BARRON’S America’s premier financial weekly. AAII WDC 2014
Take it apart! • Wrap • Market Week • Special Report • Top 100 women Financial Advisors
Barron’s Wrap • Up & Down Wall Street PG 7 Super Mario… • “D” Word! • Slices of Pizza • • Streetwise PG 11 Stillness… A sign of trouble • ahead? Low VIX rarely a sign of • immediate pain • Index To Companies PG 12
Barron’s Preview PG 15 • Preview This Week • Consensus Estimates • May Retail Sales (Thur) – Big Gains expected • June Mich Sent (Fri) – Consumer Sentiment • Coming Earnings • H&R Block (Wed) – Beat 3.23 est
Barron’s Mutual Funds PG 43 • Mutual Funds Profile • ETF Profile $1.7 tril • Hedge Funds Monthly • Best, Worst, Biggest • Special Packages • Barron’s 500 • Best Fund Families
Barron’s Market Week Every Week •Cover • Refer to the Stats Index • Market Data Center
Barron’s Current Yield PG M9 • Bond Center • Global: • Short Term rates • Long Term rates • Yield Curve • US Credit • Week’s most active • Investment grade • High Yield • Convertibles
Barron’s Striking Price PG M 11 • Equity Options • CBOE VIX: • VIX close • VIX Futures • Equity-Only Put-Call Ratio: • Is a buy/sell indicator • Skews: When skew is high, it means puts are in more demand, and investors are pricing in more downside risk • SPX (options S&P 500) • NDX (NASDAQ)
Barron’s Research Reports PG M 13 • Insiders Transactions Recent Filings • Insider Transactions Ratio Bullish/Bearish/Neutral
Market Watch PG M 14 • Sample Advisory Opinions “Furthermore, both economic • data and corporate earnings continue to look healthy…the eventual violent break will be to the upside.” M ichael Shaoul/The Weekly Speculator “Although this year might • prove the economic performance of the recovery, it may also produce a volatile and frustratingly flat stock market.” James Paulson / Wells Cap Mg mt
Barron’s Market Week Every Week • How To Read M 15 Bonus Tables • Phone & Email • Tables online •
Barron’s Market Week Every Week • Mutual Funds (Top 2500) M 40 • Cash Track: 4 week moving avg of cash flows (Out EQF, In TBF) EQF = In 3.9 bil; MMF = Out 2.4 bil; MBF = In 783 mil; TBF = In 5.4 bil •
Barron’s news moves the Markets, but the Market L ab shows the market direction! PG M 47 • Stocks • Bonds • Indicators
Barron’s Market Lab Stocks 1 PG M 47 •DJ Half-Hourly • Strong open/High volume, possible correction later in day • Weak close, weak open next day • Hypothesis future trends based on historic performance. • N ew ind ex subtracting open ½ hr. and closing ½ hr. •Dow Jones Averages
Barron’s Market Lab Stocks 2 PG M 48 •Intensity • Week in Stocks • Arms Index • 4 week moving avg • < 1 in advancing • > 1 in declining • Stock Volume • NYSE 15 most Active • Avg Price • % of total vol
Barron’s Market Lab Stocks 3 PG M 4 9 • DJ US Total Mkt Industry Grps Sector Analysis • • Consensus Operating Earnings on the DJIA (not same as P/E’s Yield table)
Barron’s Market Lab Stocks 4 PG M 50 • Weeks New Highs & Lows • Dividend Jump (when needed)
Barron’s Market Lab Stocks 5 PG M 51 • Indexes’ P/Es & Yields • Coming Earnings jump • Treasury Auctions Record debt sales • • Equity Financing New IPOs •
Barron’s Market Lab Bonds PG M 52 • Weekly Bond Statistics Barron’s Confidence • Index Best Grade • Intermediate Grade •
Barron’s Market Lab Indicators PG M 53 • Money Rates • Federal Reserve Databank Sco tt Bl a c k • • Investor Sentiment • Market Sentiment Delta Tactical • • Money Supply
Barron’s Market Lab Indicators 2 PG M 54 • Barron's Gold Mining Index • Pulses Employ data • Eco Growth • Consumer Confidence • Electric production • Ho war d Silv erb l att • Sco tt Bl a c k •
Barron’s Market Lab PG M 51 • Dividends Payment Dates • Ex-Dates • Payment Boosts (jmp) • Stock Splits (jmp) • R e duc t ions (Requested) •
The Bernanke Tide… And Unconventional Monetary Policy In Warren Buffett’s famous formulation, only when the tide rolls out do you see who’s been swimming naked… …And the sooner they get dressed the better! • Direct correlation between the growth of central banks assets and the S&P 500. Increase in Feds balance sheet to $4 trillion and less recognized is the impact QE has had on Interest rates. Risk on! More to come on yield curve. • Our bull market has been midwifed by exceptional central-bank support and interest rate cuts. — K opin Tan • Extreme liquidity creates market distortions and the longer you have it in place the more the distortions become a problem. — M ark Stern/Bessemer Trust • Don’t fight the Fed! Monetary conditions exert an enormous influence on stock prices. Indeed, the monetary climate—primarily the trend in interest rates and Federal Reserve policy—is the domin a n t factor in determining the stock market’s major direction. — M artin Zwei g
