A Three-Year Bull Market: Feeling Better Yet?

4 mars 2012

Wall Street Journal

On March 9, 2009, the stock market hit its postcrash bottom. Today, after a three-year rally that’s seen the Dow Jones Industrial Average rise 98%, from 6547 points to 12978, investors are trying to understand how to explain the good fortune, and whether it will continue. "In March 2009, the stock market was priced for another Depression," says James Paulsen, chief investment strategist at Wells Capital Management. "What we have come to realize is that the economy was probably never that close to depression and is now in recovery; consequently, valuations are being reversed."

Adds John Brynjolfsson, who runs hedge fund Armored Wolf: "We’ve been to the depths of Hades and back."


One of the biggest factors behind the three-year burst for stocks: easy money. The Federal Reserve cut interest rates and took other steps to send interest rates plummeting. Lire la suite »

Going long still seems the way to go

29 février 2012

Financial Times

It doesn’t matter how bullish investors are, the market does not usually go up in a straight line for an extended period. The recent grind higher for the S&P 500 may therefore be stretching its luck. By Monday’s close the benchmark is up 100 points, or 8 per cent, since the turn of the year without any pullback worthy of the name.


But this has left the 14-day relative strength index flirting with overbought territory above the 70 mark. Indeed, it has been about this level for much of the past two months. The past two times such sustained optimism was evident it resulted in declines for stocks. After April 2010 the S&P fell nearly 7 per cent in a few weeks. February 2011’s RSI peak triggered a 6 per cent, three-week retreat. Lire la suite »

Where Do We Go From Here?

22 février 2012


The S&P’s surge past 1360 is ripe with meaning.

We’re there already — at 1360 for the S&P. That was the average year-end 2012 number forecast by the 10 Wall Street market strategists we polled for Barron’s annual outlook cover feature ("Buckle Up!" Dec. 19, 2011). The Standard & Poor’s 500 index closed Friday at 1361.

This says equally as much about the collective sobriety of the sell-side establishment after a tortured 2011 market path and the impressive vigor of the equity market in 2012. Lire la suite »

As Everything Disconnects And Everything Is Soaring, Morgan Stanley Issues A Warning

21 février 2012

Zero Hedge

The latest report from Morgan Stanley’s Graham Secker can be summarized simply as follows: i) in January everything has disconnected as traditional linkages between asset classes have broken down, ii) also in January every major asset class (equities, treasurys, gold, oil) was up materially, iii) such a phenomenon has been seen only 5 times in the past 5 years, iv) a double digit decline followed 3 of the past 4 such surges. Then again, as Bob Janjuah lamented earlier, when a bunch of bespectacled economists who have never held a real job in their academic careers since transplanted with banker blessings to various central bank buildings, and who continue to plan the fate of the world in secrecy (a fate that can be summarized as follows: CTRL+P), as the only marginal decision makers, who really cares anymore?

From Morgan Stanley: Lire la suite »

Unusual Drawdown Risk

21 février 2012

John P. Hussman, Ph.D

Hussman funds

In order to estimate likely returns and risks in the financial markets, our general approach is to identify a set of historical instances that match current conditions on a broad range of important dimensions (in practice, using an "ensemble approach" that randomizes over scores of subsets of historical data). We then look at various features of that cluster, including the average return that followed over various horizons, the deepest loss over various horizons, and the overall spread of those outcomes. In general, the clusters include a mix of both positive and negative outcomes, resulting in moderate estimates of expected return and moderate estimates of risk. In some cases, the average return across the cluster of instances is very positive, and the individual instances show few negative outcomes at all. That sort of condition justifies a very aggressive investment position. In contrast, since the late-1990’s, the average returns of the clusters have been quite poor, with a preponderance of negative outcomes in historical instances having similar characteristics. Lire la suite »

Kass: What to Own and How Much

14 février 2012

The Street

This commentary originally appeared at 8:50 a.m. EST on Feb. 13 on Real Money Pro — for access to all of legendary hedge fund manager Doug Kass’s strategies and commentaries, click here.

So far, the Cassandras’ predictions of global collapse and failure have been proven false. Some of the most notorious bears are now turning bullish and revising their forecasts to the positive. Other "gloom and doom" holdouts are feeling the heat. We think that heat will intensify…. Lire la suite »

Market Volume Hits Fresh Non-Holiday Decade Lows

14 février 2012

Zero Hedge

Surrealer and Surrealer (sp.) is the only way to describe today’s activity. With a technical halt in CME’s oil complex trading which was quite obviously driven by some rogue algo between Oil futures and the USO oil ETF, perhaps it is no surprise that today’s NYSE volume (16% below the year’s average volume) is the lowest on Bloomberg data for a non-Holiday day in over a decade. ES (the e-mini S&P futures contract) also had a dismal day with the day’s total just beating February 6th previous multi-year low (non-holiday) volume and 30% below the 50-day average volume.

