Recent Asset Class Performance — International Markets Bounce

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Below is a look at the recent performance of various asset classes using key ETFs that we track on a daily basis.  For each ETF, we show its performance year-to-date, since the Fed hiked rates on December 14th, and since the close on Election Day 2016 (11/8/16).

Most US equity ETFs (left side of matrix) are up between 0-2% so far year-to-date, but the Nasdaq 100 (QQQ) has been a standout to the upside with a 2017 gain of 3.95%.  The Dow 30 (DIA) has lagged with a gain of just 0.60%.  Looking at sectors, Consumer Discretionary (XLY) and Telecom (IYZ) are up the most YTD, while Energy (XLE) and Consumer Staples (XLP) are down the most.

Since the Fed hiked rates in mid-December, the Energy sector is the only area of the US market that has felt any kind of pain (-2.48%), while Consumer Staples is down less than 1%.  Since the election, the Financial (XLF) and Telecom (IYZ) sectors are the only ones up more than 10%.

Outside of the US, many countries have already posted nice gains in 2017.  Brazil (EWZ) is up 7.8% YTD after posting a big gain in 2016 as well.  Hong Kong (EWH) and Australia (EWA) are both up more than 5%, while Canada (EWC), China (ASHR), India (PIN), and Japan (EWJ) are all up more than 3%.  Mexico (EWW) is the only country on our matrix that is down year-to-date, and that follows a very weak Q4 as well.

Looking at commodities, gold (GLD) and silver (SLV) have both gotten off to good starts to 2017, while oil (USO) and natural gas (UNG) are in the red.  Treasury ETFs are up both YTD and since the Fed hiked rates, but they’re all still down since the election.

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Equities Laying Low

One aspect I hate about winter, beside the dismal weather of course, is that we seem to hopping from one long holiday into the next. With the obvious result that pretty much nothing gets done. The situation is even worse over here in Spain where we’ve had on average at least one regional holiday scheduled every week. I kid you not. And that list doesn’t even account for Las Fallas which starts on March 1st and gradually turns Valencia into the Mediterranean equivalent of Sodom and Gomorrah by the time it ends on March 19th. I often wonder when those Spaniards actually do work as statistics claim that they work more hours per year on average as the Germans and of course the French. With all that time devoted to holidays, how can they find the time?

At least over in the U.S. you guys enjoy clear skies until Washington’s birthday on February 20th. However Trump gets sworn in on January 20th and given that I don’t expect much in terms of directional movement on the equities side until at least a day or two after – depending how much fireworks (ahem) we’ll actually be seeing.

2017-01-17_spoos_setup

Now you know that I’m not a slacker but must concede that this constant off and on really doesn’t help me get into the flow of things. It’s extremely difficult to maintain a trading campaign if participation keeps disappearing two days ahead of a three or four day weekend. And apparently I’m not alone as mid January is usually the period when we see some of the exuberance of the recent Santa rally is being corrected courtesy of low participation tape. Except that this year we’ve been getting more of those sideways gyration we’ve all loved to hate throughout most of 2016.

Anyway, based on the recent sequence of spike lows I’m somewhat tempted to grab a long position here, however it would have to be a near perfect entry in the vicinity of the 100-hour SMA. The context on the daily panel is supportive but is getting dangerously close to running out of mojo, which could be easily exploited by an organized stop run. On the positive side however we are building a strong base here which may aid us in the future.

2017-01-17_YM_setup

The YM actually shows us slightly better context and splitting your exposure between that one and the ES may not be a bad idea. For one I like that diagonal on the hourly as well as the touch of the lower 25-day Bollinger.

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Making Sense of the Market’s Auction Process

Here's an admittedly unusual chart taken from last week's stock market action.  The red lines represent the amount of total upticks in the market on a one-minute basis.  I use this as a measure of buying pressure.  The blue line represents one-minute closing prices in SPY.  The chart is arranged so that the week's high price for SPY is at the left and moves toward the low price at the right.  Time is not a variable here.  We are looking at buying pressure at each price level of SPY during the past week.

