5 CHARTS THAT WILL KEEP YOU IN PEACE AND NOT IN PIECES DURING THE WEEK AHEAD
click chart to enlarge
BUYING SHARES OF NYX FOR RETIREMENT ACCOUNTS
It is fair to say that shares of NYX (NYSE Euronext) will be sensitive to bull and bear cycles. It is a company that derives its revenues from the trading and access to various types of securities on a daily basis. In fact, between all the exchanges NYX owns globally, roughly one-third of all global equity trades are made through one of their exchanges. It is the largest such entity in the world. It popped up on my radar screen as a result of the tremendous amount of insider buying taking place in the company recently. Most impressive is the seven figure buy that took place by the Deputy Chairman of the company earlier this week. The per share price has declined significantly since last year when a merger was announced with Deutsche Boerse. That merger has since been dumped by European regulators and is no longer in the picture. While the shares have recovered from their 2011 lows of roughly $22 per share, they are nowhere near their $41 high of 2011 and a long ways from the all-time of $112 made in 2006. The future share appreciation in this company comes down to market environment...plain and simple. It is essentially a play on whether the global markets will be accommodating towards investors or hostile. An accommodating market sees increased volumes, participation and opportunities that will be reflected in the share price of NYX. A hostile market will, obviously, hurt the prospects of a company that deals directly with equity trading more than most other entities. In the meantime, the company is extremely shareholder friendly. It has a 4% yield, which always helps with the process of waiting around for a company to experience capital gains. They have been in the process of buying back shares for sometime now and recently announced another $550 million to be allocated towards share buybacks. Here is a technical look at the company: click chart to enlarge On a fundamental basis, all valuation measures point to opportunity. It trades at one times book value and 10 times forward earnings. They also sport some extremely fat margins that should remain consistent over the long-term. All of this is for a global leader in its respective sector, keep in mind. NYX is a long-term buy with a time horizon of 5 years plus at a minimum. I am purchasing it for retirement and conservative accounts only. Let it sit and forget type...
A FASCINATING INTERPRETATION OF THE PUT/CALL RATIO: VOLUME 3
Misinterpretations of sentiment indicators are common in today's market. Traders have become accustomed to looking at raw data for these indicators, without any respect for historical reference. The put/call ratios can be extremely effective if smoothed out and viewed from a relative basis. You do that by using moving averages instead of raw data and zooming out. Today we take a look at the equity put/call ratio. Traders like to refer to this as a "dumb money" indicator. This comes from the idea that smaller, retail investors enjoy getting involved in equity options and professionals tend to gravitate towards index options. I am not sure that there is a "dumb money" class left in this market. When even the small pockets of retail investors have a general grasp of contrarian theory, the act of fading the next guy becomes an exercise in futility. It's like the story of a hedge fund manager that goes to an investment conference and the first question the presenter asks, "How many of you in this room are contrarians?" 80% of the attendees raise their hands. The chart below displays the 20 day and 100 day moving average of the equity put/call ratio only. The bottom graph displays the S&P 500. I have marked important, multi-month tops with the vertical blue lines. You can see that there seem to be some definite requirements of where the 100 day moving average needs to go before important tops in the market are observed. This becomes all the more pronounced following periods of excess pessimism that are marked by important tops in the 100 day moving average of the equity put/call. I have highlighted those tops with a green box. The conclusion here is that the bears may have a lot more waiting to do before a top of any significance is observed. click chart to...
6 CHARTS THAT WILL HELP YOU MAKE FRIENDS AND INFLUENCE PEOPLE IN THE WEEK AHEAD
click chart to enlarge
THE MARKET IS SHOWING RESPECT TO AN IMPORTANT LEVEL OF RESISTANCE. NOW WHAT?
Today's move down more than likely marks a beginning rather than any conceivable end. It's the beginning of the market taking its foot off the proverbial gas pedal in favor of a consolidation or a pullback not to exceed 5% from the recent highs. You can see in the daily chart posted below that the Dow is showing a tremendous level of respect for the generational trendline/resistance point I discussed a couple nights ago. This is a sign of short-term weakness for the average. What makes it more decisive is the fact that the markets gapped down off of this resistance area. When you have momentum that develops off of such an important level it just shows that the market is paying all the more attention to it. click chart to...
THE POWER OF GENERATIONAL TRENDLINES AND WHAT THEY MEAN FOR THE CURRENT MARKET
I speak about generational trendlines now and then. I define them as trendlines that exert their influence over long periods of time that span multiple investing generations. These trendlines can often have origins that go back many decades. When the S&P was battling with the 1230 level from August until nearly the end of 2011, there was a generational trendline sitting right in the middle of that range dating back to the early 1970's. That trendline marked the bottom for the 1987 crash. The bottom for the 90/91 market that saw the "tech boom" kickoff soon thereafter. Its influence was obviously felt during the second half of 2011 as the 1230 level was a consistent battle zone between the bulls and the bears. The Dow has been battling the same types of generational trendlines since the 2011 top. The origins of the pink trendline that you see in the chart below go back to the 1930's for the Dow. This trendline marked the 1966 top that led to a 15 year sideways range for the Dow. It marked the 2003 low that saw the markets rise into the 2007 top. These trendlines should never be used as absolute points of support or resistance. Rather they should be used as guideposts or benchmarks to gauge how strong or a weak a market is currently. Think of them as 100 pound dumbbells that the market has to lift. If the market lifts the dumbbell with ease, meaning that it breaks out over a generational resistance line, as an example, then the market can be deemed as strong. If, however, the market breaks down violently off of the generational trendline, then the market can be deemed as being weak since it dropped the weight. You can see in the chart below we are right up on the pink trendline and consolidating below it. This leads me to believe that the Dow wants to break up through the trendline, above 13,000. You can see that the Dow had three counterfeit moves about the generational trendline in 2011 before breaking down severely. This was much like the three counterfeit moves below the trendline that I outlined in the "Most Important Chart I've Ever Posted" posting in mid-December. It could be that the Dow wants to break up through the trendline and then break down for a correction before trying to move up in a substantial manner later this year. It could also be that the Dow simply breaks up through the generational trendline and accelerates, not looking back. The latter scenario is highly bullish. Highly bullish doesn't do it justice. It is a monstrously...
AN UPDATE ON THE FOUR RECOMMENDED STOCKS SO FAR IN 2012
A technical update on the performance of the four recommended names I have mentioned here since the start of 2012: click chart to enlarge
5 CHARTS THAT WILL HELP THOSE WITH BLINDERS SEE THE ENTIRE LANDSCAPE
click chart to enlarge
A FASCINATING INTERPRETATION OF THE VIX & PUT/CALL RATIOS: VOLUME 2
Notes are on the chart. Per the usual, conventional wisdom regarding these two indicators is way off base here. Moving averages only to provide a clean price picture. click chart to enlarge