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Money In Motion – October 5, 2015

October 5, 2015, 4:02 am
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Today’s piece focuses on a subject not addressed in these pages for a long, long time: gold bullion and gold mining stocks. To our eye, gold is tantalizingly close to breaking above the downtrend line it has been descending the past three years. As such we are buyers of the SPDR Gold Shares ETF (GLD).

And gold mining stocks as a group, as a theme, also are judged likely to move higher in the days/weeks ahead. To that end, the report focuses on the Philadelphia Stock Exchange Gold and Silver Index and makes the case for buying the Market Vectors Gold Miners ETF (GDX).  For those in search of specific gold miners to buy (rather than expressing a bullish view through GLD or GDX, please email us and we will forward a list of favorite gold miners in the US, Canada, Europe and Asia.

Finally, on pages 11-12, you will find an appendix examining the damage done the past few weeks to so many individual stocks in the S&P 500 Index-Friday’s ricochet and strong close notwithstanding. Tellingly, even though the S&P 500 itself has yet to breach its August 24th low, some 221 stocks in the Index (44%) have violated their respective August 24th lows, with 68 stocks (13%) currently below their August 24th lows.

By our work, all the same levels for the SPX cited in the pages over the past many weeks (levels above and below) are still “in play”… and it remains our view that equities as an asset classes are under duress and headed lower in the weeks/months ahead.

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Money in Motion –“UNCH”, literally…

November 1, 2015, 5:59 pm
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The S&P 500 has advanced five weeks in a row and now is +11.08% from its September 29th low of 1871.91.  The past month was the best month for US equities in four years, following the worst quarter in four years. So which is the primary data point? The former or the latter?  Which is the important data point… the worst 3-month selloff in four years or the best 30-day rally in four years?

Either recent strength is the beginning of a sustained recovery for equities from which new highs will be achieved (new highs at least 2.5% above the May 20th SPX high of 2134.72 are the only thing that would validate the current market as still bullish)… or… recent strength represents a steep, quick (read: impetuous) and ultimately unsustainable rally back to a difficult level where overhead supply comes into play (read: where interested sellers are lying in wait – people who lost money during the plunge of late August who are interested in recouping their losses and being made whole in the event that prices move any higher from where we closed Friday, to levels where they themselves entered just before getting hurt).

So here we are, 51 sessions later and the S&P 500 is trading at the exact same price it was before the plunge of August 19-25.  A rare instance when one can use the acronym “UNCH”.

            Thursday, August 19, 2015              Friday, October 30, 2015

             S&P 500 Index:  2079.61                  S&P 500 Index:  2079.36

Today’s piece takes a look at the S&P 500 and other U.S. indices and several global equity indices, examining where they are in relation to their respective August 19th levels.  Almost without exception, most are still below where they were on August 19th, having not recouped all of their losses.

Thereafter, you will find a list of U.S. Buys.  While we ourselves very much believe this to be an unfavorable juncture for equities generally, we certainly understand that many (in fact, most) market participants are long only and must be fully invested at all times.  The stocks on the list, sorted by Sector, are your best bets- by our work.

Trade well,

-Carter

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Money in Motion: Today’s is an Eclectic Piece, Comprising Three Parts..

November 9, 2015, 4:24 am
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Part 1: [Pages 2-7]  With the S&P 500 having advanced six weeks in a row (a very rare occurrence), we thought we’d look back at all instances where the market has managed such a feat in order to determine what happened thereafter.  Given that there are eight calendar weeks remaining in 2015 (a total of 35 full trading sessions and 2 half sessions), part one of today’s report examines how the market performs 1 week later, 2 weeks later, 3 weeks later, etcetera, looking out 8 weeks after being up six consecutive weeks.  Our own skepticism notwithstanding, were the market to do what is has done on average in the past after advancing for six weeks straight, the S&P 500 will manage to eke out a slight new high between now and year-end.

Part 2:  [Pages 8-13]  Based on how poorly so many individual consumer stocks are acting, we are downgrading the S&P 500 Consumer Discretionary Sector from Overweight (the posture we’ve maintained since joining Cornerstone in April) to Underweight.  Despite being the best performing S&P 500 Sector year-to-date (+12.76%), it looks to us that the good times are coming to an end.

