David Rosenberg: The Sweet Spot is Over

Tuesday, December 8th, 2009

In yesterday’s Breakfast with Dave, Rosie shares his thoughts about why the easy money has already been made in equity markets.

Below are 10 reasons why we believe this:

1. For the time being, the equity market is going to have to contend with more chatter of the Fed’s exit strategy.

2. The market also faces a new reality. While employment stabilizing (maybe) is a good thing, it means the era of declining unit labour costs and margin expansion is behind us.

3. Market leadership is beginning to fade as seen by the receding advance- decline line on the big board.

4. Market complacency is a worry with the VIX index back down to 21.25. The good news is that insurance against a correction is priced about as low as it can go. Protection is cheap.

5. The WSJ (page C1, December 7, 2009) reports that not only have individual investors been selling into this last leg of the rally (then again, the S&P 500 has really done nothing for over six weeks), but pension funds have been rebalancing too.

6. Volume has declined markedly and has surpassed 4.7 billion shares on the NYSE just once in the past three weeks.

7. With the correlation between a weak greenback and a positive stock market above 90% over the past eight months (versus zero over the past 30 years), a countertrend rally in the U.S. dollar would likely coincide with sputtering equity prices.

8. The Dow transports/utilities ratio has turned in a classic triple-top and this is a signpost to get defensive.

9. The latest Investors Intelligence poll shows the bull camp at 50%; the bear share at a mere 16.7%. In other words, there are three bulls for every bear. This is negative from a contrary perspective (another sign of complacency).

10. Corporate bond yields have stopped narrowing over the past three months and have actually recently shown modest signs of an upward bias.

Source: Breakfast with Dave, Gluskin Sheff, December 7, 2009

Tags: Advance Decline Line, Bear Share, Cheap Advertisement, Complacency, Corporate Bond Yields, David Rosenberg, Dow Transports, Exit Strategy, Ffffff, Gluskin Sheff, Greenback, Individual Investors, Investors Intelligence, Market Leadership, Market Musings, New Reality, Nyse, Page C1, S Market, Signpost, Target, Textcolor, Unit Labour Costs, Upward Bias, Vix Index, Wsj
Posted in Markets | No Comments »

Rosenberg: Market is Pricing in Stimulus II

Thursday, August 20th, 2009

David Rosenberg, Chief Economist, Gluskin Sheff, says the market is pricing in 4.0% real return GDP for the coming year. He does not agree that this is attainable, and worse, its already baked in:

IS THE NEWS MAKING THE MARKET?

A market that needs rumours of yet another round of fiscal stimulus at a time when the budget deficit is 13% of GDP for sustenance is a market that is being driven by liquidity. But there were some various non-confirmations, such as (i) the bid in the Treasury market; (ii) lack of volume pickup on the NYSE; (iii) copper fell to a two-week low; (iv) CDS spreads, which measure credit default risk in North America, widened to four-week highs, and (v) John Deere cut its top-line sales estimate for the year to -21% from -19%. Moreover, we see that credit spreads have started to widen out a touch - by around 20bps for Baa and 65bps for high yield - in the past two weeks.

THE RECESSION IS DEAD, LONG LIVE THE RECESSION!

We can understand that there is a growing list of economists calling for the end to the recession, and that may or may not be the case actually, judging by the performance of all four ingredients that go into the NBER decision-making wheel. But let’s be charitable and assume that the herd is correct this time around - a 49% rally from the lows and the degree of multiple expansion suggests that the S&P 500 has gone beyond just discounting the end of the downturn but is now embedding a 4.0% real GDP growth rate for the coming year. That is not our view, and even if it is attainable, guess what? It’s priced in. Corporate bonds (and Treasuries too) are discounting around a 2.0% GDP trend, which looks more realistic.

Bottom line: The market is pricing in a much stronger recovery than is possible right now.

Tags: Budget Deficit, Chief Economist, Confirmations, Corporate Bonds, Credit Default, Credit Spreads, David Rosenberg, Default Risk, Fiscal Stimulus, Gdp Growth Rate, List Of Economists, Lows, Market Musings, Nyse, Real Gdp Growth Rate, S Market, Sheff, Target, Textcolor, Treasuries, Treasury Market, Week Highs
Posted in Emerging Markets, Markets | No Comments »

Bill King: Automated front-running on an unfathomable scale

Friday, July 10th, 2009

This post is a guest contribution by Bill King*, well-respected and straight-talking author of The King Report. GreenLightAdvisor has added supplemental notes on supporting material.

