Yes, most major U.S. equity indices have rolled over. Yes, the Shanghai Stock Exchange Composite Index is in a real bad way. Yes, the Ibovespa Brasil Sao Paulo Stock Exchange Index is making new 52-week lows and 5-year lows. Yes, indeed, there are many clear and obvious “bad patterns” at the index level worldwide.

But the elephant in the room is Japan.

“Elephant in the room” is a metaphorical idiom for an obvious truth that is either being ignored or otherwise going unaddressed. The expression applies to an obvious problem or risk that no one wants to discuss.

Is Japan an “obvious problem” that is being ignored?

We ourselves don’t know a thing about Japan. We know nothing about the ability of its economy to produce goods and services; we know nothing about its financial sector or its industrial base; we know nothing about the BOJ or Mr. Shinzo Abe or money printing or fiscal stimulus. We know nothing about Japan’s gross debt as a percentage of GDP, nothing about its Postal Saving System, nothing about the nation’s fertility rate, its working population. We know nothing at all.

But we do know something about price action. And on that score the Nikkei-225 Stock Average, “acts poorly” as the old time technical expression goes – simple as that.

This short mid-week edition of “Money in Motion” reiterates the view that something is wrong in the land of the rising sun (click here for the June 12, 2015 edition of “Money in Motion”).

The charts on the pages that follow tell the tale. By our work, the Nikkei likely is headed down to the 16000+/- level in the period immediately ahead. At the end of today’s piece you will find a list of stocks in the Nikkei 225 judged to be the most vulnerable to selling pressure in the days/weeks ahead.

Trade well,

-Carter

This report is composed of:

Pages 2-4: An examination of the January Barometer: its history and efficacy since 1927.  

Page 5: A look at where we stand now, with January in the history books- and what’s implied for the remainder of 2016.

Page 6: A table of the 10 best and 10 worst Januarys and how the years in question played out.

Pages 7-12: A table of all Januarys from 1928 to 2015 featuring three columns: 1) January performance, 2) Rest-of-Year performance, and 3) Full-Year performance

Trade well,

-Carter

Today’s edition of “Money in Motion” begins with a chart of 1) the S&P 500 Equal Weighted Index, 2) the Value Line Arithmetic Index, and 3) the MSCI All Country World Index. The charts speak for themselves.

Following the index charts presented without comment, you will find a table listing all instances since 1927 in which the S&P 500 Index advanced 20% or more without the occurrence of a 20% selloff… and all instances where the S&P 500 declined 20% or more without the occurrence of a 20% rebound.  We continue to believe that the reasonable intermediate price objective for the S&P 500 is 1800+/- (at a minimum), and that we’re headed below that -quite likely meaningfully below.

Thereafter, the report zeroes in on stocks with current dividend yields above 3% exhibiting impressive relative strength to the S&P 500, the STOXX Europe 600 Index, and the S&P/TSX Toronto Stock Exchange Composite Index… on a 1-week basis, a 1-month basis, 2-month basis, and 6-month basis.  By our work, these are stock to favor in an environment such as the present one.

Reminder: We will be hosting our 2016 Technical Outlook Webinar on January 19th, 2016 at 10:30am. Please contact your salesperson for more details.

Trade well,
-Carter

Today, Tuesday, January 19th, we are hosting a client webinar regarding our 2016 Year-Ahead Outlook for Global Markets. Accordingly, there is no regularly published edition of “Money in Motion”.

To join our 10:30 AM EDT call… please click and register below.

We appreciate your interest in our work and are humbled by all of your ongoing support.

Trade well,
-Carter

2016 Year-Ahead Outlook
Global Markets

Today, Tuesday, January 19th, 2016
10:30 AM EDT

Click here to register (dial-in details)

​2016 Year-Ahead Outlook
for Global Markets
​
 ​​WEBINAR Hosted by Carter Braxton Worth

Click here for the video
Click here for slides​​

Fun and exciting as last week was, with the market plunging and recovering dramatically on Wednesday, ricocheting on Thursday, and again on Friday, the inability of major financial stocks to participate in the revelries is a sobering reminder that rebounding action in beaten down, high-beta, low-quality stocks makes for a good time, but lacks substance.