Part 3: [Pages 14-22]  Based on how very well the stock is acting, we’re taking aim at Amazon (AMZN), making the case to trim longs, to write calls, to do something- if one is long.  The stock’s current steep intermediate advance – in the context of its year-to-date advance – is judged to be “excessive”.  Presumption is one can own the stock lower in the days/weeks ahead.

Trade well,

-Carter

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Catching Up With Carter – November 11, 2015

November 11, 2015, 4:29 am
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This is what’s on our mind; what’s on yours?

Trade Well,
Carter

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CSM | Money in Motion – Financial Markets at Present: What We Know and Don’t Know

November 16, 2015, 4:07 am
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We know that most market participants (roughly 85%, by our estimate) believe we are in a Bull Market.
Yet we know “market construction” and breadth have been deteriorating for 18 months and at present there is not a single major equity index in the world trading in an uptrend.

We know that most market participants (roughly 85%, we’d say) consider the selloff of August 19-25 to be a Bull Market correction.
Yet we know that more than half of the stocks in the Russell 3000 (1587 names to be exact or 52.7% of the Index) are currently down more than 20% from their respective 52-week highs.

We know most market participants believe the resumption of weakness in September that left S&P 500 almost back down at its August 24th low (and the subsequent rebound off said low) constituted a successful “test” of the August 24th lows.
Yet we know that some 2260 stocks in the Russell 3000 Index (75%) are currently down more than the 10% from their respective 52-week highs.

We know that most market participants consider a year-end rally to be a foregone conclusion, even a birthright.
Yet November, typically one of the top-3 performing months of the year, is more than half way through, with the S&P 500 – 2.71% month to date.

We know many players believe certain marquee growth stocks are “immune” from any trouble… stocks such as Starbucks, Nike, Home Depot, Facebook, Amazon, Under Armour, Price Line and Salesforce.com to name just a few.
Yet these and a handful of other stocks were the worst performers on Thursday and Friday last week.

We know that many market participants of late have rotated capital into Materials, Industrials and Energy stocks.
Yet we know that Copper is making new 52-week lows and six years lows, WTI Crude Oil is hovering ominously just above 52-week lows and six year lows, and the same can be said for Brent Crude, Natural Gas, Iron Ore, Nickel, Aluminum, Rubber, Corn, Wheat, Soybeans and Cotton.

These and other “line items” are discussed herein,

Trade well,
-Carter

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Money in Motion – Actionable Buys and Sells – and Nothing else

November 23, 2015, 4:04 am
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Today’s piece is intended as a compliment to the past several editions of “Money in Motion”.

Whereas recent work has been sector focused and/or has concentrated on top-down themes such as U.S. dollar strength, crude oil weakness (and overall commodity weakness), suspect breadth in the U.S. stock market, suspect action in stock markets around the world, etcetera… today’s report focuses exclusively on individual stocks and includes no market commentary.

The reports begins with a discussion of methodology (page 2)… then presents a handful of prototypical patterns we ourselves look for when singling out stocks to buy and sell (pages 3-16)… and concludes with a Master List of Buys (pages 18-20) and Sells (pages 21-23).

 

Trade well,

-Carter

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Catching Up With Carter – November 24, 2015

November 24, 2015, 4:29 am
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This is what’s on our mind; what’s on yours?

Trade Well,
Carter

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Catching Up With Carter – September 23 2015

September 22, 2015, 10:26 pm
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This is what’s on our mind; what’s on yours?

 

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CSM | Money in Motion: “Bearish-To-Bullish” Reversal Buys Into Year End

November 30, 2015, 3:42 am
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Today’s piece focuses on heretofore weak stocks in established downtrends whose recent very constructive trading action suggest that they are bottoming out.  As long-time readers will know, a stock in this position is characterized as a “Bearish-to-Bullish” Reversal Buy.

The pagination of today’s report is as follows:

Page 2-10:  Discussion of what constitutes a “Bearish-to-Bullish” Reversal Buy including a look at certain prototypical examples from the Buy List

Pages 11-13:  The Buy List presented in alphabetical order

Pages 14-16:  The Buy List broken down by Sector

Pages 17-19:  Appendix

 

Trade well,
-Carter

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CSM | Catching Up With Carter – December 3, 2015

December 3, 2015, 4:30 am
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This is what’s on our mind; what’s on yours?

