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Showing posts from October, 2015

Oil Markets in Review: October

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Just about a month ago, analysts were clamoring about the historical prospects of October where indexes typically saw the worst performance of the year. And as if it actually meant anything, reports began to tout the negative outcomes that the first month of the third quarter could produce, especially after the dismal performance of the quarter before. It seems elementary to believe the independence of monthly statistics, but some investors can't help but attribute a kind of seasonality to the apparent pattern. Once again, though, there could have been some sort of contrarian sentiment underneath the bearish rumbles. Some people may forget about that equal and opposite reaction prominent in physics, but like anything with momentum, the adage can apply in financial analysis as well. The concentrated efforts of the bears in the third quarter have diminished and given way to short-term and long-term bulls that traded in the way of the bull market birthed at the end of the financial c…

FOMC Leads A Market Surge

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The results are in. Deliberations have been deliberated, and the Fed Board of Governors can once again retreat behind the economic curtain where the markets will continue to masticate upon their own heavily digested thoughts. Markets showed modest gains on the day as investors patiently waited for a statement to be produced at 2:00 p.m. today. In that memorandum, Chairwoman Janet Yellen surprised listeners with the abdication of the arbitrary prose of meetings before. With the omittance of questioning how long to preserve low rates, the statement hinted at small feelings of urgency as it mentioned that more serious decision-making will occur at the December meeting. On top of rate hikes being delayed until December (possibly), the FOMC decided to leave out key phrases citing worries over the global slowdown and the high probability that the 2% inflation target will not be reached. In fact, the Fed's statement opined that "moderate" growth has been sustained for some time…

Janet Yellen, The Yoga Instructor

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Days before the FOMC's meetings, the spotlight shifts to focus on monetary policy. Traders on the floor and the internet find ways to tune into the world's largest central bank's mind. Where once the Maestro led with few words, now come parched attempts of explaining the Fed's economic plan. In charge of the U.S. monetary positions, Janet Yellen must extricate the country from the particularly sticky situation offered by the world's recent slowdown. A correction in August ruled out interest rate hikes for the rest of the year. All the while, the Fed's Chairwoman must find routes to unwinding her central bank's expansive asset positions instituted on the balance sheet during the 2008 Financial Crisis, a traumatic period during which she served as a Fed Board member. Tons of issues clutter the meeting's atmosphere, towered by the global economic slowdown which continues to echo in statistics coming out almost every day. During this trading session, both t…

Energy Lags on a Neutral Day

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We're at it again. A bullish run from the end of last week appears to have been capped once more with muted movement. Poor performances from tech stocks as well as natural gas firms lead the decliners while advancing stocks made out almost as strong. After a weekend full of central banking activity, the U.S. markets begin to shift their focus to an FOMC meeting scheduled to convene soon even though rate hikes appear very rare. Trading today followed the ECB's hint at more quantitative easing, and, more recently, the People's Bank of China's decision to cut interest rates, reduce reserve requirements, and extirpate a cap on deposits. As worldwide stimulus hits the global economies, markets have responded. Trading sessions in Europe and Asia showed particularly evident jump during the end of last week on Oct 22 and 23. During those days, the Shanghai composite grew about 250 points (7.29%), and the STOXX Europe 600 grew about 20 points (5.33%). The local economic efforts…

Recovering Emerging Markets

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Just like the Fed, the European Central Bank has the venerable reputation of serving as the monetary and financial giant that keeps global economic engines running. Accompanied by an earnings season that has companies constantly meeting or beating their low expected EPS projections, ECB press releases appeared all the more exciting with Mario Draghi in the spotlight. Investors in this report are looking for signals of the continuation of quantitative easing despite some misgivings about its effectiveness. If it does look like QE will be pushed into the end of the year, European securities should see an increase in price. Sure enough, Draghi's comments gave investors the feeling that more stimulus is needed. Even though comments like that could be taken as a contrarian indicator, traders supported gains caused by the preservation of loose monetary conditions. As the Fed and the ECB continue to coordinate their dovish policies, stock markets have responded positively. The Dow Jones …

