Posts filed under “Cycles”

SPX Index Secular Markets (1900-2010)

We’ve taken many longer term looks at the markets (See, for example, this, this, this or this) but the following chart from UBS Technical Analyst Peter Lee really tickled my fancy:

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click for larger graphic

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Source:
2011 Technical Market Outlook
Peter Lee – Chief Technical Strategist
Wealth Management Research
December 2010

Category: Cycles, Markets, Technical Analysis

NFIB: Modest Improvement and Correlation du jour

The National Federation of Independent Business (NFIB) released its Small Business Economic Trends Report (SBET) [.pdf], and the news was an improvement over the prior month: The National Federation of Independent Business Index of Small Business Optimism rose 1.5 points in November rising to 93.2, the highest reading since December 2007, and the fourth consecutive…Read More

Category: Consumer Spending, Cycles, Data Analysis, Economy, Employment

Consumer Deleveraging Continues

The Fed released its report on consumer credit, and it comes as no surprise that revolving credit eased for the 26th consecutive month as consumers continue to shed credit — either by paying it down or, in some cases, walking away from it.  From a high of $973.6 billion in August 2008, revolving credit has…Read More

Category: Consumer Spending, Credit, Cycles, Data Analysis, Economy

Bump Higher in Job Openings

The Bureau of Labor Statistics just released its most recent Job Openings and Labor Turnover (JOLTS) data, and the number of job openings increased to 3.4 million (from 3.0 million last month; it was a gain of +351k openings, to be precise).  Consequently, the number of unemployed per job opening has declined from 6.25 (Oct. 2009,…Read More

Category: Cycles, Data Analysis, Economy, Employment, Markets

Zulauf: How Cyclicality Drives Investing Decisions

I have been a fan of Felix Zulauf’s approach to investing for many years. The longstanding Barron’s roundtable member is a straight shooter, with a superlative track record. That was why I was thrilled to do an extensive interview with this Summer (Interview, Transcript). Felix is advising on a new fund (Disclosure: We are investors…Read More

Category: Cycles, Markets

The New Economic Cycle

Gordon Long has an interesting graphic on what he describes as the New Economic Cycle. > > Quite fascinating . . . > Source: We’ll Need The Courage Of Our Forefathers The New Economic Cycle Gordon T. Long The Automatic Earth, November 8 2010 http://theautomaticearth.blogspot.com/2010/11/november-8-2010-well-need-courage-of.html

Category: Cycles, Economy

Grinding It Out

Invictus here, folks.  (Have I mentioned what a pain in the ass it is to track down references to my work since Morgan Freeman and Matt Damon stole my name?). Now that the NBER has officially dated the end of the recession, it probably makes some sense to start putting comps in terms of “from…Read More

Category: Cycles, Data Analysis, Economy

Monday Morning Grab Bag

Invictus here, folks, with a smattering of items that caught my eye last week.  Food for thought on what will likely be a quiet Columbus Day trading session (famous last words). Revisiting a theme I introduced here in July, I continue to follow the trend of Temporary Services jobs vs. Private Sector jobs less Temps. …Read More

Category: Credit, Cycles, Data Analysis, Economy, Employment

September Trading and Q4

If you closed your eyes in January and opened them today, stocks have barely performed. But the swings have been enormous.

Markets of barely positive on the year, despite all the bad news — Greek scare, Euro crisis, Flash Crash, China slowdown, U.S. double dip, Treasury yields at all time lows, on top of the 2009 run up that left markets overbought.

Despite the ugly U.S. newsflow, US markets have actually been resilient this year. There have been multiple opportunities to rollover, or even crash, and somehow, we have  managed to avoid that fate so far (Cue conspiracy wingnut rant). Perhaps this means equities have more strength than people think.

Let’s have a look at some of the present and historical data.

The first chart shows the swings the market has taken this year: Down 7%, up 14%, -15%, +10%, -6%, +9%. So much for Buy & Hold: This is a nimble trader’s market:

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2010 Market Swings


Chart courtesy of Michael A. Gayed, Pension Partners

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Next up, let’s look at some history: The Stock Trader’s Almanac shows us what September trading (since 1950) has looked like, along with the subsequent Q4 performance. Yes, its a sweet track record — 1973 and 2007 are the only real nasty marks — but I must remind everyone that correlation does not equal causation. (50 years of data is not sufficient to say this is not a random outcome).

The Alamanc notes:

“In nominal terms, Sept will be the 2nd best on record for the S&P 500, a great run of almost 10%. Let’s look at the gain in another context. As is done with economic data to take out the influence of inflation, a REAL calculation is done to deflate the NOMINAL reading in order to take out the noise of higher prices vs volume. Using the CRB index as a market inflation gauge for Sept, the S&P 500 in REAL terms only rose modestly as the CRB index is up 8.7% month to date. This highlights the allure of inflation and higher asset prices from a policy perspective as it creates an image of prosperity but with a much more unstable underpinning.”

Here is the Alamanac’s table of historical September versus Q4 runs:

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S&P Sept Q4
1954 8.3% 11.4%
1998 6.2% 20.9%
1950 5.6% 4.9%
1996 5.4% 7.8%
1997 5.3% 2.4%
1958 4.8% 10.3%
1973 4.0% – 10.0%
1988 4.0% 2.1%
1995 4.0% 5.4%
1968 3.9% 1.2%
2007 3.6% – 3.8%
2009 3.6% 5.5%
1967 3.3% – 0.2%
1970 3.3% 9.4%
1965 3.2% 2.7%
1964 2.9% 0.7%
1980 2.5% 8.2%
2006 2.5% 6.2%
1976 2.3% 2.1%
1955 1.1% 4.1%
1983 1.0% – 0.7%
1992 0.9% 4.3%
2004 0.9% 8.7%
1982 0.8% 16.8%
2005 0.7% 1.6%
1953 0.1% 6.3%

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Last, let’s look at a set of economic projections that forecast future economic performance by combining historical patterns with recent data, from Trendlines Research.

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Category: Cycles, Economy, Markets, Technical Analysis

War & Peace + Inflation + Secular Bull = Dow 38K ?

I mentioned this morning that Jeff Hirsch is the anti-Prechter — forecasting a wild $38K Dow in 2025. (Discussed this AM here, with Jeff’s full piece here) Jeff and I are in the same secular bear market camp; However, he argues that the current secular Bear market will end ~18 years after the last secular…Read More

Category: Cycles, Inflation, Investing, Psychology, Technical Analysis, War/Defense