5/1 – Things People in the Finance Industry Don’t Want You to Know

Sy Harding:

Author of Riding the Bear, and who coined the term  “Sell in May“, passed away on Friday. His sell in May methodology entailed an MACD cross down after April 20. Another MACD cross in late October would signal the buy. His honesty and integrity were evident to all who knew him..That generation is passing and these qualities seem to be passing as well

Asset Class Overview

Equities fell on Thursday, reversing much of April’s gains.  Mixed economic data fueled a selloff in technology and small-cap shares that until recently had been strong performers. The Dow Jones Industrial Average fell 195.01 points, or 1.1% The S&P 500 index dropped 21.34 points, or 1%. The Nasdaq Composite Index shed 82.22 points, or 1.6%.

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The Nasdaq Biotechnology Index fell 3.1%, and is down 8.1% this week. Before its recent pullback, the index had gained as much as 21% for the year. The Russell 2000 index lost 2.2%. The small-cap benchmark had gained 5.5% for the year through last week’s high point.

“People are still kind of smarting from the GDP number,” said Ted Weisberg, a trader at Seaport Securities. “You can wrap any excuse around bad economic numbers, but at the end of the day they’re just excuses.”

European stocks rebounded from Wednesday’s steep losses. Germany’s DAX added 0.2%, while France’s CAC 40 gained 0.1%.

Crude-oil futures rose 1.8% to $59.63 a barrel, their highest settlement since Dec.11. Gold futures fell 2.3% to $1182.40 an ounce. The yield on the 10-year Treasury note rose to 2.096% from 2.035% on Wednesday.

Overview

Commodities and corporate bonds are the only asset classes to gain today. The downside led by real estate, Emerging markets, and US equities.

Sector Watch

XOP – Oil and Gas Exploration the only one of our 14 SPDRs to advance on Thursday. Only three advancers on a rolling week basis; Energy and Materials, stretching out to a rolling month we manage to have 6 of 14 higher. Recently this ratio was much higher.

SpdrDaily

Only 15 or our 79 sector ETFs managed a gain today. Quit honestly that is more than I expected before pulling the data. Those 15 were virtually all energy and metals ETFs. I am not a fundamentalists per se but with the enormous supplies of Oil around  I have to wonder what the energy markets are attempting to discount? Hmm, supply is up and increasing, demand is down. That does not sound to me like a bull market scenario.

On a rolling week basis we do manage 25 of the 79 higher. The leaders all up over 2% on the rolling 5 day look:

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I go through these exercises everyday looking for the next leaders wherever and whenever they show themselves.  😎

The rolling month shows 49 of the 79 higher. The leaders here, all up between 10% and 19% for the 21 trading days are:

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Things People in the Finance Industry Don’t Want You to Know

The following is from a great blog that is part of the reading room links below. Although I enjoy reading about the economy and the markets I do 99% of that reading in the evening and on the weekends. In other words when the markets are closed and I cannot act based upon emotion invoked in me by the author. Believe me it happens and at least it happens to me.

The one exception to that rule is reading about psychology or philosophy. Reason is obvious, it cannot evoke an emotional market response. Emotions can be and ofter are the death knell of otherwise good traders. In any case this article appears on “A Wealth of Common Sense blog”. I will give you here the salient headlines and then a link to the full article should you be interested.

Like most professions, everything is not always as it appears in the finance industry. Here are a few truths you will rarely hear from anyone that works in finance.

  1. No one really knows what’s going on most of the time
  2. Most of the things we argue about aren’t all that important.
  3. There’s no such thing as “smart money.”
  4. You can be right for the wrong reasons but still be compensated for it.
  5. It’s very difficult to differentiate between skill and luck
  6. It can be difficult to distinguish between relatives and absolutes.
  7. The bolder the pundit, the more people who listen to them.

Things People in the Finance Industry Don’t Want You to Know


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