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Showing posts from February, 2018

Interest Rates and Stock Multiples

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(Updated 03/13/2018) Job creation remained solid in the small business sector as owners reported a seasonally adjusted average employment change per firm of 0.22 workers, a strong showing and a repeat of last month. A headline on Bloomberg —"Goldman Says Stocks May Plunge 25% If 10-Year Yield Hits 4.5%" —said that: [1] If the 10-year U.S. Treasury yield hits 4.5 percent by year-end, the economy would probably muddle through -- stocks, not so much, according to Goldman Sachs Group Inc. Goldman’s base-case scenario calls for a 10-year yield of 3.25 percent by the end of 2018, though a “stress test” out to 4.5 percent indicates such a move would cause stocks to tumble, economist Daan Struyven wrote in a note Saturday. He also said the economy would probably suffer a sharp slowdown but not a recession.  “A rise in rates to 4.5 percent by year-end would cause a 20 percent to 25 percent decline in equity prices,” the note said. Remember that US Treasury traders ar...

Financial Markets and the Business Cycles

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Updated on 06/08/2024 This Signal Flashed "Recession" For 22 Months Straight (YouTube link ) By October, TLT plunged 50% from its July 2020 peak, then rebounded 20% by year-end 2023. This year, inflation worries pushed TLT down 10%. Original Post Bull Market A bull market normally goes up in 5 waves and has 3 phases: Smart money moves in Smart money guys — who are not market timers, they’re value finders  Institutional money moves in Public moves in Wall Street will provide the story to catch everybody's attention and public money moves to the market Market Topping Market topping is a process which normally includes  different asset classes peaking in a specific sequence .  Using tech bubble as an example: Bond market peaked  in 1999 Stock market peaked  in early 2000 Stock market historically peaks an average of seven months before every recession Commodity market peaked  in fall 2000 A  bear market is normally triggered by the following series of ...

Technical Analysis: USD to CAD Currency Exchange Rate

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(Updated 06/30/2018; Click Read More to view the original article) The greenback had a strong quarter ending on 06/30/2018, appreciating against all the major currencies. The Canadian dollar's 2.25% decline made it the strongest of the other majors and is consistent with the loonie's tendency to outperform in a strong US dollar environment .

Stock Market—Primary Trend & Secondary Trend

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Two main indexes are used as metrics in the analysis: S&P 500 NYSE Which is broader than S&P 500 For discussion, terms used here have the following meanings: Primary trend Long-term trend  Secondary trend Short-to-intermediate term trends In this article, I will summarize ways of monitoring the primary or secondary trends of  stock market. Primary Trends When SPY hits all time high on 01/26/2018, it is around 11.5% above its 200-day moving average ( MA ), which is historically frothy. To monitor the primary trends, here are some gauges you can use: Slope of the 200-day moving average ( $SPXEW ) $SPXA200R For a primary uptrend to manifest itself, most of the index constituents need to trade above their 200-day averages Death Cross Considered a bearish signal within the market, a death cross occurs when the short-term, 50-day moving average, also called a price trend, crosses below the long-term, 200-day moving average. Some analyst...