ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Stock Market Commentary The stock chickens have come to roost on declining market breadth. The stock market indices still generally appear fine, but an ever growing swath of individual stocks have fallen further and further behind. Last week in particular, sellers delivered an extended beating on individual stocks. The signs of waning confidence in the … Read more
The early 2000s built upon the 1990s momentum for extending home loans to as many people as possible. The drive culminated in the “ownership society” which incentivized the financial system to over-extend credit and fuel a housing bubble. That bubble collapsed spectacularly from 2008 to 2009. In the wake, builders became very wary about building … Read more
Housing Market Intro and Summary The housing data for April and now May confirm that the housing market had a kind of false start to the Spring selling season. Normalization continues to pressure short-term trends. Housing starts, new home sales, existing home sales, and home builder sentiment are in key downtrends. These measures are now … Read more
The Downgrade Zelman & Associates gut-punched home builder stocks with a major downgrade of the sector on June 10th. Zelman used a survey of builders to conclude that soaring housing prices are reducing demand. The survey also revealed “a fourth straight month of weaker-than-seasonal order activity in May”. (I have covered this dynamic as “normalization” … Read more
Turnkey Two years ago I wrote a somewhat snarky article about a partnership between Realogy Holdings (RLGY) and Amazon.com (AMZN) titled “Realogy and Amazon.com Partner Up But Does It Matter?” Real estate services company Realogy (RLGY) worked out a deal to increase order flow by hooking into Amazon.com (AMZN) smart products for the home. They … Read more
Stock Market Commentary Even the Federal Reserve must sit back and marvel as the S&P 500 (SPY) refuses to rest for long. Post-Fed handwringing sent the stock market into a period of doubt over previous assumptions of inflation fears. The previous week even ended with oversold conditions looming. However, as is the case with so … Read more
The Follow-Through Intro The stock market followed a rare stumble with a broad-based rebound from “oversold enough” conditions. Stocks were generally up across the board as buyers rushed in to grab “bargains.” AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs), jumped from 37% to 46%. My favorite technical indicator … Read more
Stock Market Commentary The Federal Reserve seemed to change the rules of the game. To-date, easy money policies and stubborn dovishness in the face of rising inflation was a formula for higher asset prices, reflation and inflation-friendly trades, and even rising fears of an over-heating economy. Last week, Federal Reserve Chair Jay Powell shifted the … Read more
Federal Reserve Chair Jerome Powell served up the alley-oop and James Bullard delivered the slam dunk. While the latest statement on monetary policy had nothing to say about a hawkish turn at the Fed, Powell served up notice during the press conference. Powell noted growth and inflation prospects that exceeded prior expectations, which in turn … Read more
The Follow-Through Intro The biggest follow-through trades from “Key Stock Sectors Missed A Breakout In Market Breadth – Above the 40” (June 11, 2021) erupted in the housing-related plays. Big cap tech looks more ready than ever to reestablish its leadership position over the market. The stock market had an initial negative reaction to the … Read more