The Great Gridlock

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It's the beginning of another week full of financial and economic goodies that will make prices toss and turn once more. Market forces constantly being forced into gridlock provide no insight on whether the global economy is gaining speed or continuing its slowdown. Yesterday, major market indices either jumped (or dropped) just a tick above (or below) zero. A historical trader would reference the doom and gloom typical of October's keeping investors on the fence where a bullish rally invites them on one side, and the other a fearful bearish retreat. With supply and demand forces constantly parrying each other, traders trade like they're playing waiting moves as they anticipate guidance from larger economic powers. Most of these people buying and selling stock can't diagnose the global economic condition, so they are left on the backburner as economists try and interpret the complicated atmosphere in which we find ourselves. Even in their analysis, constant contradicti…

Bullish Technicals and Bearish Fundamentals

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In the history of the stock market, the month of October is notoriously known for its bearish overtones. Investors since 1927 seem to want to sell during the first month of the fourth quarter with no apparent pattern to be recognized. Although the bull market since the end of the financial crisis in 2009 has produced Octobers with less capital outflow than those that came before. In fact this year, the first half of the month has boasted capital inflows of almost $1.2 trillion as a result of the recent bullish rally. As a reaction to Fed monetary policy, traders have garnered confidence behind securities that will benefit from the continuation of 0-0.25% interest rates. The averages serving as a litmus test for the trading floor have soared in the first three trading weeks of the new quarter. 

Gains in the NASDAQ, the NYSE index, the Russell 2000, the DJIA. and the S&P 500 have surged about 5% with few days of losses. As a result, most of the ground lost from the August correction…

Equities Bounce Back off Fed Hopes

Another earnings day passes us, but this one is traded in a different direction. As Wednesday's session was littered with worries over retail performance given Wal-Mart's profit outlook, today traders bounce back with some bullish sentiment supported by a rally in the financial sector. Even though there were losses reported in bond trading, both Goldman Sachs and Citigroup surprised investors with an EPS $0.03 above the forecast. If anything, it gives hope to individuals with major doubts about the system. Many traders are also reacting to the recent reports of "modest" economic numbers that should fend off the Fed's desire to raise rates. Many dovish dissenters, like FOMC Governor Tarullo, have already revealed their preference of stalling the rate hikes. As a result, the Dow Jones Industrial Average bounded up 217 points to register a 1.28% gain, reaching a 7-week high. The S&P 500 grew just a little more reporting gains of 1.49%. The United States was not …

A Deflated Earnings Season

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Just like the wall of Jericho, great fortresses can fall. Even Warren Buffett's portfolio is vulnerable to losses, especially in what may appear to be a bear market. This week, third quarter report cards of some of the largest financial players are being dealt out, and investors are trading reactively. Statistics are being thrown every which way to elicit a favorable response in stock price, and those listening are adjusting the equilibrium based on the respective change in fundamentals. As we switch mentalities from a macroeconomic perspective to a microeconomic focus, all eyes are on earnings reports that have been lackluster so far. Today, sour reports from Netflix and Wal-Mart weighed on media companies and retailers likely recoiling from the information revealed. Overall, the Dow Jones Industrial Average dropped about 150 points or -0.92%, and the S&P 500 skidded -0.47% by the end of Wednesday. Wal-Mart, a leading loser today, fell a whopping -10.04% to hit almost $60 a s…

The Emotionally Charged Crude Oil Market

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The bulls and the bears both had their go around today's trading session as a parabolic session leaves shares slightly lower than yesterday's close. After a light holiday session on Monday, investors sidestepped their way into the middle of the week with intentions to trade cautiously. Upon open (and after a slight loss from Dow and S&P futures), traders appeared to have been realizing short-term long positions which were established about a week ago. The Dow Jones low today, near 17,030, experienced a rebound to the green until selling pressure pushed it to a -0.12% loss late in the trading session. The Dow's returns are still positive for the trading week and remain bullishly above the 50-day moving average with the spread between the 200-day average inching smaller. Volatility gained for the first time in as VIX grew about 7.15% today. The NASDAQ and the S&P 500 showed patterns similar to the Dow's whipsaw movement but sustained losses around -0.35%. Investo…

Oil Comparison with Commodity Index (BCOM)

