By Christopher Ebert
Option Index Summary
All markets become irrational from time to time, including the stock market. An irrational market can be extremely frustrating for traders. It’s frustrating because an irrational market is driven primarily by emotions. Read More
By Bill DeShurko
One of the strategies we follow for our growth portfolios is a version of the “Sell in May, buy in October” seasonality promoted by The Stock Traders Almanac.
However, a cash position for six months can be a risky proposition, considering the potential lost opportunity if the market has a (not so rare) summer rally.
We therefore follow the relationship between the PowerShares S&P 500 High Beta Index ETF (PowerShares Exchange-Traded Fund Trust II ETF, NYSEARCA:SPHB) and the PowerShares S&P 500 Low Volatility Index ETF (PowerShares Exchange-Traded Fund Trust II, NYSEARCA:SPLV). Each ETF holds 100 of the S&P 500’s stocks — the highest beta and lowest volatility stocks, respectively. Read More
By Christopher Ebert
Option Index Summary
Why is it that stock prices sometimes go up one day and down the next, without any significant news event in the market that would explain the two moves?
How is it possible that stock prices sometimes go up when there is bad news, and down when there is good news?
Just who or what is it that is making the market behave the way it does?
Some may conclude that “evil” bankers are the cause, or some sort of covert government influence is at work. Others would consider those to be outlandish ideas. But it truly does not make a difference – good and evil are irrelevant when it comes to understanding how the stock market works. An evil Wall Street tycoon or a benevolent trader of a retirement account are both slaves to the emotions of greed and fear. And since greed is really just the fear of missing out, the only emotion that matters is fear; and fear affects all humans, both good and evil. Read More
By Bespoke Investment Group
A lot has happened so far in the fourth quarter, especially over the last few weeks, so below is an updated look at recent performance numbers for key ETFs across all asset classes. Pretty much everything equity related has gained over the last two trading days. The major US indices are all up roughly 2.5%, while the best sectors have been Materials, Technology and Consumer Discretionary. Utilities, Telecom and Healthcare have lagged. Globally, the best performers have been Japan, Mexico and Russia. India has been the weakest country over the last two days with a gain of just 0.02%. As stocks have bounced, Treasuries have obviously pulled back. The 20-Year+ Treasury ETF (iShares Barclays 20+ Year Treasury Bond Fund ETF, NYSEARCA:TLT) has been the worst performer in the entire matrix over the last two trading days with a decline of 0.65%.
Looking at quarter-to-date numbers, stocks in the US remain down. The S&P 500 tracking SPDR S&P 500 ETF (NYSEARCA:SPY) is down 3.36% in the fourth quarter, while DIA and QQQ are down even more. Technology and Telecom are down the most of any sectors so far this quarter with respective declines of 7.82% and 8.66%. Read More
By Jeff Pierce
As bullish as traders have become on the dollar lately I have a hard time seeing new 2012 highs coming anytime soon. Note the negative divergence on RSI.
The more likely scenario is that the Dollar has formed a short term top, which may allow the general markets rally to continue for a little while longer. If this is going to play out like this, the SPX (seen below) needs to find support at the upper down-sloping trendline seen below. If that fails and/or the PowerShares DB US Dollar Index Bullish Fund (NYSEARCA:UUP) can break out and sustain the move above $23, then all bets are off. The markets could then find itself in a new leg down. Read More
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