Tag Archives: Optimism

Eurozone investor morale improves in September, inspired by Mario Draghi

Mario Draghi started a new round of QE. Again. Last time, he said he had a bazooka, but that bazooka was obviously not powerful enough. He have also previously said that he will do everything he can to boost the market again. In addition to his QE program, he also lowered the deposit interest rate.

You can borrow money in your bank and your bank will pay you money for that. Isn`t that funny? Did someone say something about «free lunch?» You cannot find cheaper money at moment and that will make people borrow more money. The strategy is to boost the economy and create a level of optimism.

In the Euro Area, the ZEW Economic Sentiment Index measures the level of optimism that analysts have about the expected economic developments over the next six months. The optimism isn`t sky high, but it isn`t deeply low either.

The ZEW indicator rose by 21,2 points in September 2019. It was expectation of -32,2 in September but it came in at -22,4 this month. The servey covers up to 350 financial and economic analysts and 47,4 percent of the surveyed analysts expected no changes in economic activity and 15,1 percent expected it to improve while 37,5 percent predicted a deterioration in economic condition.

The index reached an all time low of -63,70 in July of 2008. (-100 means all analysts expect the economy to deteriorate). Right before the dot-com-bubble in January of 2000, the index reached an all time high of 89,90.

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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January Effect

The so-called “January Effect” is not what is was anymore. It is not so important as it was and more and more people are using tax-sheltered retirement plans, and that is one of the most important reasons why they tend not to sell at the end of the year for a tax loss.

Earlier, the “January effect” affected small cap stocks much more than the larger one. This trend is declining much because the investors have adjusted for it.

Definition:

A general increase in stock prices during the month of January. This rally is generally attributed to an increase in buying, which follows the drop in price that typically happens in December when investors, seeking to create tax losses to offset capital gains, prompt a sell-off.

Please note that the optimism in the market right now is historic. The charts show us that we are very close to a tipping point, but it could take some time before a major reversal occurs.

Price is always the most important and the most valuable indicator. The price in the indexes must show some reversal pattern on a daily chart, but until then, the uptrend remains intact.

January 2013 was strong, but in the last 15 years it has not been that strong. December has been a very strong month the last 15 years. How will january 2014 be? The first trading day of 2014, all the major indices was trading lower. It is the first time in six years the S&P 500 and Dow ended the first trading session of the year in red territory.

The optimism in the market tends to be very strong in the early stages of a bear market, and the charts tells us the truth. It happens again and again and again. We saw it in 2007. People poured more money into different U.S stock funds in October last year, and that is more money than any time in at least 7 years. Keep in mind that this includes the 2007 stock market top.

News today: ISM Non-Manufacturing PMI & Factory Orders at 10:00am.

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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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