Skip to main content

SPIKE of short term trading index

Following the significant equity market consolidation or profit taking in Asian markets overnight, the stocks in the states were under enormous pressures from the opening bell in the morning. The declines were broad based and no safe place to hide (only two stocks of S & P 500 index ended in positive territory). However, the sell-off was due to happen considering the historical magnitude of rallies we have witnessed in the last week (>17% in 5 sessions) and potential huge amount tax related portfolio balancing at the year end. Any opportunities to book meaningful gain or any any sign of momentum shift would trigger consolidations. Today's movement is no exception, the broad based indexes steadily went to downward throughout morning session (we can see the ARMS gradually reach the usual upper limit of 2.0, then the index suddenly spiked right over 6.0 around 2:45. After this momentum shift the market went to unstoppable downward spiral. Because of the way that ARMS constructed, we might speculate that it is quite likely somebody or some "big guns" were exiting huge positions real fast willingly or unwillingly.



Popular posts from this blog

What history tell us about “Sell in May and Go Away”?

US stock market has experienced one of the best first four-month performance over the last four decades, produced 17.5% price return comparing to 19.1% in 1987. It is the third best price return for S&P 500 index since 1950; the top four-month performance belongs to 27.3% in 1975 as the stock market recovered from a severe bear market in 1973-1974 when the index nosedived more than 42% in two years. With calendar flipped into May and onto summer season of sun, beaches, most likely we would hear a lot of about old Wall Street saying “Say in May and go away” in the media. Moreover, primarily because of the unprecedented nature of speed and magnitude of the current market rally against the backdrop of weakening macroeconomic and corporate earnings backdrops during the period.  Sell in May and Go Way has delivered 6 times more return Historically, the six months between Nov-April frequently experienced extraordinary stock market performance than the six months between May to Oct...
Read more

Michael Masters - The Commodity Speculator Crusher?

Michael Masters , the hedge fund (Masters Capital Management LLC .) manager, made some headlines in the Hill and markets for his champions that speculators cause skyrocket high prices for commodities from agricultural grains to metal zinc. Media has raised the questions regarding Mr. Masters's motive because of his investments concentration in transportation. I pull out the his q2 13F regulatory filings via Bloomberg (see the chart below from Bloomberg ), it is interesting to note that he increased weights on industries and utilities, two sectors by 6.1% and 5.8% respectively over 1st q this year. Not surprisingly, two of his top 5 holdings, Delta and US Ariways , make up 33% portfolio. During the quarter, US Airways positions were increased from 2 millions to 4 millions shares, and Delta was almost double the positions too (from 1.05 to 2 millions shares.) I guess the pain must be unbearable when the benchmark crude rocked to over $140 from less than $100 during the quarter. Cer...
Read more

Dollar and crude oil price

The skidding of dollars against the major foreign currencies, especially Euro were constantly blamed for the seemingly unstoppable skyrocketing crude oil price. The logical explanation for this relationship often quoted was that crude is traded in dollar and the weakening the dollar is the major reason the higher crude oil and hence gasoline price paid at pump. If the arguments for this negative relationship contributing to a high crude price. We would expect a significant correlations between crude price and dollar strength. Are there any significant correlations between oil and dollar? Regressing crude price with dollar index ( DXY ), we did found the strong negative correlations between the two beginning early 2006 up to now. The correlations reached to the highest at -0.96 today. However, this relationship were neither stable nor constant over time. We can see from the attached chart (the green area represents positive correlations and red areas indicated negative relationships...
Read more