Unconventional Monetary Policy • Ed Yardeni • Perma-Bears sin of omission • “Don’t Fight the Fed” • Or BOE, BOJ and ECB
Where is the Market going? Dow Theory M 47 Production vs. Distribution Q3 2013 to Q4 2013 agree m e n t • DJIA Up 9.6 % • DJTA Up 12 . 4 % • Q4 2013 to Q1 2014 dis agree m e n t • DJIA Do w n 0 . 7 % • DJTA Up 2 . 4 % • Q1 2014 to date agree m e n t • DJIA Up 1 . 7 % • DJTA Up 5 .6 % • Agreement in over Q3 and Q4 2013 up. • Industrials started to stall 1/6. 7 tremors 6 up 1 down. Major DISAGREEMENT. Putting in a market top. Currently both are pushing all-time highs. • And is agreement. Good news. How? Daily contradictions (tremors). In Half- • Hourly on M 47 . An indication of market tops/bottoms and possible change of direction .
Where’s the Market going… Dow Theory (continued) Tremors (Ripples) • DJ Half-Hourly Averages • From 1/2/2014 to 1/15/2014; Six (6) Tremors Transports Up 3 . 0% • Industrials Do w n 1 . 1 % • 6 tre mo r s
Where is the market going… 200 day Simple Moving Average • 200-day moving avg on the DJIA • Historical analysis for +10% over 200-day moving avg: • 8/1929: 18.3% above; 66% correction (The Great Depression) • 8/1932: 21.3% above; 15% correction (TGD part II) • 7/1933: 50% above; 25% correction • 6/1935: A ppr o x. 10% ab ov e fo r 2 y ear s! The longest stretch over 200- day moving avg; 45% correction in 1938! Passed thru 200 dma twice. • 4/1971: 16.7% above; 17% correction • 9/1987: 17% above; 35% correction • 8/1998: 11% above; 18% correction • 9/2006 to 10/1/2007: 10.7% above on May 29, 2007; 51% correction • 7/16/2009 to 6/11/2014: A ppr o x. 10% ab ov e fo r ov er 4 y ear s! With out a significant correction (15% summer 2011). Past correction’s avg = 32%.
Where is the market going, continued… Shu t do w n OT E xte nd e d QE- Infini t y T aper $ 10 b il ( - 3 . 8%) QE 2 O perat ion QE 1 T w is t QE 1 E xpa nd e d D e clinin g Volum e
Where is the market going, continued…(499 sma) Long in the Tooth!
Where is the market going, continued…(Hat Trick) Industrial/Transportation/Utilities All-Time highs
Where is the market going, continued… There’s no better illustration of how far afield expectations have run from reality than this chart. Having given the economy the benefit of the doubt for the better part of 3 years , just as they did following the housing bust in 2005, investors will finally accede to reality. - Stephanie Pomboy
Where is the market going, continued… Stephanie expects the news (seasonal adjustment issues to weather and above all the massive inventory unwind.) will continue to look bad and the reverse rotation out of stocks into Treasuries to gain pace. In fact, as you might surmise from the placement of the last red arrow in the chart above, she fully expects we will trace out a downside similar to that of 2000 and 2008. - Stephanie Pomboy
Market Intensity PG M 48 • Arms Index Relationship between • number of stocks that increase or decrease in price and the volume associated with that increase or decrease. <1 = Vol in Advancing • >1 = Vol in Declining • Why Declining? Big cap… •
Is it a broad movement? • Breadth M 18 Daily advances – declines • totaled and added to the previous week. Reflects the thirst for all • financial assets. (Common stock, CEF, REITS, Preferred) Reached an all-time high of • 387,030 last week (Jun e 6 ) . Up, Up and AWAY!!
Is it a broad movement? M 48 • Week in Stocks DJIA Up 1 . 0 % ytd • SP 500 Up 4 . 4 % ytd • DJ Idx US Market (Total Stock Market • ( sm a ll er )) Up 5 . 4 % ytd • Biggest Losers: DJ Idx Internet Do w n 4 . 2% ytd • Russell 2000 Do w n 0 . 4% ytd • • Biggest Winners: DJUA Up 9. 8% • NYSE Market Comp Up 11 . 83% • • Overall slightly up for large cap. Slightly down for small-cap .
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