Ticker Sense

How's YOUR Vacation?

With so many players out of the game this week we're having some trouble understanding the market's moves.  Volume on the New York Stock Exchange has been below average, with only 1.1b shares traded on Monday, and 1.4b yesterday.  We do not suggest that a lack of volume accounts for recent market declines, but it is possible that many investors will look to take advantage of bargains when they return to work on Tuesday.

 

DJIA: Up Meets Down

As highlighted last week, market technicians seem to be paying close attention to the Dow, while allowing the S&P 500 to run its course.  Friday and today are no exception.  Below we highlight recent Dow trading, and note that the Dow Industrials peaked on the downtrend established between the 7/19, 7/23, and 8/8 closes.  With the peak noted, we point out the shorter term uptrend established after the 8/16 rebound on the 200-day.  The judgment call will be left open to interpretation.

 

August 27th Blogger Sentiment Poll

This week's poll remains bullish, although many bloggers have moved to neutral.

Blogger Sentiment Poll Participants:

24/7 Wall Street (N) Abnormal Returns  Ant & Sons  Alpha Trends  Big Picture  Bloggin' Wall Street  Capital Chronicle  Carl Futia (+) Confused Capitalist  ContraHour  Controlled Greed  Crossing Wall Street  Crowder Blog  CXO Advisory (+) Fly on the Wall  Dash of Insight (-) Day Trade Team  Daily Dose of Optimism (+) Daily Options Report  Deal Breaker  Dr. John Rutledge  Elliot Wave Lives On (N) Fallond Stock Picks (+) Fickle Trader  Fresh Trader  Global Economic Analysis  Hedgefolios (-) Information Arbitrage (N) In The Money  Daily Blog Watch  Jack Stevison  Kirk Report  Knight Trader (N) Learning Curve (+) MaoXian  ChrisPerruna.com (N) Michael Comeau  Millionaire Now (N) Naked Shorts (-) Peridot Capitalist (N) Quant Investor (N) Random Roger's Big Picture (-) SeekingAlpha  SelfInvestors  Shark Report (+) Sigma Options  Stock Advisors  ShadowTrader  Tech Trader Daily  Trade King  Trader Feed  Trader Tim (-) Traders-Talk (N) Ugly Chart  Wall Street Folly  WindRiver Blog  Wishing Wealth

Greatest Dividend Yields

Below we highlight the 40 highest yielding dividend stocks in the S&P 1500.

DJIA Moving Average Spread

After seeing how the US markets responded to the Dow touching its 200-day moving average, we would have to infer that many traders look to it as a better measure than the S&P 500.  While we did notice that the S&P 500 encountered some resistance at its 200-day, we cannot deny the nearly perfect bounce the Dow Jones Industrial Average had off of its 200-day moving average (this using closing prices).  With this in mind we did some further analysis looking at the Dow in relation to its moving averages, and their distribution through the current bull market (beginning on 10/9/02).

For starters, the 50-day spread is below average.  This is not surprising seeing that in a bull market we would expect the index to remain mostly above its moving averages.

Surprisingly, the 200-day spread is only slightly below average.  The 200-day spread at the beginning of the correction was 10%, or 1.35 standard deviations above average for this bull market.

Perhaps the most interesting point is the fact that the spread between the 50-day and the 200-day remains above average.  The current spread of 4.9% is 0.66 standard deviations above the 2.1% average spread, to be exact.  In our view, barring some outside forces such as the Fed, this would suggest that the market will trade sideways until the 50-200 day spread narrows.

Sector Trading Envelopes

What's going on in behind these dull market days?  The Dow and the Telecom sector have had nice bounces off their 200-days.  Technology has held above the 200-day, and the S&P 500 is now finding intra-day resistance at the 200-day. 

Spike in the VIX Index

During the recent market correction we noticed a seldom seen 100% spike in the VIX Index.  We looked back over the VIX since its inception in 1990 and found four other similar such periods.  We should point out that this analysis must be taken with a grain of salt, because there is a direct correlation between the VIX and the speed of present market declines.  In other words, when the S&P 500 goes down quickly, the VIX goes up quickly. 

Below we drill further into these periods of a spike in the VIX to see where the worst day occurred.  Not surprisingly, it is always near the end.  The graph below divides the period that the VIX increased into tenths, the left is the beginning of the period, the right is the end.  The current period came in nearly in-line with the spike in June, 1990; however, the worst day was more in-line with July of 1998.  We should also point out that all of the periods occurred around the summer months, and on average the market gains in response to the spike.

August 20th Blogger Sentiment Poll

The bullish sentiment continues...

Blogger Sentiment Poll Participants:

24/7 Wall Street (-) Abnormal Returns  Ant & Sons  Alpha Trends  Big Picture  Bloggin' Wall Street  Capital Chronicle  Carl Futia (+) Confused Capitalist  ContraHour  Controlled Greed  Crossing Wall Street  Crowder Blog  CXO Advisory (+) Fly on the Wall  Dash of Insight (-) Day Trade Team  Daily Dose of Optimism (+) Daily Options Report  Deal Breaker  Dr. John Rutledge  Elliot Wave Lives On (N) Fallond Stock Picks (+) Fickle Trader  Fresh Trader  Global Economic Analysis  Hedgefolios  Information Arbitrage (+) In The Money  Daily Blog Watch  Jack Stevison  Kirk Report  Knight Trader (-) Learning Curve  MaoXian  ChrisPerruna.com  Michael Comeau  Millionaire Now (N) Naked Shorts (-) Peridot Capitalist  Quant Investor (+) Random Roger's Big Picture (-) SeekingAlpha  SelfInvestors  Shark Report (+) Sigma Options  Stock Advisors  ShadowTrader  Tech Trader Daily  Trade King  Trader Feed  Trader Tim  Traders-Talk (+) Ugly Chart  Wall Street Folly  WindRiver Blog  Wishing Wealth (-)

S&P 500: Down For the Year

As many of us who were watching the market today know, the S&P 500 today erased its gains for the year and is now down 82bps YTD.  Below we compare our current situation to last year, where the market was down for the year until July 24th.  An important note that many analysts discuss as the "norm" is a fall rally off of a summer low.  We would hope that this year is just a little bit late across the board.

US Recommended Asset Allocation

Amid market turmoil, a 10% correction, and lower lows; US Equity strategists are raising their recommended stock allocations.  Not that we would tell anyone when to buy or sell, but they might...