Tag Archives: Nasdaq

We are 1% from a bear market

I started day one this year with this simple words: «And now we welcome the new year. Full of things that have never been». We are finished with just one month of the year 2016, and so far we have seen a lot of things that have never been. Is it more to come?

Yes, I think so. I think 2016 will be full of surprises. The start of the new year have been brutal, but we are not in a bear market yet. Nasdaq slid -1,82% on Monday and we are now about 1% from entering a bear market.

Warningbear

The stock market need to fall more than 20% to be called a bear market. Otherwise it is just a correction. S&P 500 and the Dow peaked in May last year. Nasdaq peaked in July 2015, so it`s long time since the top. The spread has warned us in months.

As you may know, we are now entering a critical moment. But what`s holding the market up is the blue chips. Big companies can go up while many small companies can go down at the same time, and that can make the index go up.

The Dow consist of thirty leading companies, and are a price-weighted index. Stocks with high prices count for more than stocks with low prices. The index goes up if stocks with high prices are doing it better than stocks with low prices.

It`s different with Nasdaq, which consist of a hundreds of stocks and most of them are in the tech sector. Nasdaq is not price-weighted, but a capitalization-weighted index, which means the most valued companies like Alphabet and Apple count for more than smaller companies.

It`s easy to be blind if you only look at growth-stocks like Alphabet and Facebook. They are both big, but if you look at the Russel 2000 index, which is an index of small-cap and medium-cap stocks, it is different. That market is more nervous, because small and medium-cap stocks is more risky than blue chips.

Bullish investors argue that most of the bad news is already baked into the market, and if the carnage we have seen so far this year is a correction, we will se the market bounce back very soon. I will follow the oil price, what happens in China and the Fed the coming days. Fed Chair Yellen testifies on Wednesday and Thursday.

We are not in a recession and many institutional investors are closely watching the economy for any sign of negative GDP. We are not there now, but we are close. What we see is a decline in companies earnings. Big buyers are patient and will jump in once the correction is over. If not they will hit the panic-button.

2016 will be the year of change.

wallboard

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Green friday

It`s optimism in the stock market again. People belive the lawmakers will solve the dept-ceiling problems. China rebound and BDI is increasing. Everything looks great. That`s in the long term. Right now the futures is down about 1 percent.

What an end of the week. Everything was green. Dow Jones was up 0,51 percent, to 15,072,60. The S&P 500 climbed 0,71 percent to 1,690,50, and Nasdaq rose up 0,89 percent to 3,807,75. 5,2 billion shares canged hands on U.S excanges, and that is 9,6 percent below the three-month average.

People belive that the lawmakers will reach a deal to end the budget impasse. That`s why we see the excanges is green now. The investors are very optimistic, and 6,4 days is the average of the days the spend to solve the problems in capitol hill.

S&P 500 is up 19 percent so far this year and from it`s 2009 low, it is up amazingly 155 percent. VIX dropped 5,3 percent today and are now down to 16,74 percent. The equity volatility gauge has fallen 7,1 percent so far this year.

China is back too, and now it seems to be a good time to invest in South East Asia. The industrial profits rose 24,2 percent in August this year. In addition; I see Baltic Dry Index has broken it`s 200 day moving average. That is good news for the economy.

Gold is still a little bit above 1300, and gold have not reacted on the shutdown earlier since 1976. The duration shutdwon has varied from one to twentyone days. Two years ago during the dept- ceiling, the gold rose from $1500 in july to $1800 in august 2011. A nice safe-heaven rally.

There`s no news to watch out for today or tomorrow. What I am looking for this week is what`s happening in capitol hill. It`s up to the republicans. People expect to see a solution and that`s why they are so optimistic. This will be an exciting week.

Markets up

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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