Black Friday was black in more ways than one, with a number of negative events. Still the market held up reasonably well. Perhaps there’s nowhere else to get an acceptable return on one’s cash. At least the stock market has shown some strength, and valuations with a few exceptions are reasonable from a historic perspective.
By all accounts retailers did less than expected and did not have a great day, although the exception was online retailers who reported better than expected business. On top of that, we got the surprising and very unpleasant news that Dubai World was seeking a stay on interest payments on its $60 billion of debt. Read more…
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Sabrient’s SectorCast ETF rankings solidified its defensive bent this week. Healthcare continues to lead, but Consumer Staples moved ahead of InfoTech into the second spot. On the bottom, Materials remains in the basement as the fundamentally most overvalued sector, but Industrials dropped quite a bit in the wake of its recent price momentum, which added to its already overvalued levels.
Latest rankings: This week, Sector Detector indicates that Healthcare (XLV) remains on top on a forward-looking basis, with the highest score of 87. It is now followed by Consumer Staples (XLP) at 75, which gives the model a more defensive bent. Read more…
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I rather expected the market to be somewhat slow this week, waiting to see what would happen on Black Friday (traditionally initiating the period when retailers go from posting a loss to turning a profit). Instead, the market rose rapidly this morning, up nearly 2% in the first couple of hours. It later tailed off a bit but still closed as a very good day.
Of course, the dollar continues to sink, and I suppose that is the main impetus for the market’s buoyancy, along with the fact that existing housing sales were up more than expected. It does seem to me, however, that the worse-than-expected new housing starts on Friday would trump to some extent existing housing sales report today. Jobless claims were a little better than expected last week but still over 500,000 and that certainly can’t be considered good. Read more…
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Paul Krugman has again drawn the attention of other economists and myself to some of his loose thinking. His most recent post at the Op-Ed of the New York Times is entitled Free to Lose. This blog post will be referring back to that article often so best to read it first.
Can Krugman Understand Economics?
Steven E. Landsburg, Professor of Economics at the University of Rochester, gave one of the best backhanded complements ever to Krugman at Krugman to the Rescue.
It’s always impressive to see one person excel in two widely disparate activities: a first-rate mathematician who’s also a world class mountaineer, or a titan of industry who conducts symphony orchestras on the side. But sometimes I think Paul Krugman is out to top them all, by excelling in two activities that are not just disparate but diametrically opposed: economics (for which he was awarded a well-deserved Nobel Prize) and obliviousness to the lessons of economics (for which he’s been awarded a column at the New York Times).
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We are seeing only slight movement to Sabrient’s Sector Detector ETF rankings, as Healthcare, InfoTech, and Consumer Staples continue to lead, while Materials sinks further into the cellar and remains the fundamentally most overvalued sector.
Latest rankings: This week, SectorCast-ETF indicates that Healthcare (XLV) remains solidly in front on a forward-looking basis, with the highest score of 93. Read more…
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Categories: Sector Detector Tags: absolute-return, ETF, exchange-traded-funds, long/short, quantitative-analysis, sector, Sector Detector, sector-analysis, SectorCast, stock-strategies, stock-trading
As the Dollar reached 15-month low {and} Euro presses back above $1.50, there are bound to be renewed questions such as: Is the Dollar Fading as No. 1 Reserve Currency? Given that, this post will look at some points of view of that particular question starting with the economists quoted in that second linked article above at US Banker magazine.
What Economists Predict.
While the future may be hard to predict, economists are happy to provide educated guesses on the time frames for when structural changes may occur. Aside from a total and complete melt down of the present economic environment, Joseph Rosta {writer of last linked article} provides the views of 5 economists and what time frame they think it is possible {but unlikely} that the US fades as the number one reserve currency. Let me start with a quote by David Wyss in Rosta’s article.
“A shift away from the dollar probably should happen, but it won’t happen overnight,” says Standard & Poor’s chief economist David Wyss. He sees a 10-year process, with the dollar losing its dominant position to a basket of currencies. “You can’t have a world currency before you have consistent global regulatory and fiscal policy,” according to Wyss.
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Since the unemployment release of 10.2% on November 6, virtually all economic releases have been modestly positive and the late reporting companies have had strong results (including revenues) and strong guidance. So why has the market been going up and down on a daily basis over the past week?
The short answer is the dollar. Over the past several weeks, the market has seemed inversely tied to the value of the dollar. The dollar goes down, the market goes up; the dollar goes up, the market goes down. Generally speaking, the dollar has gone down, and the market has gone up. Read more…
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Healthcare, InfoTech, and Consumer Staples continue to lead in the Sector Detector ETF rankings, based on Sabrient’s fundamentals-based SectorCast model. Actually, they increased their scores this week relative to the other sectors as the bottom-up speculative rally led to further overvaluation in the fundamentally weaker sectors.
SectorCast is quite predictive for identifying the best (most undervalued) and worst (most overvalued) sectors, with a 1-month forward look. Read more…
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Sabrient’s research team posts a wide variety of useful data for internal reference, and much of it is used within our quantitative models and client deliverables. One of the things that we track is Net Insider Transactions.
It appears that for the first time since late May, the market has seen positive net Insider Buying, as of October 30. (I tweeted about this last week.) We are simply adding up the number of unique insider purchases during the week minus the number of insider sales, as reported to the SEC on Form 4 – open market transactions. Read more…
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Riding a wave of positive corporate announcements — among them, CISCO (Nasdaq: CSCO); The Blackstone Group (NYSE: BX); Coca Cola Bottling (Nasdaq: COKE); and Dynergy (NYSE: DYN) — and a number of positive economic releases, the market bullied its way through resistance to make net gains every day last week for the S&P 500. The result was a 3.2% gain for the S&P and consistent strong market action through all cap/styles and all sectors.
The strength continued today (Monday) with the S&P 500 up over 2% without even a hiccup. I have to admit that I’m impressed with this market right now.
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