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Last week, investors traded on a positive group psychology with many stocks experiencing eccentric support from buyers across the board. Most sectors grew for at least four out of the five days with Friday ending a bullish streak with some consolidation. The Dow Jones Industrial Average repeated that same movement today with a confirmation of gains at 17,120 and a positive change of 0.25% today. The S&P 500 and the NASDAQ indices sought to maintain price levels as well with parsed gains of 0.10% and 0.18% respectively. The Russell 2000 small cap stock index fared a little worse posting losses around -0.17% as an economic recovery continues its fragile course. Even as asset prices appear to be shakier, the volatility index dropped -5.15% upholding a substantial 5-day decline of -22.68% as it approaches its 52-week low of 10.88. The Dow Jones Transport Index performs rather neutrally today with a small 0.03% climb, but it continues to outperform the industrials in the short-term. Ov…

The Bull's Strength

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Markets opened this morning with a slight loss but progressed steadily to continue the bullish breakout that has taken the market by storm this week. Later in the day, the Fed released their minutes pertaining to their decision to delay raising rates. Investors responded to the citations of global economic risk and the need for loose monetary policy. The inflation target remains far away even though commodity futures continue to increase. The Dow Jones Industrial Average surged to a 0.82% increase after an initial -0.25% loss during morning trading. With those gains, the market index passes the 17,000 level after a correction in Augst dropped the value below 16,000. The moves have been robust, but a lot of analysts seem worried that the extra girth will not be maintained. The S&P 500 grew 0.88% as well as bulls won today. Just like the Dow, the Fed's minutes pushed the large cap index above the 2,000 threshold just 100 points from the year high. The Global Dow, as well as Euro…

The Death of OPEC: Shale Fracking

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The turn of the quarter seems to have breathed some life into the equities and commodities market as Tuesday's session continues to cap off gains from the recent rallying. To begin with, the S&P Volatility index (VIX) has dropped for the fifth session in a row, ranging from a high of 25.88 on September 30 to a low of 18.82 earlier today. Stocks and commodity securities seem to be cooling down after an economic atmosphere riddled with slower growth prospects was illustrated during the summer and emboldened by Fed rate delays. The Dow Jones struggles to maintain its bullish surge from the past couple days as it shifts around the break-even point with losses of -0.16%. Up until now, around $700 billion worth of stock has been restore. These gains, of course, lead by surges in the energy sector. Notably, the Dow Jones Industrial Average finally jumps up to its 50-day moving average once again.The S&P 500 trades pretty neutrally midway through Tuesday with a pared loss of 0.48%…

Bullish Reversals in Oil and Gas

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Friday's trading session ended with bullish sentiment left to cultivate after the closing bell. The weekend wasn't enough to separate those feelings from the investor's portfolios, and they might not be speculated feelings as Monday's trading session showed the real possibility of a bullish reversal. The Dow Jones jumped 1.85% to post total gains of 304 points, beating Friday and approaching the 50-day simple moving average with hints of a reversal. Volume today was just under that of Friday's with a convincing move nonetheless. Five-day performance jumps to 4.84%. The S&P 500 large-cap index showed gains of 1.83%. The jumps sent the price level surging above the 20-day moving average with a chance at approaching the 50-day resistance level. Five-day performance increases to 5.59%. The reversal indicators seem contagious, and oil and gas stocks are feeling it too.


WTI crude oil finished today with a $0.55 gain after the bullish trading day on Friday. Its increa…

Market Capitalization in the Energy Sector

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Over the past couple posts, I've discussed various characteristics of the third quarter while often turning my nose up to their stinky trends. Particularly, energy sector performance was looked at and compared using some oil and gas companies as well as the major S&P Energy index. The red numbers hadn't been that bad for some time, 7 years that is. Wasn't the period after Lehman's fall supposed to be full of gains following the recession? In fact it was in the first half of the 2015 year, the Dow Jones Industrial Average reached a very high (and perhaps exceptionally capricious) 18,000 points. If it weren't for poor statistics in the two largest world economies, bulls would be having a heyday with a sharp rebound in crude oil and exploding equities. But it wasn't. Now in October, investors and the Fed continue to clamor about the tight money conditions and low inflation, and that affects everyone differently. Today, I wanted to take one more look into Q3 an…