The table below depicting the performance of each of the S&P 500 GICS Sectors during the holiday-shortened week tells the tale.

Today’s piece examines the matter in detail [Part 1, Pages 2-8] and concludes with a Buy and Sell List constructed from S&P 500 stocks reporting earnings this week whose chart patterns suggest news-related strength or weakness is likely [Part 2, Pages 9-11].

Trade well,

-Carter

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.

On the pages that follow you will find:

Pages 2-4: A quick review of the January Barometer, where we stand as of today’s close, with January 2016 now in the history books, -and what’s implied for the remainder of the year

Page 5: An updated table of the 10 best and 10 worst Januarys and how the years in question played out.  Note: this is the 9th worst January of all time for the S&P 500.

Pages 6-9: A table of all Januarys from 1928 to 2016 featuring three columns: 1) January performance, 2) Rest-of-Year performance, and 3) Full-Year performance

Trade well,

-Carter

Today’s edition of “Motion in Motion” gets right to it, with no opening commentary here on page one.  The major subjects discussed herein are:

Part 1: “Bear Markets are characterized by sharp counter-trend rallies providing excellent entry points for shorts.”

-Vincent Roland Boening (1925 – 2009)  Head of Technical Analysis – Donaldson, Lufkin & Jenrette (1976 – 2000)

Part 2:  Why the argument was made on August 24th following the 11% plunge of Wed, Aug 18th – Mon, Aug 24th that the “odds are zero that the selloff is over.”

Part 3:  Why the argument was made on September 29th that “someone needs to say it, and it might as well be us.  We’re in a Bear Market”

Part 4:  Why the argument was made in mid and late October regarding the 13% rally of that month that the recovery was not analogous to the quick plunge/quick recovery patterns of 1998 and 2011 (Bull Market corrections).

Part 5:  Why in the day/days ahead (if not already) invariably there will be those seeing new analogs comparing the current market to early 2008 or late 2000 and why attempts to “see” the current market top as analogous to past market tops is specious. (these analogs likely will be abandoned, just as we longer hear about 1998 or 2011).  Funny.

Part 6:   The difference between strength that leaves a stock more vulnerable versus strength that improves a stock’s position.

Part 7:  A Sell List composed of stock’s where recent strength renders the stocks in question vulnerable to profit taking and or shorting, and the selling pressure associated therewith… and a Buy List composed of stocks where recent strength has improved their respective chart patterns.

Trade well,

-Carter

Despite all the hoopla and ballyhoo last week surrounding the selloff in market high flyers, there is very little wisdom to be gleaned from the price action in said stocks.  In a Bear Market (and everybody knows this), high flyers eventually succumb.  Simple as that.  In a market characterized by deteriorating breadth (in this case for over 2 years) holdout stocks in which people are crowding eventually suffer from the inevitable “stampede out of the theater.”  Everybody knows this too.  And therefore the fact that names such as Starbucks and Nike and Amazon would be hurt badly at some point is no surprise to anybody.  Indeed, the idiom “a matter of time” is known to and used by school children as young as 8 or 9 years old.

It is strange therefore to see such a commotion, to see all the noisy excitement and confusion surrounding an event that everybody knew would happen at some point.  It can be repeated, therefore, that there is nothing to be learned from what happened last week.  The occurrence of something inevitable teaches us nothing, tells us nothing about the state of the market.  The state of the market is bad and it got worse last week.  This is obvious.

There was, however, price action last week that does say a lot about the market, revealing just how complacent and still hopeful many people are.  Specifically, the aggressive buying last week of beaten down laggards speaks volumes about investors’ states of mind.  And what it says is that we are nowhere near the capitulation point.  Unless and until we reach a point where capital is virtually afraid to engage, the odds are very low that the Bear Market has run its course.  Today’s edition of “Money in Motion” focuses on this subject to the exclusion of all others.