For the past several years Street operators have assumed that the computer jockeys who were being employed by proprietary trading departments on The Street were developing algorithms that would find other algorithms that represented buyside orders so prop desks could trade against those orders.

Another trading prop that has been occurring for years is certain firms feed their electronic trading systems into prop desks so traders can see in real time money flows into and out of stocks and groups.

However recent revelations are forcing the Street to consider the possibility of automated front-running on an unfathomable scale. The two “front-running” issues are: 1) “queuing” [of orders] - finding orders loaded into a system, particularly limit orders, and trading against them; and 2) “latency” - discovering and then front-running electronic orders by a penny or more by exploiting the latency or lag in execution.

HFT (high frequency trading) is being done on every electronically traded item on a global basis. Ergo, firms could be making pennies a few billion times per day … It was imperative for the NYSE and other exchanges to price securities in pennies to disguise “HFT” and to provide ample trading opportunities.

[GLA]

Bloomberg and others write about “HFT” as a result of a corporate espionage case involving Goldman Sachs and  the alleged theft of its proprietary trading software  by Sergey Aleynikov, a story that has broken wide open during the last two weeks:

Bloomberg : Aleynikov, 39, is the former Goldman computer programmer who was arrested on theft charges July 3 as he stepped off a flight at Liberty International Airport in Newark, New Jersey. That was two days after Goldman told the government he had stolen its secret, rapid-fire, stock- and commodities-trading software in early June during his last week as a Goldman employee. Prosecutors say Aleynikov uploaded the program code to an unidentified Web site server in Germany.

It wasn’t just Goldman that faced imminent harm if Aleynikov were to be released, Assistant U.S. Attorney Joseph Facciponti told a federal magistrate judge at his July 4 bail hearing in New York. The 34-year-old prosecutor also dropped this bombshell: “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”

Former Goldman Programmer Sergey Aleynikov Arrested for Theft Charges on July 3rd - Click play to watch:

How could somebody do this? The precise answer isn’t obvious — we’re talking about a black-box trading system here. And Facciponti didn’t elaborate. You don’t need a Goldman Sachs doomsday machine to manipulate markets, of course. A false rumor expertly planted using an ordinary telephone often will do just fine. In any event, the judge rejected Facciponti’s argument that Aleynikov posed a danger to the community, and ruled he could go free on $750,000 bail. He was released July 6.

Reuters: Federal authorities contend the computer codes and related-trading files that Aleynikov uploaded to a German-based website help this major financial institution generate millions of dollars in profits each year.

The platform is one of the things that gives Goldman an advantage over the competition when it comes to the rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and using secret mathematical formulas, allows the firm to make highly-profitable automated trades.

[GLA]

While the Street is percolating with anger and curiosity about “High Frequency Trading” there is also frustration and astonishment that the media, regulators and our duly elected are not addressing what could be the biggest financial abuse story of our times, if not history.

[GLA]

Bloomberg: Meantime, it would be nice to see someone at Goldman go on the record to explain what’s stopping the world’s most powerful investment bank from using its trading program in unfair ways, too. Oh yes, and could the bank be a bit more careful about safeguarding its trading programs from now on? Hopefully the government is asking the same questions already.

[GLA]

Though the blogoshpere is all over the ‘HFT’ trading story an important piece of the puzzle has not been publicized enough. Few people realize that exchanges actually pay firms to trade against order flow when they act as a SLP - “Supplementary Liquidity Provider”.

[GLA]

Read more about SLP here, here, and here.

[GLA]

Exchanges will pay firms ¼ of a penny if they “provide liquidity” when an order appears in their system. This is extra incentive to front run order flow … Theoretically a firm could “scratch” all day and profit.

Over the past decade the move to electronic trading and pricing in pennies was heralded by Street insiders as a means to improve liquidity for clients. This appears to be a deception. Virtually every facility benefitted proprietary trading at a select few firms. Who’s the patsy?

