June 21, 2010
– Comments (86)
update of the usual figure displaying the S&P 500 index (see this post).
The green trend line is at around 1191.50, the grey lines are at around 1260.88 and 1125.94 at June 21, 2010.
good old DAX almost made a new 52w high today.
porte, when will you determine, other than hindsight, when the market has broken from the t^(1/7) (if I remember the formulation correctly) recovery pattern?
so the proposed fit is:
p(t) = p(0) * exp (1/15 * t^(0.37))
and the "quality" of the fit can be "seen" by
comparing log(p(t)) - log(p(0)) to 1/15 * t^(0.37).
(from comment #3 here)
As I wrote in that comment about a year ago the quality of the fit can be "seen" by looking at the chart. I think the fit is still in decent shape ...
Looks like the bottom grey line is now resistance, after today's reversal of fortunes.
We need a reverse, declining red arch now it would appear for the next 3-6 months of trading?
See what the influence of the original post carries - I still had a vague memory of (1/7) in the power portion of the formula (even though you had actually written 1/17), and had forgotten about the correction to 0.37.....out of sight, out of mind. The function is a remarkably good fit still, especially how early on you were able to set the parameters and let this thing ride. My real question, though, is if you have thought about how to determine when the model finally breaks (didn't you build this from observing the recovery from the '87 "crash"?) other than waiting until you can see that it did after the fact?
the best "caps" game blogs chart might be this one.
(from here, at least it used to be there.)
#7 I compared the 1987 ("pre-crash") rally with the 2009 rally.
(from comment #32 here)
Then came this question by russiangambit in comment #4 here.
ok, so how did the story end in 1987? I am not old enough to remember.
Then I wrote this in comment #11 here.
October 5, 1987 (the closing high for 1987) and Thursday, December 10, 2009 are corresponding dates in the charts (Since I am too lazy I did not count the trading days, but took the calender days to find the corresponding day ...). The fitting curve is at around 1077.55 for December 10.
So if you insist on getting a prediction. Black Friday this year will be on December 11.
As we now know there was no crash in December 2009, hehe ...
That "Norris formation" post was written on March 6, 2009 ...
Nice work Porte!
There are many similarities between 1987 and 2009-2010, in terms of the imbalances created by insane, greedy, short-sighted FED and Treasury policy...
The stock market overshot reality in 1987 from the lower Dollar policy engineered by Treasury Secretary Baker to stimulate manufacturing and export growth in America. The U.S. economy was near recession in mid-1986 and consumer prices were flirting with going NEGATIVE (Deflation)... Excessive money printing rates during late-1986 and early 1987 primed the pump even more for stocks.
Many of the same 1986-1987 fears and desires erupted again in 2008-2009. BEN at the FED, and characters at the Treasury in early 2009 decided to flood the system with money and try a lower the Dollar strategy in hopes of reversing the economic slide of the Great Recession with few repercussions.
The same net effect as in 1987 was a sharply higher stock market run, not based in much reality. In 1987, the stock market corrected the lower Dollar imbalance in 6 weeks with a 40% stock market price shaving (crash) back to the mid-1986 level.
What will the markets do in mid to late-2010 to correct the largest modern advance in stock prices over 13 months of nearly 100% for many indexes???? The outcome may not be pretty for the wishful thinking bulls and optimists if history is any guide... AND IT IS!
The downgrade of Treasury bonds by the ratings agencies in late-summer into the fall won't help the markets one bit to stay calm or richly priced/valued vs. our slow growing economy.
I pray each night that the "coming" downside doesn't completely take control of emotional investors. Last month's flash crash was a shot across the bow about what happens to markets when few buyers exist, and stocks are overly owned and hyped by the Wall Street crowd. I continue to assume we will not take back the entire advance since 666 on the S&P 500, but I cannot guarantee such an end result in late-2010.
My minimum target is for 50% of the advance from March 2009 to be "corrected," and this optimistic goal would bring a total SPX decline of 20%-25%, to say 920-960 on this important index. If emotion and fear gets the best of investors and we get the Treasury downgrade contagion from Europe, well, who knows where we end the year?
