

Some highlights from this interview:

  • DoubleLine notes that the market has been affected by shifts in sentiment relating to potential inflationary outcomes vs. deflationary outcomes. Gundlach seeks to take advantage of pendulum shifts in sentiment by positioning his portfolio more into government bonds when everyone is focused on inflation, bucking the prevailing sentiment trends. 
  • As unattractive as Treasury yields appear to be from a historical standpoint, investment managers should own bonds "even today" as a hedge.
  • "I used to be an inflationist several years ago". Gundlach understands the printing-money-to-cover-entitlements view, but feels that this pro-inflation scenario is unlikely to happen without a crisis. Gundlach feels you will first see economic weakness and a societal trend towards reigning in deficit spending. Hence, deflationary arguments are at the forefront.
  • Tremendous income polarization in the United States. This has often led to societal unrest. Hard times for working class vs. plush times for multinational corporations will lead to calls for increased corporate taxes. Expect lower PEs for stocks in that environment.
Catch the full take at the link above.

Monday, October 03, 2011

Picture of a global market correction


Call it a downtrend, call it a cyclical downturn, or a bear market. No matter how you slice it, stocks are in a definite slump worldwide. 

Here's a daily chart of the iShares MSCI All-Country World Index ETF, AWCI

The pattern of lower highs and lower lows since May 2011 is clearly evident in this ETF tracking some of the world's leading shares. This shows a bear trend, or at the very least, a months long correction in global shares. 

Proceed with caution, folks.