Anyone with a modicum of industry experience understands that “providing liquidity” is at best a euphemism for front-running order flow.

Source: Bill King, The King Report, July 10, 2009.

* Bill King is market strategist with Chicago-based broker-dealer M. Ramsey King Securities. He has over 30 years’ equity trading and management experience with major Wall Street firms including Nikko Securities International, E F Hutton, Nomura Securities International, Dean Witter, and Jeffries and Co. To subscribe to The King Report, e-mail Bill at billking@ramkingsec.com.

Tags: Bill King, Bloomberg, Commodities, Commodities Trading, Computer Jockeys, Computer Programmer, Corporate Espionage, Electronic Orders, Electronic Trading, Espionage Case, Global Basis, Goldman Computer, Goldman Sachs, High Frequency, Liberty International, Newark New Jersey, Nyse, Pennies, Proprietary Trading, Rapid Fire, Supplemental Notes, Supporting Material, Theft Charges, Trading Software
Posted in Gold, Markets | No Comments »

Technical talk: Stellar market internals

Tuesday, May 5th, 2009

The comments below were provided by Kevin Lane of Fusion IQ.

Market internals continued to be stellar with the NYSE registering an up to down volume ratio of 19.2 to 1, while advancers beat decliners by a ratio of 5.7 to 1. On the NASDAQ up volume bested down volume by a rate of 5.19 to 1, while advancers bested decliners by 3.47. These stellar and continued strong internals tell us liquidity is still strong.

The rally continues to broaden as well, with more groups now participating in the upside. As long as breadth remains good the rally will still have legs. Granted, any day we could see reactionary (normal) pullbacks along the way; however, given the strong market breadth we are now raising our S&P 500 intermediate-term target to 950/960 range. Anecdotal sentiment remains in disbelief of the rally which is bullish, while other sentiment indicators, though moderating, are not unconstructive yet.

The monthly relative strength within the S&P reveals the best groups as follows:

1. Health-care Facilities
2. Real Estate Service
3. Tire and Rubber
4. Automobile Manufacturing

So far for this earnings season, with 70% of the S&P 500 reporting, the average earnings surprise is 4.9% (upside surprise). Consumer Discretionary, Information Technology and Materials have had the best results.

Source: Kevin Lane, Fusion IQ, May 5, 2009.

Tags: Average Earnings, Decliners, Disbelief, Down Volume, Earnings Season, Earnings Surprise, Health Care Facilities, Iq, liquidity, Market Breadth, Market Internals, Nasdaq, Nyse, Pullbacks, Relative Strength, Sentiment Indicators, Strong Market, Term Target, Upside Surprise, Volume Ratio
Posted in Markets | No Comments »

Technical talk: Buying power not tapped out yet

Monday, April 13th, 2009

The comments below were provided by Kevin Lane of Fusion IQ.

Another stellar day for the markets on Thursday as up to down volume ratios on the NASDAQ and NYSE were 12.36 to 1 and 14.78 to 1 respectively, while their advance to decline ratios were also correspondingly bullish at 5.10 to 1 and 7.28 to 1 respectively. We always say these metrics are the best gauges of confidence and conviction behind the markets move and help to better handicap a rally’s likely staying power as it reflects more participation and commitment by the market largest aggregate buyers – institutions.

When a market is up but these metrics aren’t as positively skewed it is typically more a sign of short covering, which is not a long lasting liquidity event (buying) to drive stocks markedly higher. However, days with internal readings like Thursday’s or the ones we highlighted back in early March (when the index was about 17% lower), are signs of significant buying and commitment which suggest a good (i.e. durable) rally is at hand.

For the last few days we have been saying the obvious and easy call was to say the market would stall as the S&P 500 approached resistance. From a common sense as well as a technical perspective even we had to respect that this resistance may be a factor after a 26% gain from the lows.

Playing devil’s advocate in our head and knowing nothing is certain or has to act a certain way we did hold out an alternative and equally likely thesis – a continuation of the rally. We also suggested several blueprints on how to navigate this call of stall or rally. We suggested that being prepared and then executing a game plan makes one less emotional and makes for better results. Along the vein of being open to the idea that the game changes constantly and like a good coach, a trader/investor needs to adapt (or change) their game plan as new wrinkles occur. In this case the wrinkle was that the market could possibly move higher and evidence was growing to suggest that.