Trade Well,
Carter

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CSM | Money In Motion: “Conventional” Buys Into Year-End

December 7, 2015, 3:42 am
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Today’s piece focuses on heretofore range-bound stocks judged to be toying with the prospects of breaking out to new 52-week highs.  As long-time readers will know, a stock in this position is characterized in these pages as a “Conventional” Buy.

The pagination of today’s report is as follows:

Page 2-10: Discussion of what constitutes a “Conventional” Buy including a look at certain prototypical examples from the Buy List

Pages 11-13: The Buy List presented in alphabetical order

Pages 14-16: The Buy List broken down by Sector

 

Trade well,

-Carter

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CSM | Catching Up With Carter – December 10, 2015

December 10, 2015, 4:40 am
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This is what’s on our mind; what’s on yours?

Trade Well,
Carter

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CSM | Money in Motion: It’s only a matter of time before the oft-repeated phrase of August-September-October “Bull Market correction” is abandoned on the street

December 14, 2015, 3:42 am
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Immediately following the sharp, 4-session break in the market of Thursday, August 18th to Tuesday, August 25, in which the S&P 500 dropped from 2096.92 to 1867.61 (-229.31 points… -10.94%), the selloff was interpreted – and quickly designated as – “a Bull Market correction”.

But not in these pages.

And following the ricochet of the month of October during which the S&P 500 climbed some 12%, the “Bull Market correction” determination won yet more adherents. And perhaps understandably so, because it is human nature to always find fresh cause for optimism. After all, hope springs eternal.

Hope springs eternal in the human breast;
Man never is, but always to be blessed:
The soul, uneasy and confined from home,
Rests and expatiates in a life to come.
 
From An Essay on Man by Alexander Pope (1688-1744)

But what we know as of last week’s close is that the S&P 500- some four months later – is well below the 2096.92 close of Wednesday, August 17th, the day before the 4-session plunge occurred. And what we also know is that even though the phrase “hope springs eternal” in the modern era has taken on a cynical – even pejorative – connotation, Pope’s intended meaning was simply that people will continue to hope even though they have evidence that things are unlikely to turn out the way they want.

And speaking of evidence, you will find much in the charts on the pages that follow… evidence that things cannot possibly turn out the way the “Bull Market correction” crowd has argued. Indeed, we think that phrase (and that designation) will be abandoned on the street in the days/weeks ahead.

Trade well,

-Carter

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CSM | Catching Up With Carter – December 17, 2015

December 17, 2015, 4:44 am
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This is what’s on our mind; what’s on yours?

Trade well,
Carter

 

*If you experience any issues with the above video link, please call (212) 257-4957 or email jnguyen@cormacteam.com to resolve.

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CSM | Money In Motion: Annual Christmas Week Edition

December 21, 2015, 3:15 am
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Whether you are gathered around the Christmas tree this week…
or simply taking a few days off to enjoy the slopes or the beach…
or just staying put and staring at your screens between now and year end…

Here’s to a prosperous year in 2016.
 
As to how the remaining eight and half (8 ½) sessions of 2015 play out… the odds are high that they play out well. Indeed, the statistics relating to final-week-of-the year performance are as follows:
 
Going back to 1928, when the S&P 500 was formed, the average 5-day return for all 5-day periods is 14.2 bps, with a standard deviation of 263 bps. Taking only the last 5 days of the year, the average return is 117 bps, with a standard deviation of 187 bps. So… not only is there a higher-than-average return during the last 5 days, but there is less variability around the average.
 
The last week of the year for the S&P 500 aside, 2015 is headed into the history books as a controversial year for equities as an asset class, worldwide. And regular readers will know that the author of these pages does not pretend to be sanguine about the market’s prospects in the weeks/months ahead. Regardless…
 
On the next page you will find a bit of history regarding US stock-market returns in years past… and how this year “stacks up”. What you’ll see is our seasonal interpretation of same.
 
The very best to each and every one of you; your interest in our work is greatly appreciated.
 
