180 Straight Days Above the 150-DMA
Posted by Eddy Elfenbein on August 13th, 2013 at 11:02 am

Daily volatility continues to be pretty meager this August. The stock market is currently down, but just a bit this morning. The government reported that retail sales rose by 0.2% last month, which is the fourth monthly increase in a row. Economists were expecting an increase of 0.3%. The increase for June was revised higher by 0.2% to 0.6%.

Despite the headline miss, the details were pretty good. If we look at “core” retail sales, which doesn’t include cars and gas, that rose by 0.5% in July. That’s the biggest since December. Clothing stores saw their sales rise by 0.9% last month, which bodes well for stocks like Ross Stores ($ROST).

Steven Russolillo at the WSJ highlights an interesting factoid: The S&P 500 has traded above its 150-day moving average for the last 180 days. That’s the ninth-longest streak since 1980. I think this is due to the market’s slow, steady upward crawl combined with the low volatility. The index is currently about 6% about its 15-DMA.

Morning News: August 13, 2013
Posted by Eddy Elfenbein on August 13th, 2013 at 6:44 am

German Investor Confidence Rises as Euro Area Resumes Growth

Contraction Shows Signs of Slowing for Greece

German Gov’t Dismisses Report Buba Expects More Greek Aid

Japan PM May Sweeten Sales Tax Hike With Corporate Tax Cut

There’s A Huge, $1 Trillion Hole In Chinese GDP

In Move for Economy, Mexican President Seeks Foreign Investment in Energy

Musk Shows Hyperloop Transport Design for People to Cars

BlackBerry Mulls Putting Itself up for Sale

New Bid for Steinway Is Sweet Music to Investors’ Ears

Murdock Clinches $1.6 Billion Dole Buyout

EON’s Proprietary Energy Trading Loss Narrows in First Half

U.S. Subpoenas Goldman in Inquiry of Aluminum Warehouses

Best-Paid Women in S&P 500 Settle for Less With 18% Gender Gap

John Hempton: Strange Stock Assessment From A Value Investor I Kind Of Admire: A Note On The Transition Of Apple Into A “Value Stock”

Howard Lindzon: The Bitcoin Moment – F$%^#! The Winkelvoss Twins

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All In the Family Revised Intro
Posted by Eddy Elfenbein on August 13th, 2013 at 12:51 am

More Thoughts on Day-Trading
Posted by Eddy Elfenbein on August 12th, 2013 at 10:55 pm

My post from last week on day-trading drew a lot of commentary and a fair bit of criticism. I enjoy having my views criticized, especially if it’s smart criticism. This may come as a surprise to you, gentle reader, but I’m not always right. Being challenged and challenging yourself is a way to get better.

Here’s a smart take from Brian Lund, who’s a terrific blogger, and here’s a post from two years ago from Ivan Hoff.

For the record, I don’t think our views are in direction opposition. Professor Noah Smith also had some kind words about my post.

About Those Second Half Earnings
Posted by Eddy Elfenbein on August 12th, 2013 at 1:20 pm

Chuck Jones at Forbes has some depressing news about earnings for later this year:

As 450 of the 500 companies in the S&P 500 have reported financial results for the June quarter FactSet estimates that revenue growth has been 1.8% (vs. a 1.2% estimate at the end of June) and earnings growth has come in at 2.1% (vs. a 0.6% estimate). A 2.1% increase would be the third lowest rate in the past four years AND if the Financial sector is removed earnings for the S&P 500 would have DECREASED by 3.1%.

As I previewed in previous notes estimates for the Third quarter have come down fairly significantly in the past six weeks. At the end of June Third quarter revenue growth was expected to be 3.0% and has only dropped slightly to 2.9%. However, earnings growth has decreased from 6.7% to 4.3% in six weeks and was over 10% in mid-April.

Those numbers are from FactSet. According to the numbers from S&P, the estimate for Q3 earnings has dropped from $30.27 in March 2012 to $27.17 today. The Q4 estimate is down but not as much, falling from $31.18 in March 2012 to $29.13 today.

Analysts now expect the S&P 500 to earn $108.51 this year, and $122.37 next year. As always, I caution against putting too much faith in estimates beyond a few months out.

The Decline of Volatility
Posted by Eddy Elfenbein on August 12th, 2013 at 10:34 am

Here’s the percent change for the S&P 500 every single day over the last five years. The decline in volatility is rather striking.

I remember back when stock prices used to, you know, change from day to day. Not anymore. The S&P 500 hasn’t had a 2% up day in 11 months.

The Volatility Index ($VIX) is currently just over 13. In March, it dropped to 11.05 intra-day which was the lowest reading in more than six years. I think we could make another new low soon.

Morning News: August 12, 2013
Posted by Eddy Elfenbein on August 12th, 2013 at 4:50 am

Japan’s Q2 GDP Misses by a Huge Margin

Japan’s Below-Forecast Growth Fuels Sales-Tax Debate

Shanghai Rallies Over 2% To 7-Week High On Economic Optimism

Korea on High Alert for Looming Energy Shortage

Carney Call to End Men-Only Club Puts Pressure on Osborne

Recovery Hopes Leave European Shares Hovering at Two and a Half Month Highs

Germany Thumbs Nose at the NSA

WTI Fluctuates After Week’s Biggest Gain as Hedge Funds Cut Bets

Lowballing of Losses Key to Whale Probe

Rockwell Collins to Buy Carlyle’s Arinc for $1.39 Billion

Taiwan’s HTC Looks To Iron Man For Rescue

When It Comes To Billionaires Buying Newspapers, Marketers Should Pay Attention To Warren Buffett, Not Jeff Bezos

Musk Gets $4.3 Million of Stock Options for Model X Work

Cullen Roche: Yes, Government Deficits Equal Private Surpluses (Basically)

Jeff Miller: Weighing the Week Ahead: Is It Time to Book Profits?

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August Is the Sunday of Months
Posted by Eddy Elfenbein on August 10th, 2013 at 4:59 pm

“Don’t You Dare Miss It”
Posted by Eddy Elfenbein on August 9th, 2013 at 7:07 pm

The week is over! Time to stop watching stock tickers on a glowing screen and enjoy yourself. The weekend is here — don’t your dare miss it.

The Nikkei Relative to the Dow
Posted by Eddy Elfenbein on August 9th, 2013 at 9:33 am

In 1950, the nominal value of the Nikkei was 0.4 of the Dow. Forty years later, it was 14.6 times the Dow. That rate of outperformance is amazing. But by last October, the ratio had fallen all the way back to 0.64 of the Dow.

Thanks to the Nikkei’s furious rally, the ratio broke 1.0 in May, but has since drifted back to 0.9.