A Meme Rush Pushes Stocks to the Summer Trading Season – Above the 40 (May 28, 2021)

Stock Market Commentary Summer trading in the U.S. traditionally starts after the Memorial Day holiday weekend. The period typically features lower levels of liquidity and, accordingly, periods of listless trading interrupted by bursts of wild volatility. While the “sell in May and go away” adage is a poor trading strategy, August is the year’s most … Read more

The Federal Reserve Hinted At Exuberance in Financial Markets

The Federal Reserve released its report on Financial Stability with an interesting emphasis on potential vulnerabilities from “elevated risk appetites”. The Fed included an evaluation of valuation measures. The report even called out “meme stocks” as part of its evidence. However, the report stopped short of calling the market outright over-valued. Instead, the Fed took … Read more

Sell In May and Go Away: Now A Throwaway Adage

Why Sell In May? “Sell in May” is an old stock market adage that advises investors to sell in May and leave the stock market alone until November. According to Investopedia, the adage identifies May through October as a period of under-performance. The adage survives despite its persistently poor performance as a stand-alone strategy. For … Read more

A Bullish Kind of Bearish Call on the Stock Market

The stock market has enjoyed overbought trading conditions for the last 13 trading days and 14 of the last 15. I consider the stock market overbought when AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs), trades above 70%. Overbought periods are times of mixed feelings. The stock market tends … Read more

Stock Market Extremes: Summer vs Post-Summer Trading

This blog takes a particular interest in studying and learning from stock market extremes. This year, 2020, is full of stock market extremes with the summer and the first day of post-summer trading delivering their own extremes. Summer vs Post-Summer Performances and Stock Market Extremes Measuring summer as the first trading day of June to … Read more

The Top 1 Percent Even Rules the Stock Market: Divergences with Elites

Sam Ro is a managing editor at Yahoo Finance. Ro’s tweet with data from FactSet and Goldman Sachs (GS) shows how just 5 stocks – Facebook (FB), Amazon.com (AMZN), Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOG) – dominate the S&P 500 (SPY). The top 1 percent seem to be the only story worth telling given … Read more

Stock Market Bottoms Ahead of the Worst Jobs News In A Crisis

Purists in the financial markets often decry the “voodoo” of technical analysis. The U.S. jobs report for May, 2020 is an extreme version of how the fundamentals can also fail to provide sufficient guidance for trading and investing in financial markets. Economists and other sooth-sayers in consensus expected the U.S. economy to lose 8.3 million … Read more

Why the Australian Dollar and Japanese Yen Matter for Stock Traders

The Australian dollar (FXA) tends to be correlated with the S&P 500 (SPY). The Japanese yen (FXY) tends to be inversely correlated with the S&P 500 (SPY). The exceptions to these relationships are notable because the inevitable return to these relationships usually present unique trading opportunities. The drivers of these relationships are related to trader … Read more

Fun With Numbers: Daily Trading Patterns for the S&P 500

Back in 2012 and 2013, I wrote pieces describing some interesting daily trading patterns in the S&P 500 (SPY). The effects looked big enough to matter. In particular, Mondays and Tuesdays showed outsized performance differences from other days in the week. The performance divergences were very large in the first 5 months of 2013 as … Read more

Above the 40 (December 19, 2018) – A Fed Undeterred Is A Stock Market Not Yet Low Enough

AT40 = 9.4% of stocks are trading above their respective 40-day moving averages (DMAs) (oversold day #4)AT200 = 14.7% of stocks are trading above their respective 200DMAs (new 34-month low)VIX = 25.6 (no change!)Short-term Trading Call: bullish (caveats below!) Commentary On Tuesday night, basketball great LeBron James, now of the Los Angeles Lakers, experienced an … Read more