The report examines past and recent instances where stocks in established downtrends rally quickly back to levels of overhead supply… and observes what happens thereafter, more often than not.  And what happens – more often than not – is unhappy.

Necessarily, therefore, today’s report concludes with a Sell List comprising of heretofore weak stocks whose current counter-trend rallies are judged likely at an end.  We’re sellers of any and all stocks in this position.

Trade well,

-Carter

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.

By our work, there is virtually nothing new to say about the world – at least from our seat anyway.

Readers will know where we stand on the US equity market (and global equities for that matter); readers will know our position regarding the Japanese equity market specifically.  Indeed, where we stand on gold bullion and gold mining stocks remains the same (we remain buyers); as does our view of crude oil (we remain sellers).  Our view of the US Dollar remains the same (we’re buyers).  And so on and so forth.

Today’s piece is intended as a compliment to recent editions of “Money in Motion” which have focused on the market overall, on sectors, and on “themes.”  It singles out actionable Buys and Sells and nothing else.

The report begins with a discussion of methodology (page 2)… and then gets right to the dozen of so names in question.  And with regards to the names, an effort has been made to include a decent cross section of the market in terms of sector representation and market cap.  The names featured are as follows:

“Conventional” Buys:  Coca-Cola (KO), Bemis (BMS), CSG Systems (CSGS), B&G Foods (BGS)

“Reaction” Buys:  Old Republic Int’l (ORI)

“Bearish-to-Bullish” Reversal Buys:  Walmart (WMT), Corning (GLW), Cabot Corp (CBT), MSC Industrial Direct (MSM)

“Bullish-to-Bearish” Reversal Sells:  Visa (V), Cintas Corp (CTAS), AutoZone (AZO)

The names singled out are prototypical patterns and are representative of many others in similar positions throughout the marketplace.

Trade well,

-Carter

Note: An appendix beginning on PAGE 20 includes a handful of market charts, reiterating our longstanding view that the S&P 500 is headed down to the 1575+/- level.

Catching Up With Carter: Updated thinking on gold in the context of the October 5th Edition of “Money In Motion”

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.

Today’s edition of “Money in Motion” consists solely of an Updated Master Buy List.

Tellingly, most all of the stocks singled out today have been featured on recent buy lists. And that is important because Utilities, REITs, and Consumer Staples have dominated said buy lists since December… and they dominate today’s list as well. Indeed, 97 of the 282 stocks featured today (34%) fall within these three Sectors.

Add the fact that 19 of the 25 Materials stocks on today’s list are gold miners, and a very clear “story” emerges: a story of caution.

The average beta of the 282 stocks (equal weighted) is 0.84.

The average beta of the 282 stocks (market cap weighted) is 0.73.

All 282 stocks hail from the Russell 3000 Index; 73 of them are in the S&P 500.

Trade well,

-Carter

Today’s edition of “Money in Motion” consists solely of stocks judged to be at “Identifiable” Sell junctures; the report is intended as a complement to last Monday’s piece, which consisted only of Buys.

Tellingly, all of the stocks singled out today have been quite strong as of late, but their strength – by our work – does not help their respective chart patterns; rather, it leaves the stocks in question back at difficult levels where overhead supply comes into play.  The 204 stocks featured herein fall within one of two categories:

1. Heretofore strong stocks in long-term uptrends that rolled over with the market in December and January that have rallied the past several weeks (like the market) and now are back to their respectively flattening 150-day moving average (a circumstance characterized in these pages as a “Bullish-to-Bearish” Reversal Sell).
2. Weak stocks in established downtrends that have rallied back to their respectively declining 150-day moving average where overhead supply comes into play.

  The average beta of the 204 Sells (equal weighted): 1.14

  The average beta of the 204 Sells (market cap weighted): 1.07

All 204 stocks hail from the Russell 3000 Index; 75 of them are in the S&P 500.