That evidence we suggested that was altering the original game plan of a likely stall near 850 (after we suggested investor buy just above S&P 500 at 700) was growing anecdotal observations of everyone echoing disbelief in this rally’s staying power. We suggested it was pervasive and growing louder and as more and more naysayers and doubters said things such as: “I am in cash and can sleep.” or my favourite: “I am not worried that I am missing this up move it’s not a real move.” Pardon my naiveté (lol!), but the last time I checked a 26% rally in several weeks is pretty damn real.

Hearing those “safe in cash” comments now, not after the first 20% or 30% correction but after a 50% correction from the peak and then adding to the equation negative sentiment towards equities, individual investors and fund managers with lots of cash on the sidelines, a ton of bad news discounted into prices and a global push to aggressively stimulate, made for a pretty compelling backdrop to buy stocks (if not for the long haul at least for a good cyclical rally).

As further supportive evidence to a rally extension theme being likely, on Thursday we highlighted that sentiment had not become excessively bullish yet (typically a rally killer), even after the aggressive move off the lows. Therefore we suggested stocks weren’t in danger because liquidity (buying power) was not tapped out yet. Techs, high beta and growth style investing outpaced the market for the duration of the rally and continue to be the place and style bias producing the best returns.

Source: Kevin Lane, Fusion IQ, April 13, 2009.

Tags: Blueprints, Common Sense, Continuation, Conviction, Devil S Advocate, Down Volume, Game Changes, Game Plan, Handicap, Liquidity Event, Lows, Metrics, Nasdaq, Nyse, Short Covering, Staying Power, Technical Perspective, Trader Investor, Volume Ratios, Wrinkles
Posted in Markets | No Comments »

Technical talk: Stocks nearing short-term resistance

Tuesday, March 24th, 2009

The comments below were provided by Kevin Lane of Fusion IQ.

As we have said before, it is not the points gained or lost that matter, but rather the conviction behind the move. Monday’s internals did not disappoint, with the NASDAQ and NYSE both scoring up to down volume ratios and advancer to decliner ratios that were superbullish. This rally confirms the comments we made on March 10 and then again on March 18.

Excerpt from FusionIQ comments on March 10: “Market internals (i.e. the number of advancers to decliners and up volume to down volume) on today’s advance were the most bullish internal readings seen since the move off the 2002 lows … ” We also added: … “That said, we believe today’s rally is the start of a good move higher (again it may not be the ultimate low – only hindsight will tell us that); however, the surge of momentum suggests this rally will be worth participating in.”

On March 18 we stated: “So that said, we continue to view this current rally as having legs with maybe another 10–15% up from present levels. (So buying on dips with appropriate stop losses would make sense for the time being.) We also continue to view this as an opportunity to make money on the long side for a narrow window of time (1 to 3 months).”

We think the S&P 500 can still rally up to the 850 – 860 in the near term on the heels of the unwinding of the deeply oversold conditions, the large piles of sideline liquidity and additional money managers are allocating to stocks so as not fall too far behind their benchmarks. At the aforementioned S&P 500 level some more aggressive profit-taking is likely to ensue and it may be a good time to take some chips off the table (i.e. lock in some profits)

We would then look to reallocate on the next aggressive pullback. Techs continue to act better than the broader market and should dominate your portfolio more than any other sector at this point.

Source: Kevin Lane, Fusion IQ, March 24, 2009.

Tags: Advancer, Benchmarks, Decliners, Dips, E Lock, Hindsight, liquidity, Lows, Market Internals, Money Managers, Nasdaq, Nyse, Piles, Point Source, Profit Taking, Pullback, Sideline, Volume Ratios, Window Of Time, Would Make Sense
Posted in Markets, US Stocks | 1 Comment »

Oil About Nordic American Tankers (NAT)

Monday, March 9th, 2009

Back in November, we recalled overhearing the interview with Herbjorn Hannson, CEO, and his report on the earnings of his company, Nordic American Tanker (NYSE: NAT), which in the midst of the turmoil of the market and worsening global economy, reported its 3rd best quarterly earnings in the history of the company, which has been in operation since 1997. Regrettably, but not because it got away, but rather, it was an interesting story, we did not publish a note about this then.

