Category: Commentary
Weekly Commentary for January 22, 2005
This week the technical condition of the stock market deteriorated meaningfully, with the most notable development being a Dow Theory sell signal. Below are the daily charts of the Dow Jones Transportation Average and the Dow Jones Industrial Average: A Dow Theory sell signal occurs when both averages violate a previous low. The key is [...]
Commentary for January 21, 2005
As you know, Dow Theory plays a significant role in our investment philosophy. Its most important tenets, regarding things such as values, price movements, and the primary trend, shape our analysis and strategy on a daily basis. However, there is also something called a classic Dow Theory Signal, which attempts to identify meaningful changes in [...]
Commentary for January 20, 2005
The technical condition of stocks continued to deteriorate today. Below is a daily chart of the NASDAQ Composite: As shown, the 40-day moving average has just turned down, while money flow, momentum, and oscillators are all strongly bearish. Notice how pronounced the negative divergences of last year were for this particular index: beginning in the [...]
Commentary for January 19, 2005
According to the latest Federal Reserve beige book the pace of economic activity continued to pick-up across most of the country during the final quarter of last year, and future growth is predicted. However, we must ask the same question we always do when confronted with an optimistic appraisal of economic activity moving forward: what [...]
Commentary for January 18, 2005
Several regional Federal Reserve Presidents expressed differing opinions regarding the future course and pace of interest rate moves today, some indicating the desire to continue raising them at a “measured pace” and others suggesting that a more aggressive approach may be required to defend against inflation. We comment often on the battle that is currently [...]
Commentary for January 14, 2005
Thus far in 2005 the stock market has exhibited meaningful technical weakness, and yet investor optimism and complacency continue to grow, which is precisely the opposite of what one would expect. Usually when stocks display weakness market participants tend to become nervous, and when that fear ultimately reaches a frenzied crescendo, as it oftentimes does, [...]
Commentary for January 13, 2005
First time jobless claims were up to 367,000 last week, their highest level since last September. The jobless recovery continues. Contrary to the bright picture that your friendly, neighborhood government official paints, we are not once again in the midsts of a strong, sustained economic expansion. The historically low interest rates and liquidity flood engineered [...]
Commentary for January 12, 2005
The trade deficit “unexpectedly” widened in November to a record $60.4 billion, confounding all of the experts who believed the weak US dollar would magically repair that component of the massive triple deficits. Treasury Secretary Snow blamed the surprising figure on too much domestic growth and too little international growth. Of course government officials will [...]
Commentary for January 11, 2005
There are many reasons why the vast majority of investors and traders lose money over the long run, but one of the primary reasons is poor risk management. When opening a new position, most market participants will focus on what can go right, whereas they should do precisely the opposite. It is human nature to [...]
Commentary for January 24, 2005
The long bond was finally able to decisively break-out of its recent trading range today, predicting further gains and lower interest rates moving forward. From a long-term perspective, the long bond is now close to making its first intermediate-term higher high in two years, as shown below: If prices are able to move appreciably above [...]
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