What we see is that buyers were quite active as we crossed the 227 level in SPY.  We also see very low levels of buying and in fact net negative buying from approximately 226.75 to 226.87.

It's a way of smoking out where the buyers and sellers are located.  I've found this to be a very useful way of thinking about "support" and "resistance"--and an especially effective way of identifying points where fresh buying or selling are entering the market.  

It's also an example of how looking at market data in new ways can provide fresh perspectives that aid market understanding.  If a price level has held sellers this past week but cannot hold sellers early this week, it's a very useful indication of a shift in supply vs. demand.

I find my most effective trading captures an understanding of who is in the market and what they've been doing.  Too many traders attempt to forecast what prices *will* do before they truly understand what they've been doing.  The market is an auction, and you're watching the behavior of buyers and sellers to determine whether the price of the goods is likely to rise or fall.  It's amazing what we can see when we place market behavior in proper context.

Further Reading:  The Most Powerful Step We Can Take Toward Becoming Solution Focused
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Kelebihan dan kekurangan uang kertas

kelebihan dan kekurangan uang kertas |  Uang Kertas dorar.info Sesuai dengan namanya, uang kertas adalah uang yang terbuat dari kertas. Uang ini termasuk dalam jenis uang kartal, atau uang yang beredar di masyarakat. Di Indonesia ada beberapa nominal uang kertas, mulai dari Rp 1.000,00 hingga Rp 100.000,00. Nah, apa saja kelebihan dan kekurangan uang kertas? Ada dua jenis uang kartal yang

Wells Fargo: Is That What You Call Success?

Wells Fargo reported Q4 results that missed analyst estimates. The large bank still trades at the high end of sector valuations, despite a relative underperformance over the last three months. Investors should remember that success is all relative. Before the open on Friday, Wells Fargo (NYSE:WFC) reported quarterly earnings along with a group of large financials. The troubled bank

Turning Information Into Knowledge: 100 Sources of Potential Insight

Traders are typically inundated with information--from charts and data feeds, chat, financial media, social media--but obtaining knowledge (not to mention wisdom!) requires some active filtering.  The challenge is to be open to new sources of perspective, but not so open that everything becomes a blur.  I would much prefer to deeply ponder five excellent sources of knowledge than skim fifty.  Indeed, it's the proliferation of information--and our desire to assimilate it all--that often prevents us from obtaining true knowledge and wisdom.

A recent feature from Feedspot highlights 100 top blogs and websites associated with the stock market.  These have been ranked as a function of site traffic and social media followings.  TraderFeed is on the list, as are a number of news and trading-related sites.  A great exercise would be to scan the list and find one source of information that can truly provide knowledge for your trading.  While not all 100 will be relevant to every trader and investor, the odds are good that at least one can provide new ideas and perspectives.

Creativity begins with new inputs:  we're most likely to achieve new insights when we look at new things and contemplate old things in new ways.  The challenge is finding the information most likely to provide us with actionable knowledge.  The list of 100 sites is a good place to start.  

Further Reading:  Some of My Favorite Financial Websites for Developing Traders
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Bespokecast — Episode 5 — Meb Faber

In our newest conversation on Bespokecast, we speak with investor, blogger, analyst, and commentator Meb Faber.  Meb is the CEO of Cambria Investments, has written three books on investing as well as 10 white papers and countless blog posts.  You can follow his work at MebFaber.com.  Cambria’s ETFs cover a broad swathe of US and global equity markets as well as asset allocation and fixed income.  For Meb and Cambria, evidence-based investing is at the core of their investment approach, and we spend much of the podcast discussing the specific investment strategies this leads to.  We were thrilled to record this conversation and are very excited with how it turned out.  We hope you feel the same!

To access episode 5 immediately, please start a 14-day free trial to Bespoke’s research product.  If you’ve already signed up for a Bespoke free trial in the past, you can gain access by choosing a membership option at our products page.  Here’s a look at past guests if you’re interested.

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