This is one of those rare instances of a company/stock story that sticks out like a bright beacon in the darkness to guide the way, as an example of what types of businesses are out there that are seriously worthy of consideration, if not investment. We are not making a recommendation here, just pointing out something really interesting. The shares are trading for around $23-25 and they have been more or less rangebound, having recently been as high as $35 during the last three months since November, when we first heard the story, and is now back down to same price it was at then, give or take a few bucks then. At 23-24 its a much better price resulting in a far more attractive yield of over 14%.

Nordic American Tanker (NYSE:NAT), 6 months, vs. 50 MA.

The company is debt-free, has consistently paid a cash-dividend of over 10%, has a strong cash position and unused credit lines totalling $500-million, and all they do is ship crude oil.

This is a must read, must view. Every now and then, there are some truly interesting stories worthy of your time and thought, if not action.

Herbjorn Hannson, CEO, Nordic American Tankers, pays a visit to CNBC February 13, 2009. Click play to watch:

Here is the transcript of Herbjorn Hansson, on CNBC, February 13, 2009, with Erin Burnett, Mark Haines and Doug Mavrinac, Head of Maritime Research for Jefferies.

Herbjorn Hansson, CEO, Nordic American Tanker, CNBC, February 13, 2009

Erin Burnett: With the drop in Crude oil prices, Nordic American Tankers share price has fallen about 12%; now crude as you can see is down about 22%. Despite that NAT came out with 4th quarter earnings this morning, and guess what, they were better than expected. What is going on here? Joining us on set is our friend, Herbjorn Hansson, CEO of Nordic American Tanker, and in Houston, Doug Mavrinac, Head of Maritime Research at Jeffries.

Herbjorn, first of all, I know that the link is not perfect between where crude oil prices are and where shipping rates are, but there is a big issue with demand around the world dropping. Is that really the story, or is this a time of great opportunity?

Herbjorn Hansson: In the short term, demand [for oil] is dropping, but we must remember that this is the first time in history that we have a recession in a globalized world. There are very strong forces at work, and we are the highest paying dividend stock on Wall Street. We have turned in more than 10% annually in cash dividend yield.

This is a time for opportunity for us, because if and when markets are down, many ship owners are in a distressed situation.

EB: They have a lot of debt, you don’t. You have no debt.

HH: No. No debt at all, and we have a strong cash position; we have an unused credit line of $500-million, and it is my firm view that when we re-emerge, if you wish, from this mess, we will be a much stronger company having more ships, so I’m optimistic, as far as our company is concerned. But of course, you know there may some muddy waters in the near term. But rates are excellent at this time, and another point, the Dry Cargo business is a completely different story.

Mark Haines: Rates are excellent at this time?
HH: Yeah, I would say so.
MH: Even though demand is down for oil?

HH: Yes, that’s true. We have something that’s called contango. The contango, and then we use oil tankers for storage, and that means that tankers are withdrawn from the market. That’s good for us. We are talking about substantial amounts. Secondly, also we see slow-steaming; the tankers go more slowly, and when you go down from 15 knots to 13.5 knots, that is a reduction of 10%, which is equivalent to 35-million deadweight tons which is a huge amount. I take a much more optimistic view. I believe that you in America, and China, on the international level will have to drag us from out of this. And you have put a lot of measures in hand and there is no question these measures will work.

Nordic American boosts oil tanker fleet to 15

By Jonathan Kent, Published: February 19. 2009 08:50AM, The Royal Gazette (Bermuda)

Bermuda-based Nordic American Tankers Ltd. yesterday boosted its earnings capacity with the delivery of its latest tanker, named Nordic Sprite.

The debt-free oil tanker operator has now expanded its fleet to 15 Suezmax tankers — so called because they are the largest-sized ships that can negotiate the Suez Canal — including two newly build vessels, expected to be delivered in December 2009 and April 2010.

