Travel to Financial Success

As discussed in [1], history shows us that more times than not the market will go against the majority. In other words, investor sentiment may be used as a contrarian indicator for the overall market. There are different ways to measure market sentiment. For example, through Surveys of individual and professional investors AAII Sentiment Survey US Advisors' Sentiment Report S&P 500 Put Call Ratio CNN Money’s Fear & Greed Index In this article, we will examine another bearishness indicator based on what investors are doing, not what their opinions are. Cumulative Cash Flow Ratio By measuring the ratio of Cumulative Cash Flow of "Bear + MM" and Cumulative Cash Flow of "Bull+Bear+Sector+MM" we can calculate the bearish sentiment based on fund allocation (i.e., Bear / Total). The higher the ratio is, the more bearish sentiment is. Be noted that sentiment models don't work all the time and they are weak at pinpointing th...

Does the economy affect the furniture industry?   “The economy absolutely affects the industry , as furniture is a discretionary item ” says Leslie Carothers of The Kaleidoscope Partnership , a social media and marketing company focusing on the furniture industry. [1] “ When the economy is good people are definitely more willing to invest in furniture as well as better quality furniture as they have more money for such investments. ”  In this article, we will review current status of housing demand, economy in general and furniture business in specific. Figure 1.  Housing market update (2021 Dec; Source:  @SuburbanDrone )  Housing Demand Based on [18], the drivers for housing demand are ordered by their importances as follows: Job Growth Based on [19], looking at employment in the construction industry can be a leading indicator for real estate Consumer Confidence Interest Rates In year 2015, 43% of young men were living at home, w...

The Bloomberg U.S. Financial Conditions Index  is considered an accurate gauge of the overall conditions in U.S. financial and credit markets. It combines yield spreads and indices from U.S. Money Markets, Equity Markets, and Bond Markets into a normalized index. The values of this index are Z-scores , which represent the number of standard deviations that current financial conditions lie above or below the average of the January 1994-June 2008 period. BFCIUS (3 Year Chart) The highest level for the BFICUS index in the last three years was recorded around 07/04/2013.  On that date, it showed a positive sign that financial markets were on very solid ground.  After that date, however, BFCIUS index has gradually declined to a recent trough seen on 01/20/2016. SPY (3 Year Chart) Even the overall conditions in U.S. financial and credit markets has gradually descent to a recent trough in Jan., 2016, the US stock market overall still performed relativ...

As temperatures dip during the winter, many gardeners find themselves in the time-honored tradition of hauling prized container plants indoors and out in order to protect them from freezes and harsh weather. Succulent plants in containers especially need protection from the winter cold. Succulents In the world of gardening, succulents ( jade plants or gasteraloes , for instance), have the ability to retain water in fleshy portions of their leaves as an adaptation to arid or dry climates. Succulent gardens require little maintenance and are excellent choices for beginning gardeners or those looking to create a drought-tolerant landscape. However, the same adaptations that grant these plants such exceptional drought tolerance also make them more vulnerable to cold or freezing temperatures. Succulents can benefit from being brought indoors for the entire winter season. This benefit is mutual: while receiving protection from harsh temperatures, succulents provide refreshin...

Risk-on, risk-off (RoRo) investing describes a process where investors move to riskier potentially higher yielding investments and then back again to supposedly lower yielding investments which are perceived to have lower risk. In this article, we will review some indicators which allow you to monitor current market's risk appetite. Risk-on vs Risk-off Rising of risk appetite, which would tend to be good for stocks.  To measure risk appetite, ratios can be invaluable tools for making investment decisions. In the following discussion, we rely heavily on ratio analysis : SPHB:SPLV   (High Beta/Low Volatility ratio) Risk on if high beta outperforms low volatility stocks Low Beta S&P includes the more defensive sectors of the market, including consumer staples (NYSEARCA:XLP), health care (NYSEARCA:XLV) and utilities (NYSEARCA:XLU). Representative names include Procter & Gamble (NYSE:PG), Becton Dickinson (NYSE:BDX) and Southern Company (NYSE:SO). High...

Chris Ciovacco at CiovaccoCapital has shown the similarity of S&P 500 charts in year 2008 and 2016. [1,2]  Based on his findings, we may have entered a bear market and the two-day rally since Wed. (01/20/2016) could be a counter-trend rally unless proved otherwise—note that a counter-trend rally most often fails before retracing 62%. Bull Market in 2009 Using multiple Moving Averages with different duration in different colors, Crhis has shown what S&P 500 chart looks like in 2009. When blue band is at the bottom, good things happen as shown below: Bear Market in 2008 In contrast, when the blue band is on the top, bad things happen as shown in 2008. S&P 500 Now Looking at S&P chart on 01/22/2016, it also has the blue band went up to the top. Counter-Trend Rally Counter-trend moves are a normal part of all trends (including bear markets). Chris said that the current rise of SPY looks similar to the first counter-trend ...

Looking at short term volatility ( $VIX ) vs longer term volatility ( $VXV ), it "may" help you spot the bottom of stock price. For example, when the ratio ($VXV:$VIX) gets above 1 it seems to indicate a bottoming process. [1] What is a bottoming pattern? A double bottom pattern is a technical analysis charting pattern. It describes the drop of a stock or index, a rebound, another drop to the same or similar level as the original drop, and finally another rebound.  As its name implies, the pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak in-between . Although there can be variations, the classic Double Bottom Reversal usually marks an intermediate or long-term change in trend . Many potential Double Bottom Reversals can form during a downtrend, but until key resistance is broken, a reversal cannot be confirmed. For more details, read [7]. Figure 1.  Relationship of $SPX and VXV:$VIX ratio (02/05/2021; Courtesy of stockcha...

In Jim Puplava’s Big Picture: Forecast 2016 , [1] his prediction for year 2016 is that 2016 will be similar to 2015 except with much higher volatility.  To invest in a high volatility market, one strategy is investing in dividend-growth stocks. In this article, we will touch upon the following topics: Advantages of dividends How to find trustworthy dividends How to spot risky dividends Investment ideas Table 1. Dividend Growth Stocks Outrun the Competition Over Time Source: Ned Davis Research Advantages of Dividends The advantages of dividends include [3,25] Provide a steady stream of income This income is steady and dependable Dividends on most stocks are paid every quarter. The income provides a return you can count on regardless of stock market conditions or price fluctuations. Provide an inflation hedge These dividends can increase over time providing investors with a greater source of income and an inflation hedge . You don't get this with a ...