  NB:  The same statistics for last week’s Buy List were/are…

  The average beta of the 282 stocks (equal weighted):  0.84

  The average beta of the 282 stocks (market cap weighted):  0.73

  All 282 stocks were/are in the Russell 3000 Index; 73 of them were/are in the S&P 500.

Trade well,

-Carter

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.

Today’s edition of “Money in Motion” is comprised of two parts.

Part 1 (pages 2-7) revisits the October 5, 2015 edition of “Money in Motion” making the case to buy gold bullion and gold mining stocks, and then examines the current relationships between gold and silver… and gold and platinum.

The “conclusion drawn” from Part 1 of today’s report is that it is right to continue to buy and be long gold and gold mining stocks, yes, but also that it is right (and perhaps even better at the time of this writing) to be long and to be buying silver and platinum.

Part 2 (8-22) examines the charts of the S&P 500 and several other major U.S. and global equity indices -all of which have recovered to very difficult levels where considerable overhead supply comes into play.

What a critical moment for equities here and worldwide.

After one of the top ten worst Januaries on record for the S&P 500, followed by one of the better Februaries in many years, here we are in the second week of March and both Bears and Bulls find themselves in a delicate position, wondering what lies ahead.  The situation for each is fraught with danger.

Consider the bloodied Bull: the market participant who neither anticipated, nor managed to escape the carnage of January who now is enjoying much relief, with the S&P 500 +11% in a matter of 15 sessions and with many individual stocks (many of which he or she owns) +20-30% or more.  The bloodied Bull now is faced with the dicey decision of “being grateful” for the reprieve and taking money off the table or staying fully long.

Oh what a decision to make!  The mind of the bloodied Bull spins with uncertain thoughts.  “It was wrong of me not to not be prepared for the rout of January, yet I hung on, and have been vindicated for doing so, with the market basically back to where it was at the end of last year and many of my stocks up much higher than where they were at year-end 2015.  But gosh, if the market heads back down at some point in Q2 or Q3 and I’m fully invested and exposed, I will regret to no end not taking down my portfolio after this saving gift of a rally.  I can’t afford to get this wrong.  What ever should I do!??”

Consider the halted Bear: the market participant who anticipated and profited from the carnage of January who now is suffering much hurt, with the S&P 500 +11% in a matter of 15 sessions and with many individual stocks (many of which he or she has been short) +20-30% or more.  The halted Bear now is faced with the dicey decision of staying short or even pressing his or her bets or capitulating and reducing short exposure dramatically in the event that the market continues to rebound.

Oh what a decision to make!  The mind of the halted Bear spins with uncertain thoughts. “It was right of me to be positioned for and profit from the deluge of December and January, but I stayed the course with my bets and now have seen much of my winnings evaporate.  And, gosh, if I stay or press here after this 11% ricochet and the market goes higher still, I will regret to no end not having taken down my exposure, protecting my capital and allowing myself the chance to get bigger on the short side at higher prices.  I can’t afford to get this wrong.  What ever should I do!??

Agonizing.  Perilous.  Dicey.  So much to get right, so much to get wrong.

Self doubt, recrimination, worry. Confidence shaken, conviction gone, the minds of the bloodied Bulls and halted Bears spin.  Were it that they could just come together and tell all, confessing their lack of conviction, revealing their doubt and uncertainty.  What a relief that would be.  “If we knew each other’s secrets, what comforts we should find”, wrote 19th century British literary critic John Churton Collins.

How humble.  And how true.

The “conclusion drawn” from Part 2 of today’s report is that it is right to continue to lighten up on broken longs that have recovered significantly (and mercifully for those badly hurt by said longs over the past six months) and, further, that it is right to sell short more and more aggressively in response to the general ricochet in the market of the past three weeks, leaving the S&P 500 +11% from trough-to-peak in 15 sessions (Feb 11 to Mar 4).

Trade well,

-Carter

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.