In the midst of the global economic crisis, NAT continues to make a profit and pay out attractive dividends to shareholders. The company has a policy of paying out all of a quarter’s free cash flow as dividends — last week NAT announced a dividend of 87 cents per share for the fourth quarter.

With the shares trading at around $28.20 a share yesterday, that amounts to an annualised dividend yield of more than 12 percent.

Rates remain healthy in NAT’s business of hiring out tankers, even though the price of crude oil has plummeted from $147 a barrel last July to around $35 yesterday.

NAT said the average daily hire rate for each of its vessels in the spot oil market was $40,157 net. The company estimates its break-even price is less than $10,000.

The fourth-quarter rates were much higher than the $27,000 average NAT achieved in the same period for the prior year, despite the dramatic fall in the price of oil and the slump in demand.

What has helped to buoy rates is oil companies and commodity traders hiring out oil tankers to use for storage, because of the large differential between today’s lowly oil price and that purchased for delivery a few months later.

For example, at 2.46 p.m. yesterday afternoon, light, sweet crude oil for March delivery was trading at $35.09 a barrel on the Nymex Exchange in New York, while contracts for December 2009 delivery were selling for $47 a barrel.

Royal Dutch Shell and Citigroup are among the companies who have hired tankers to take advantage of the market in a practice known as “contango”. That has tied up a significant amount of tanker capacity, which has decreased the availability of vessels to actually transport oil, thereby boosting rates.

NAT said in its earnings statement last week that it believes approximately 35 very large crude carriers (VLCCs) are being used for storage now.

How long tanker rates can remain high is debatable, particularly with the global downturn keeping demand low, inventories growing in the US, the world’s biggest oil consumer, and the Organisation of Petroleum Exporting Countries likely to make further production cuts.

NAT chief executive officer Herbjorn Hansson told business TV channel CNBC last week: “There may be muddy waters in the near term, but rates are excellent.”

Yesterday, Goldman Sachs downgraded Bermuda-based Frontline, which is the world’s largest owner of supertankers, to “sell” from “neutral”, citing a weaker-than-average balance sheet and a likely drop in hire rates.

There will likely be a “sharp decline” in rental rates in the second quarter as ships stop storing oil at sea and Opec cuts output, analysts led by Hugo Scott-Gall in London wrote in a note.

The shares were added to the bank’s “conviction sell” list, having previously been rated “neutral”. The stock fell by around five percent in Oslo trading.

NAT’s debt-free status means it has a clean balance sheet. It has a history of selling shares to raise capital in order to add to its fleet, instead of borrowing money, since it started with its first three tankers in 1997.

While it could be argued this has had the effect of diluting the value of shares for existing shareholders, the tanker acquisitions have added to earnings capacity, as well as dividends. The strategy is paying off handsomely during the ongoing credit crunch, with companies finding it difficult to borrow money.

NAT said last week it had gained $107 million in cash on January 15 this year from a follow-on share offering and also boasts an untapped $500 million credit facility.

According to a report by Morgan Stanley, published last week, the company offers a “safe harbour in a choppy tanker market”.

“NAT is holding all the cards now, in our view and should greatly strengthen its relative position in a down market,” the report stated.

Nordic American Tanker Shipping Limited is an international tanker company that now owns 15 modern double-hull Suezmax tankers averaging approximately 155,000 deadweight tons (dwt) each. It owns and operates crude oil tankers. The Company’s fleet consists of 15 modern double-hull Suezmax tankers, of which two are newbuildings. These include Gulf Scandic, Nordic Hawk, Nordic Hunter, Nordic Voyager, Nordic Freedom, Nordic Fighter, Nordic Discovery, Nordic Saturn, Nordic Jupiter, Nordic Apollo, Nordic Cosmos and Nordic Moon. Source: Wikinvest.com

