Short S&P 500 ProShares
Nobody knows if the 11-session, 5.27% S&P 500 decline from the high of 1687.18 on May 22 is over or not. The easiest way to figure it out is to look at the cold data relating to all past corrections in the market greater than 5% to determine the odds that the current sell-off is at an end.
History shows that the median 5%+ correction since 1927 more »
The Federal Reserve is currently purchasing over $80 billion in bonds per month to keep interest rates at an all time low, this helps inflate other asset prices. The action, called Quantitative Easing, or QE, seems to be working; the stock market’s up about 18% and home prices 10% in the last year. But there is also evidence that these gains are the symptoms of a particularly dangerous bubble more »
At the height of the real estate bubble in October 2007, the DJIA traded at 14,164.43. Financial institutions had heavy exposure to the collateralized debt obligation (CDO) market in the form of mortgage-backed securities, while banks were frantically writing and packaging sub-prime mortgages. In the meantime, the credit default swap (CDS) market was virtually unregulated; insurance companies were selling them with abandon. On the surface, the US economic more »
Many economists fear that the Federal Reserve's unprecedented asset buying program may cause an inflation problem in the future. While that may be true, what seems to be ignored is that there is a current inflation problem. Worse, the problem is also creating a hidden bubble that, when bursts, could severely crimp stock prices.
The current inflation problem
The main issue with inflation is the compounding spread between the more »
“You can’t short anything in this market because of the amount of money-printing.”
Fred Hickey, editor of the High-Tech Strategist, made this remark last week to Barron’s as part of its 2013 roundtable. If you agree with Hickey, you need not read any further.
But some contrarians insist today’s happy consensus that the market can only go higher is exactly the sort of sentiment indicator that generally more »
Investors are constantly looking for ten baggers in the latest trends, like 3D printing, an aging population, and the Chinese growth miracle. Without looking at the big picture it is easy to ignore the possibility that stocks as an asset class are overvalued.
Corporate profits after tax are at super high levels. This is not a simple anomaly from the latest quarterly earnings, but a substantial change over the past more »
Bouncing off the lowest quarterly reading in six years, volatility in the second quarter of 2012 (2Q12) was up 115% quarter-over-quarter, but that only brought it to slightly-above-normal levels. For 2Q12, the average daily change in the value of the S&P 500 index was ±0.76%, compared with ±0.35% in 1Q11.
We track market volatility because it is a reasonably reliable gauge of risk levels. 74% of the more »
Financial markets can be very unstable nowadays; we go from almost panic mode selling to rampant optimism, and vice versa, in a few days. Maybe it´s because the economic scenario is unusually uncertain due to deep rooted economic problems in most of the developed countries.
High unemployment, below average growth rates and elevated sovereign debt levels are long term problems that won´t be solved overnight. In such a more »