You're one of the few "chartist" to whom I give any credence. Keep us posted.
I hope you're wrong, but my intuition tells me you're probably spot on.
boom in German manufacturing sector.
The Ifo Business Climate is a widely observed early indicator for economic development in Germany. It is based on ca. 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing. The firms are asked to give their assessments of the current business situation and their expectations for the next six months. They can characterise their situation as "good", "satisfactorily" or "poor" and their business expectations for the next six months as "more favourable", "unchanged" or "more unfavourable". The replies are weighted according to the importance of the industry and aggregated. The balance value of the current business situation is the difference of the percentages of the responses "good" and "poor", the balance value of the expectations is the difference of the percentages of the responses "more favourable" and "more unfavourable". The business climate is a mean of the balances of the business situation and the expectations.
An example to illustrate how the balance values are calculated:
Of 100 responding firms, 40% appraise their business situation as satisfactory, 35% as good and 25% as poor. The firms that assessed their situation as satisfactory are considered to be "neutral" and do not affect the results of the business-situation appraisal. The two remaining percentage values (35 - 25) are now balanced. The resulting value of 10 percentage points is the business-situation appraisal, i.e. the first component of the business climate in the form of a balance. The six-month expectations are calculated the same way.
So to get a point inside the "boom" quadrant the number of respondents saying saying that their "current business situation" is "good" must be greater than the number of respondents saying that it is "poor" (resulting in an x-value greater than zero for the point in the chart) and the number of respondents saying saying that their "expectations for the next six months" are "more favourable" must be greater than the number of respondents saying that they are "more unfavourable" (resulting in a y-value greater than zero for the point in the chart).
So to get a "boom" result for the "manufacturing industry" June survey the balance value of the "expectations for the next six months" must be slightly higher than they were in the May survey (unless that May point is already inside the boom sector. hard to tell ...).
The last part was from comment #24 here.
so, let's see whether we spend around 3 years in the boom sector again, hehe ...
(from here (pdf))
Wow, spammers on CAPS!!!
Hey Port, chart is playing out nicely, that lower gray line looks like solid resistance now!!!
With a degree in economics what I can tell is that the cycle is usually about 7- 8 years. 3 and 1/2 up and 3 and 1/2 down. The 2003-2007 period was over extended as an up cycle. So to stave off the extended down, the Fed pumped the engine. It only works in moderation and best in budget surplus economies.
2009 was a blip. This down is going well into 2011 and 2012.
German companies see order books overfill
Published: July 4 2010 22:07 | Last updated: July 4 2010 22:07
Orders in Germany’s key export-driven sectors such as machinery, cars and chemical goods are pouring in at such a speed that many companies are struggling to cope with the sudden demand boom.
Significant parts of the country’s plants are running at full speed again, driven by a fast rise in demand from China and the US in particular. Some companies are already expanding capacity and many are rehiring contract workers.
“We are approaching a normal capacity utilisation in our sector,” said Manfred Wittenstein, president of VDMA, the German engineering association.
Mr Reifenhäuser compares his company’s rollercoaster ride in the past two years to the shape of a canyon. “First we went into a brutal tailspin, and now we are in the middle of an abrupt ascendancy.”
German industrial output bounces back
Published: July 4 2010 22:00 | Last updated: July 4 2010 22:00
German industrial companies are frantically rehiring workers and ramping up capacity as they approach output levels last seen before the 2008 collapse of Lehman Brothers sent the global economy into a tailspin.
Orders for export-driven Germany’s key sectors such as machinery, cars and chemicals are pouring in, say businesses.
Mercedes-Benz sales up 13 percent on year in June
BERLIN — Sales of Mercedes-Benz cars were up 13.2 percent in the year to June as strong demand for the premium brand in China and the United States helped drive growth, parent company Daimler AG said Monday.
Mercedes-Benz sold 113,300 cars worldwide last month, making it the best June performance in its history, Daimler said.