Disclosure: No positions in NAT

Tags: Afternoon Light, Boosts, Bright Beacon, Cash Dividend, Cash Position, Cnbc, Commodity Traders, Company Stock, contango, Crude Oil, Crude Oil Prices, Dividend Yield, Dramatic Fall, Erin Burnett, ETF, Flash Player 9, Free Cash Flow, Free Oil, Global Economic Crisis, Global Economy, Hansson, Interesting Story, Jefferies, Jonathan Kent, Light Sweet Crude Oil, Maritime Research, Mark Haines, Mid Thirties, Midst, Nordic American Tanker, Nordic American Tankers, Nymex, Nyse, oil, Oil Market, Oil Tanker, Oil Tankers, Price Of Crude Oil, Quarter Earnings, Quarterly Earnings, Rare Instances, Royal Dutch Shell, Royal Gazette Bermuda, Sized Ships, Sprite, Suez Canal, Suezmax Tankers, Sweet Crude Oil, Tanker Fleet, Three Months, Turmoil, Types Of Businesses
Posted in Credit Markets, Economy, Gold, Markets, Oil and Gas, US Stocks | No Comments »

Technical talk: Bounce not that impressive …

Sunday, March 8th, 2009

The comments below were provided by Kevin Lane of Fusion IQ.

Analyzing yesterday’s [Wednesday] activity two things jumped out first, after a recent aggressive multi-day sell off (and multi-week for that matter) the market could not hold on to a lousy 240 point gain, shaving off 100 Dow points in the last 1/2 hour. Second, was that the internals on the move were average, not stellar, with NASDAQ up to down volume very good at 4.75:1 but its advance decline ratio only registering a 2:5 to 1 ratio. On the NYSE the ratios were as bit better at 2.53:1 and 4:29 to 1 respectively.

However neither of these were what we would expect to see on a rally cementing a low, rather they were numbers that looked more associated with short covering and trader interest (not investor interest). Typically on days in the past that have been up real thrusts (bottom confirmation days) off real lows the up to down volume ratios are closer to 10:1 or greater with accompanying advance to decline ratios of at least 5:1.

When people are looking for lows or so afraid of missing the bottom (or a rally) then you can almost always count on it not being the real deal. Real rallies start when all hope is lost and investors become mentally worn out from calling for the bottom (so often) and being wrong that they finally stop trying.

Any rally at this point is an opportunity to make some short-term trading profits until market breadth stats improves measurably.

Source: Kevin Lane, Fusion IQ, March 5, 2009.

Tags: Advance Decline Ratio, Bounce, Confirmation, Dow Points, Down Volume, Internals, Investor Interest, Iq, Lows, Market Breadth, Nasdaq, Nyse, Point Gain, Profits, Rallies, Rally, Real Deal, Short Covering, Thrusts, Volume Ratios
Posted in Markets, US Stocks | No Comments »

World’s Cheapest Car Unveiled

Thursday, January 10th, 2008

Click to watch video from ABC News

World’s Cheapest Car Unveiled

ABC News Jan 10 The Tata Nano is 10 feet long and costs $2,500.

What exactly does a $2,500 car mean for India, and for that matter, the world? How long before these cars are exported. Ratan Tata has vindicated himself of his critics, and launched a revolution for the future of car ownership and the global auto industry. Imagine, 8 years ago, Tata Motors (TTM:nyse), India’s largest manufacturer of light CV trucks and buses was not even in the passenger car business…expectations are for the company to move approximately 1 million of this model annually to start.

The launch of the Nano lays the platform for India to emerge as the hub for frugal engineering, the ability of Indian engineers to produce more with less resources. Tata’s incumbent best-seller, Indica, which was developed in India for $350-million, would have cost three times as much to develop in Detroit.

India automaker unveils the world’s cheapest car,

Reuters Published: Thursday, January 10, 2008

Reuters

NEW DELHI — India’s Tata Motors Ltd unveiled the world’s cheapest car on Thursday, bringing car ownership closer to millions of consumers in emerging markets.

The 4-seater Nano, with an engine around 625 cc, will have a dealer price of 100,000 rupees (US$2,500), and will go on sale later this year.

Tags: 8 Years, Abc News, Automaker, Best Seller, Business Expectations, Car Business, Car Ownership, Desc, Emerging Market, Emerging Markets, Global Auto Industry, Incumbent, India, Indian Engineers, Information, Launch, Markets, Nano, New Delhi India, Nyse, Passenger Car, Reuters, risk, Rupees, Tata, Tata Indica, Tata Motors Ltd, Ttm, Video
Posted in Emerging Markets, Markets, US Stocks | No Comments »