Market Volume a Concern

Looking at stock market volume statistics over the last few weeks has not given me much confidence in a resumption of the bull market. In a healthy bull market we would like to see strong volume on up days and/or weak volume on down days. This general pattern is regarded by technicians to be a…

Correlation Breakdown

Over time, the price of gold typically has a fairly strong inverse correlation with the value of the U.S. dollar, meaning that they tend to move in opposite directions. But lately the dollar and gold have been moving higher in lockstep as the long-term inverse correlation has broken down (see chart below). There are a…

Bouncing, but for How Long?

The market finally bounced yesterday from a very oversold short-term condition, turning what was a 33 point loss on the S&P 500 Index at its worst point into a very slight gain for the day. So far today, it seems to be continuing, with the S&P up again as I’m writing this. The big question,…

Fear Factor or Fundamental Change?

The market adjustment since late April has accelerated recently, taking the S&P 500 and other major equity market indices into negative territory for the year. One thing that’s obvious is that the mood of investors has made a sharp turn from complacency to outright fear. That can be seen in measures such as the VIX…

Another Misguided Ban

You might recall during the height of fear in September 2008, the Securities Exchange Commission halted short selling of financial stocks in an attempt to protect investors and markets. They felt that the integrity of the markets was being questioned and this move would restore equilibrium to markets. You might also recall that financial stocks…

What Could Change Our Stance?

Lately our communications have focused on the fact that we are still bullish over the intermediate term, and are using current volatility in the markets to augment risk assets in our portfolios. With that in mind, it is important to note that we are not complacent here, and realize that if conditions continue to deteriorate,…

Euro At A Critical Spot

In the wake of the massive, $1 trillion bailout package concocted by the European Union, IMF, and European Central Bank last weekend, conventional wisdom was that the euro would get a big boost. After all, it had fallen by more than 16% percent since the news of Greece’s budget problems first surfaced late last year.…

Technical Damage Contained So Far

Prior to the recent sell-off, we’d repeatedly referenced how strong the underlying technical condition of the market was. We regularly monitor a variety of these different price-based measures, and prior to yesterday, we didn’t see any of the classic divergences that have preceded significant market declines in the past.

Chance Favors the Prepared

Recently our investment team has been discussing the possibility for a cyclical bull market correction, and preparing ourselves for the waters to get temporarily choppy. The thought was that sentiment had gotten frothy and that many positions were way extended over the 200 day moving average. Heck we’d only had two major corrections during this…