The premium brand's sales in China were up 177 percent last month to 13,700 cars, U.S. sales were up 20.5 percent to 18,300, and sales in Japan gained 26.5 percent compared with June last year to reach 3,400.
There also was strong growth in Brazil, Russia and India: Daimler reported sales increases of more than 70 percent in all three of the emerging markets. However, sales in Western Europe were down 3.6 percent at 58,100.
Mercedes-Benz's worldwide sales for the first six months of 2010 were up 15.2 percent from a year earlier to 556,700 cars. The brand delivered nearly 120 percent more cars in China for a total of 60,500; in the United States, its sales rose 21.8 percent to 103,700.
Mercedes-Benz Cars executive Joachim Schmidt said the year-on-year increase in June was the eighth time in a row that sales rose by a double-digit percentage.
"We are also in an excellent position to do well in the months ahead and plan to continue Mercedes-Benz's success with a significant increase in the third quarter," Schmidt said in a statement.
DAX above 6000 in "after-hours trading".
good old euro ...
Yet when things get scary people run to the dollar;p
I think "THE" chart's days are over. Maybe time for a new projection, though I still think the trend is up overall.
#31 I think that little green trend line might be relevant for a few more months or years. A decent earnings season should at least get the index back inside that trend channel. I think the DAX and KOSPI will make new 52w highs in the next few days and the S&P 500 index would really have to decouple from quite a few indices to not "rally". If I were not so lazy I would check where the other major indices are in relation to their rally trend lines. DAX, KOSPI, Sensex and the Bovespa index are obviously in decent shape.
#31 and the S&P 500 index was inside that channel for some time on June 21. I think you are a little hard on my poor little chart ...
The green line is at around 2400 at July 2020, so it would still be a decent rally if it kept slightly below that line for the next decade, hehe ...
Looks like a bearish chart :-) I love stuff that agrees with my bearish outlook. Makes me feel good about the risk of being wrong because uncertainly in one's market thesis is a killer.
Not sure how it is a "bearish" chart. What it does show is a break from a pattern as a result of a "correction." Something which many argued was needed. But the projection can still be upward, just not within the "past pattern."
"Overlay" of the charts from comment #29 and #36. The scales are different, I just tried to make it it look "nice" ...
The S&P 500 index currently "sucks", that is the only problem with my trend channel currently, hehe. It will "catch up" though I think (catch up with its trend line, not with the DAX which will probably continue to do better than the S&P 500 index as it has "higher beta") ....
I will buy any and all forms and quantities of alcoholic beverages for any and all fools in any and all locations if we hit the top of that chart again this year, lol.
I had a prolonged talk with myself over the weekend and emerged feeling pretty bullish. My second post as to whywill hopefully go up tomorrow. Lots of rulers and manual data entering from this one poor lonesome chart in Dreman.
okay, time for the DAX to make a new 52w intra-day high, the current one is at around 6341.52, made on April 26.
#30 EURUSD ≈ 1.2701 currently.
update of the performance of the "European stocks" I "recommended" about 2 months ago in comment #12 here.
(05/07/10 close -> 07/08/10 close)
AXA (CS:FP) 11.82 EUR -> 13.34 EUR +12.86%,Banco Santander (SAN:SM, STD) 7.71 EUR -> 9.95 EUR +29.05%,Crédit Agricole (ACA:FP) 9.06 EUR -> 9.37 EUR +3.42%,Deutsche Bank (DBK:GR, DB) 45.80 EUR -> 49.01 EUR +7.02%,Erste Group Bank (EBS:AV) 28.00 EUR -> 28.29 EUR +1.04%,ING Groep (INGA:NA, ING) 5.51 EUR -> 6.82 EUR +23.77%,Intesa Sanpaolo (ISP:IM) 2.01 EUR -> 2.38 EUR +18.41%,OMV (OMV:AV) 24.36 EUR -> 25.055 EUR +2.85%,Telefónica (TEF:SM, TEF) 15.36 EUR -> 16.17 EUR +5.27%,Telekom Austria (TKA:AV) 9.17 EUR -> 9.08 EUR -0.98%,UniCredit (UCG:IM) 1.63 EUR -> 1.98 EUR +21.47%.
average relative difference +11.29%.