Trade well,
 
-Carter

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CSM | Catching Up With Carter: “Bullish-to-Bearish” Reversal Sells – December 22, 2015

December 22, 2015, 6:07 am
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Today’s piece covers “Bullish-to-Bearish” Reversal Sells.

This is what’s on our mind; what’s on yours?

Trade well,
Carter

 

*If you experience any issues with the above video link, please call (212) 257-4957 or email jnguyen@cormacteam.com to resolve.

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CSM | Money In Motion: A DOGS OF THE DOW Pick for 2016

December 28, 2015, 5:03 am
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Today’s brief edition of “Money in Motion” examines the dividend strategy known as Dogs of the Dow and offers you our own pick among this year’s Dogs for outperformance in 2016.

To begin, as classic chartists, we ourselves almost never engage in the business of buying weakness for the sake of weakness. Classic charting favors securities exhibiting positive (and improving) relative strength to the market, favors momentum, favors “success”, while buying the 10 stocks in the Dow Jones Industrial Average with the highest dividend yields at the end of each year is literally doing the opposite. It is buying stocks that almost certainly are in downtrends that very likely have underperformed the market over the preceding twelve months. It’s a strategy – as its name implies – that favors losers over winners.

And even though buying a stock in a downtrend is one of the worst things one can do in investing… Dogs of the Dow strategy is not so much a strategy of buying stocks that are down sharply (even though in effect that is what one ends up doing), as it is a strategy of buying stocks with high dividend yields.

To that end, while the Dogs of the Dow strategy over the past 15 years or so has beaten the market only about half the time, the strategy has produced meaningful excess returns since it was popularized by Michael B. O’Higgins in 1991. Further, when considering total return rather than absolute performance alone, the Dogs of the Dow strategy is a decided winner.

The premise, of course, is that so-called “Blue Chip” companies (companies that populate the Dow Jones Industrial Average) do not alter (read: cut) their dividends casually on account of year-over-year fluctuations in their business. As such, DJIA companies with a high yield – the argument goes – are near the bottom of their business cycle and are likely to see their stock price rise faster than low-yielding companies.

In any event, our pick for 2016 among the 10 Dogs of the Dow of 2015 is Procter & Gamble. And said pick is based solely on a technical basis, without any consideration of the fundamental underpinnings of the company, its prospects going forward, or its valuation at present.

Trade well,

-Carter

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CSM | Money In Motion: Top Down Macro as 2016 Gets Underway (Edition 1 of 2)

January 4, 2016, 3:55 am
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Top Down Macro…as 2016 gets underway.

( isn’t good, hasn’t been good, and is getting worse… by our work )

Trade well,
– Carter

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CSM | Money In Motion: Market Construction At The Start of 2016 – An Examination Of The Parts Composing The Whole (Edition 2 of 2)

January 4, 2016, 4:02 am
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The S&P 500 Index comprises 10 Sectors, as all will know, which comprise 133 Sub-Industry Groups, which comprise the 504 stocks composing the Index. The whole comprises the parts; the parts compose the whole.

Our own very negative view of US and global equities notwithstanding, we are well aware that most market participants are long only and must be invested (typically fully invested) at all times.

Today’s edition of “Money in Motion” begins with a top-down look at each of the 10 Sectors composing the market and at the end of each Section you will find a list of favorite Longs and Shorts from the Sector in question. The pagination of today’s report is as follows:

Pages 3-8: Consumer Discretionary Sector Pages 33-38: Industrial Sector
Pages 9-14: Consumer Staples Sector Pages 39-44: Information Technology Sector
Pages 15-20: Energy Sector Pages 45-50: Materials Sector
Pages 21-26: Financials Sector Pages 51-56: Telecommunications Sector
Pages 27-32: Healthcare Sector Pages 57-62: Utilities Sector

Page 63: The sum of it all

Please note… there are two (2) editions of “Money in Motion” today: this edition, and a “Top Down Macro Edition” printed under separate cover to kick off the new year.

Trade well,
-Carter

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CSM| Catching Up With Carter – January 5, 2016

January 5, 2016, 5:14 am
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This is what’s on our mind; what’s on yours?

Trade well,
Carter

 

*If you experience any issues with the above video link, please call (212) 257-4957 or email jnguyen@cormacteam.com to resolve.

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