NYSE volume (NYSEVOL on BBG) made a new low for the year (which means decade also) as today saw volumes 16% below an already terribly low year average.

Lire la suite »

Fink: Investors Should Be 100% in Equities

8 février 2012


Investors should have 100 percent of investments in equities because of valuations and higher returns than bonds, said Laurence D. Fink, chief executive officer of BlackRock Inc. (BLK), the world’s largest money manager. Investors who seek the safety of treasury bonds will have minimal returns and will not be able to meet their needs with the U.S. Federal Reserve expected to keep interest rates low, said Fink, who in 1988 co-founded the New York-based manager with $3.5 trillion of assets. By contrast, equities are trading at the lowest valuations in 20 or 30 years. Lire la suite »

Stocks Least Loved Since ’80s on U.S. all of Worry

7 février 2012


The Standard & Poor’s 500 Index’s best start in 25 years is doing little to restore Americans’ confidence in the stock market. The benchmark gauge for U.S. shares has climbed 6.9 percent in 2012, the most since it rose 14 percent to begin 1987, data compiled by Bloomberg show. It traded at an average of 14.1 times earnings since the start of 2011, the lowest annual valuation since 1989. More than $469 billion has been pulled from U.S. equity mutual funds over five years and New York Stock Exchange volume slipped to the lowest since 1999. Lire la suite »

What Do the Stock Charts Suggest for February ?

3 février 2012


U.S. stocks had their best January in 15 years. But technical indicators are sending mixed signals about whether the rally can continue.

Even intermediate-term bears such as yours truly can see that stocks have been in short-term rally mode for nearly two months. And now with the Standard & Poor’s 500 notching a so-called golden cross, the mood of the market remains positive. New highs here we come? Not so fast.

Chart 1


Kass: A Contrarian’s Dream

3 février 2012

The Street

Today’s dominant investor classes — individual investors, hedge funds and pension funds — have de-risked and are relatively uncommitted to equities.

A re-allocation into stocks (and out of bonds) represents an underappreciated and potentially massive (and latent) demand that could easily be the catalyst for a move to all-time highs in the S&P 500 in 2012. Lire la suite »

Nous, agences de notation, ne faisons que notre métier

1 février 2012

Les Echos – Yann Le Pallec est responsable Europe chez Standard & Poor’s

Les périodes de crise sont propices à la mise en cause des agences de notation. Cette époque agitée, où l’endettement des Etats et des acteurs économiques est devenu un souci majeur, leur vaut des attaques particulièrement violentes, parfois irrationnelles. Lire la suite »

Is the market getting too quiet ?

1 février 2012

Condor Options

At the time of publication, Jared Woodard held positions in SPX options.

The market has not been this docile in more than eight months. The short-term volatility of the S&P 500 dipped below 10% in mid-January, and the market has kept getting quieter as stocks churn flat-to-higher. The temptation when stocks get this quiet and options become this cheap is to assume that volatility will soon revert higher. But before speculating on rockier markets up ahead, it is worth looking back at how similar markets have fared historically.

Fig. 1. SPX 10-day Historical Volatility, 2009 – 2012. Source: Condor Options

To get a sense of just how calm equity markets have been recently, compare the sub-10% historical 10-day volatility for SPX to the last few years of market history. There have been four periods since the March 2009 market bottom during which SPX has traded with such lack of intensity. In the first three cases, market volatility touched 20% within a month or less. In the final case, stocks stayed quiet from April to July 2011 before getting rowdy for the European banking crisis. Fig. 2 zooms in on the same data from January 2011 to the present. The lower panel in each chart shows the percentage rank of each day’s volatility estimate in relation to market data since 2001. Lire la suite »

30 janvier 2012

John P. Hussman, Ph.D. – http://www.hussmanfunds.com/wmc/wmc120130.htm

Goat Rodeo – Appalachian slang for a chaotic, high-risk, or unmanageable scenario requiring countless things to go right in order to walk away unharmed.

Over the years, of the most frequent phrases in these weekly comments has been "on average." Most of the investment conditions we observe are associated with a mix of positive and negative outcomes, so rather than making specific forecasts about future market direction, we generally align our investment position in proportion to the average return/risk outcome, recognizing that the actual outcome may be different than that average in any particular instance. Lire la suite »

Un art difficile

27 janvier 2012
Les Echos
La bonne surprise des résultats américains est qu’il n’y a pas de mauvaise surprise. Pour l’instant.

Presque toujours en politique, le résultat est contraire à la prévision, professait Chateaubriand. Les boursiers n’ont nul besoin de se plonger dans les « Mémoires d’outre-tombe » pour constater qu’eux aussi échappent rarement à cet axiome. Caterpillar et Colgate-Palmolive ont rejoint la cohorte des Apple, Microsoft, IBM, Intel, McDonald’s et General Electric qui ont publié de meilleurs résultats nets par action que prévu au dernier trimestre de 2011 et dont les perspectives, pour cette année, sont tout sauf alarmantes. Lire la suite »