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Nightly Recap 3-17-2010

Posted by Investing Freak on March 17, 2010
General / 1 Comment

Market Summary:
DOW      +47.69 (10,733.67)
S&P        +6.75 (1,166.21)
Nasdaq  +11.08 (2,389.09)

Nightly News Links

US Economy:

PPI Is Stabilizing (Econompic)
Wholesale prices fell a larger-than-expected 0.6% in February after seasonable adjustments, with energy prices falling 2.9%, the Labor Department reported Wednesday. This is the largest decline since last July. The producer price index has risen 4.4% in the past year, the government said.

437 Retail Store Closings Signal Major Brand Restructuring (RIS)
The spring thaw can’t come fast enough for retailers that haven’t yet adjusted to a retail landscape populated with bargain hunting shoppers that have limited discretionary spending. Find out which major chains, including Abercrombie & Fitch and Williams-Sonoma, are closing poorly performing stores with leases about to expire, and why one global retailer is exiting the U.S.

Now Bernanke Wants To Eliminate Reserve Requirements Completely (The Economic Collapse)
Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest.  But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says “impose costs and distortions on the banking system”. At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

Interesting Reads:

Tracking a Century of American Eating (Amber Waves)
A century of ERS’s food availability data reveals how the sometimes conflicting, sometimes reinforcing technological, political, social, and economic forces affect the types and amounts of commodities available for consumption. The following examples illustrate some of these forces and their impacts.

The Best 2-day Indicator (Trading SPY) (MarketSci Blog)
MarketSci puts four often used 2-day indicators to the test to see which has been the “best” measure of how overbought/oversold the market was over the last decade.

In Dod We Trust – The Daily Show (Video)
Chris Dodd introduces financial reform legislation and Jon Stewart provides another hilarious clip.

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
In Dodd We Trust
www.thedailyshow.com

Michael Lewis on The Daily Show  (Video)
Michael Lewis talks about the financial crisis and subprime mortgages with the Jon Stewart. I love The daily show when they talk about finance.

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Michael Lewis
www.thedailyshow.com

Have a Good Night

-K

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Sotheby’s (BID) as a Market Indicator

Posted by Investing Freak on March 14, 2010
Market Analysis / 1 Comment

I came across an interesting article today on Sotheby’s (BID).  Some analysts and websites praise it for being a leading market indicator.

Since it caught my attention I decided to do some research on it.

According to Investorwalk.com

Sotheby’s (BID) is an auction house for expensive artwork, jewelry, antiques and collectibles. It could be used as a gauge to measure hot money and liquidity flowing around the world. The argument: when super rich people have too much money to burn, they will bid up the prices of expensive art sales by setting one record after another.

Using a specific stock as a leading indicator doesn’t sit well. Sure Sotherby’s might have declined a bit early than the rest of the market for a few recessions but historical data can’t really predict the future.  Sotherby’s, being just another business out there, might take more risks and make wrong bets causing their price to go down while markets stay their course.

While at Artmarketmonitor.com an article got written in March of 2009 where they Quoted Barron

John Angelo, a hedge-fund manager who sits on Sotheby’s board, has bought 125,000 shares in the auction house since March 6 for about $970,000, or an average of $7.74 per share.

Granted, less than a $1 million is hardly a big play, especially for a director of the company. But when a number of smart market players make a move into Sotheby’s stock, no matter how depressed, it suggests a level of confidence about the art market in future, don’t you think?

Now we come to the point where I put my visual charts to work (I am a visual person).  Bespoke Investment debunks this Sotheby’s myth but I am willing to test it right here. (Click Pictures to Enlarge)

Well I am sort of convinced. If we used BID as an entry and exit signal we would have had fewer fake-outs.

Also the March bottom is Interesting as BID took nearly two weeks in a range and finally broke out.  (Below is a close up of the March 2009 Lows)

Will  Sotheby’s (BID) continue to be a “leading” indicator?  Like all other indicators, this stock might lose its name with time but until it’s proven wrong I am  adding this to my indicator arsenal.

Voice your Opinion below in the comment box.

-K

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Is The Oil Bubble Ready To Burst?

Posted by Investing Freak on July 07, 2008
Market Analysis / Comments Off on Is The Oil Bubble Ready To Burst?

Bubbles Always Have a Limit where they can no longer grow and sustain the hype.

I have seen oil run up like many of you have but without owning a car it hasn’t hurt my wallet yet.

I’ve been thinking of investing in an oil shorting stock (Exchange traded Fund in this case.)
Symbol: (DUG)   which bets that oil will go down. The ETF that bets for oil is (DIG) and the top 10 holdings are listed below.  DUG basically almost shorts all those companies and more.

Top 10 Holdings For Dig
Security Description Weight
EXXON MOBIL CORP COM STK 25.21%
CHEVRON CORP COM STK 10.87%
CONOCOPHILLIPS COM STK 6.96%
SCHLUMBERGER COM USD0.01 6.45%
OCCIDENTAL PETROLEUM CORP 3.81%
DEVON ENERGY CORP(NEW) 2.62%
TRANSOCEAN INC. (NEW) COM 2.40%
HALLIBURTON CO COM STK 2.36%
APACHE CORP COM STK 2.35%
MARATHON OIL CORP COM STK 1.9

Source: ProShares

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Here is my usual chart showing the trend reversal the past few days.

It broke through the 50 day moving average and might make a modest run.


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An interesting chart showing that the oil price has touched base with the total oil consumption just like the 1980’s bubble.
Source: SmartEconomy
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Disclaimer: I have not invested into DUG yet but it is getting very interesting.

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