EURUSD ≈ 1.27 currently.
I told you so, hehe ...
nice : )
Maersk Lifts Forecast as Container Demand Picks Up
Moller Maersk Raises Guidance
#924) On December 26, 2009 at 8:01 PM, portefeuille (99.95) wrote: MAERSK-B.CO - 7080.13 (36600 DKK) - outperform
MAERSKB:DC closed today at around 53000.00 DKK.
TUI shares soar as shipping outlook brightens
#410) On April 01, 2009 at 7:32 AM, portefeuille (99.95) wrote: TUI1.DE - 5.36 (4.04 EUR) - outperform
TUI in Frankfurt trading.
porte, you think part of the DAX's levitation in the recent market tankage is related to....
long germany / short PIIGs pair trades?
That could be bizzare if/when it unwinds.
I think the "weak euro" has helped the "exporters". And most DAX component stocks are looking very cheap.
Those are P/E ratios and dividend yields using the 2010 consensus estimates. Using 2011 estimates you get a P/E of 9.3808 and dividend yield of 3.10% for ThyssenKrupp, a P/E of 12.1865 and dividend yield of 3.52% for Lufthansa and a P/E of 11.838 (and no dividend) for Commerzbank, so even those stocks "at the bottom" look rather cheap ...
At their March 2009 lows quite a few DAX shares were trading with "forward (2010) P/E ratios" of below 5 and dividend yields above 10%. Oh well ...
BASF had a P/E2010 of 19.95 EUR / 4.0244 EUR ≈ 4.96 EUR and a dividend yield of around 9.77% if you use current estimates. So P/E of around 5 for the largest chemical company in the world. No idea what the sovereign wealth fund managers were doing at the time ...
It even looks pretty, hehe ...
BASF Ludwigshafen by night.
doesn't look all that weak ...
IDT (see this post).
quite astonishing ...
Europe’s Services, Manufacturing Growth Accelerates
July 22 (Bloomberg) -- Growth in Europe’s services and manufacturingindustries unexpectedly accelerated in July as concern over the sovereign-debt crisis eased and an increase in global trade spurred exports.
A composite index based on a survey of euro-area purchasing managers in both industries increased to 56.7 from 56 in June, London-based Markit Economics said today. Economists had projected a drop to 55.5, the median of 18 estimates in a Bloomberg survey showed. European stocks advanced and the euro rose against the dollar.
With global trade recovering, Daimler AG, the second- largest luxury-car maker, raised its full-year profit forecast this month and Renault SA said first-half car sales jumped 22 percent. As concerns over the fiscal crisis ease amid a drop in risk premiums on southern European debt, the region’s next test is the publication tomorrow of bank stress tests.
Today’s report “boosts hopes that the euro zone will see decent growth in the third quarter after a likely marked pick-up in the second quarter,” said Howard Archer, chief European economist at IHS Global Insight in London.
The euro rose 0.8 percent to $1.2851 against the dollar as 10:01 a.m. in London. The Stoxx Europe 600 Index rose 1.1 percent to 251.96, erasing an earlier decline of 0.4 percent.
An index of euro-area services, which account for about 60 percent of the region’s gross domestic product, rose to 56 in July from 55.5 in the prior month, Markit said. A gauge of euro- area manufacturing rose to 56.5 from 55.6 in June.
Ifo Business Climate Index Rises Sharply (pdf)
Port, how many computer monitors are in front of you? Because you are an information machine (not talking about just this blog).
I'm actually curious.
Do you think we'll go back on track?
Yes, I think so.
"Overlay" of the charts from comment #69 and #72. The scales are different, I just tried to make it it look "nice" ...
can you do a dow in the price of gold chart i hear it is a good indicator of where the dow is headed next
I think google can find quite a few of those. I am not really interested in the price of gold ...