There are a wide variety of active risk management strategies. None of them are fool-proof. The one that we advocate — stop-limit loss orders — may have adverse tax consequences; the stop may also fail to execute in a rapidly declining market. Options and futures investors cheer the “out-of-the-money” puts. This has the benefit of an insurance policy, though [...] [...more]
Wells Fargo, Bank of America and Citigroup are all down about 17% - 21% in 2011. Making matters worse, Moody’s has placed these companies under a ratings review. In fact, the technical picture for Financial ETFs is becoming increasingly bearish. While the Financial Select Sector SPDR (XLF) and iShares DJ Regional Banks (IAT) are only down 7%-8% YTD, they’ve fallen 2x as far from 2011 highs and share prices have fallen [...] [...more]
There are scores of reasons that the S&P 500 ”shouldn’t” go much higher in the near-term. Here are several of those reasons, in no particular order: (1) Psychological resistance for the S&P 500 at the 1300 level, (2) Fibonacci retracement resistance at approx 1295, (3) Extreme bullish sentiment of investment advisers, (4) Dangerously high bullishness in the AAII Survey, (5) [...] [...more]
Economists have been impressed with the comsumer spending on both Black Friday and Cyber Monday. Similarly, technical anlaysts have been intrigued by the S&P 500’s ability to hold the fort at the 1175 mark.  Will the retail momentum translate into bigger profits for Stock ETFs? Can the fast start to December be the catalyst to send Sector ETFs to brand new [...] [...more]
According to Bloomberg, the S&P 500 is trading at 14.2x forecasted earnings. If you like Forward P/E ratios, that’s cheaper than at any time since 1990. (Note: Bloomberg actually excludes the post-Lehman bankruptcy when discussing how inexpensive stocks are.) On the flip side, the S&P 500 has an inflation-adjusted Shiller’s P/E of 22.1. This is an inflation-adjusted price-to-earnings ratio that compares current [...] [...more]
It’s not like the pundits haven’t been talking about it. The S&P 1225-1230ish level represents harsh resistance for the stock market. There are scores of reasons. Yet one author puts forward a few more, including the ghost of the Lehman bankruptcy in October 2008 as well as Fibonacci retracement; the latter suggests that S&P 500 1228 may be a [...] [...more]
