Posts by Jeff Macke
- Jeff Macke at Yahoo Finance1 day ago
What a difference a week makes! Sound the trumpets and wave the flags! The sell-off is over! Naturally that means sell but first the good news.
Traders are also mellowed by a return to normalcy in markets and the volume of ghost stories most people don't want or need to pay attention to very much. The yield on a 10-year note (^TNX) has gone back above 2%. Traders don't mind low; they just don't want a free fall. Remember the illusion of control is the Fed's strongest weapon.
- Jeff Macke at Yahoo Finance1 day ago
The greatest strength of a man or methodology is often its greatest weakness. A gentle heart can be mistaken for a lack of resolve. A singular focus can hide a lack of vision.
As is true of philosophy, so it is in investing. Fundamentals are how stocks are “supposed” to be valued but an even cursory examination of market history reveals countless, often massive dislocations between reality and financial promise.
In financial markets as volatile as we’ve seen over the last month the simplicity of charting can be a Godsend. Fast markets are emotional, almost by definition. The S&P 500 (^GSPC) dropped 9.8% in three weeks, reversing sharply last Wednesday and now sits about 2% from where it was at the beginning of the month.
If you can think of anything that has fundamentally changed the discounted value of all the future cash flows of the S&P 500 by 10% in the last three weeks I’m all ears. Otherwise you’re just going to have to accept that there’s some value in using investing disciplines beyond accounting.
- Jeff Macke at Yahoo Finance2 days ago
Since Ebola emerged as a threat late last Spring it’s been great catalyst for story stocks. Ebola kills at a 70% rate! It was a global threat of large but unknowable size. A stock promoter’s dream.
Fortunes have been made already in biotech companies rumored to be working on cures for Ebola over the last six months. In the attached clip OptionMonster.com’s Jon Najarian says the easy money has been made but there are still some potential opportunities in company’s that, for want of a better way to put it, profit from Ebola.
NewLink Genetics (NLNK) was up 50% last week despite a large drop on Friday afternoon. It's up more than 15% today alone. It brought to mind huge pops and plunges from past epidemics and health scares. In all but a very few of those cases the companies that were supposed to be the next big thing in defense against, say, Bird Flu or SARs turned out to be duds.
“July 26th is when we flew those two patients back here,” Najarian says. That’s when those stocks were cheap. They are no longer cheap.”
- Jeff Macke at Yahoo Finance5 days ago
Time for your daily dose of Trending Tickers, the stocks that you're tracking as measured by Yahoo Finance ticker searches:
Carnival Cruise Line (CCL) shares are bobbing higher after an early dip. The cruise company's shares were hit earlier on reports that one of its ships was being held out of port because a passenger had been exposed to Ebola. The stock recovered after management assured investors that the passenger was showing no signs of the disease. Though cruise lines get a bad rap as being floating Petri dishes the reputation is overblown. It's been months since Carnival has even had dozens of passengers hit with the crippling gastrointestinal symptoms associated with the norovirus and more than a year since the Carnival Triumph drifted at sea with no power or working toilets for more than a week.
- Jeff Macke at Yahoo Finance7 days ago
Stocks are set to tumble on the open on the usual list of global tensions and a pandemic of uncertainty. This comes on the heels of a day that saw the S&P 500 (^GSPC) plunge nearly 3% before rallying into the close to finish down .8% at 1,862.
For the year the S&P 500 is now up less than 1% and the Dow Jones Industrial Average (^DJI) is in the red by 2.62% and is now 7.4% off its record high from September 19th.
Does Mr. Market have your attention yet? There were some signs of a trading low yesterday. Volume on the NYSE was 944-million shares, about 80% above average. Volatility (^VIX) spiked as high as 31.
The biggest problem for bulls is that there are just too damn many of you. The AAII.com weekly sentiment survey showed an increase in self-described bulls for the week ending yesterday. An increase! That’s bad. There are way too many uncertainties out there for individual investors to be blithely buying dips.
- Jeff Macke at Yahoo Finance8 days ago
Very, very early this morning the Texas Department of State Health Services confirmed a second health care worker has been diagnosed with Ebola. The news sent shivers down the spine of markets still trying to find a footing after the recent pole-axing to stocks around the world. Futures took a slight dip around the time the story hit the newswires but let’s be honest, just about anything could take two or three points out of the futures given the restive state of investors these days.
According topolls run by Gallup, Americans are still relatively unconcerned about the risk posed by the disease. At least they were as of last weekend. In their most recent poll 77% of those asked were unconcerned about getting Ebola, the same level reported when the question was asked the prior weekend.
Beyond hyper speculative drug stocks and sector-specific concerns (airline industry, I’m talking to you) history suggests investors are better off ignoring health scares when it comes to their investing decisions.
- Jeff Macke at Yahoo Finance9 days ago
The beatings will continue until morale improves. Yesterday's close was a nightmare for premature dip buyers. The S&P 500 lost 1.65% on the day, all of it coming in the last two hours. At this point the most obvious catalyst for the selling is selling itself: institutions were afraid of stocks not holding support so they tried to beat the rush out of equities. The rout was on into the close.
The S&P 500 is now below the 200 day moving average for the first time since 2012 and off 6.8% from recent closing highs. Our next support comes at about 1,850 where we started the year.
- Jeff Macke at Yahoo Finance10 days ago
The tone of the market changed on Friday. The difference was more a shift of emotion than economics. Depending on your time frame and financial situation this is either or an opportunity or a huge, raging, fang-toothed monster sized problem. The point is to recognize the shift as part of a definable process. Stocks are correcting. That's not a call. It's not a forecast. It's not even official based on the percentage losses. But those technical definitions are less important than TV pundits would have you believe.
Last Friday was the day we ended the prelims on the sell-off. The Dow went negative for 2014. The S&P 500 closed less than two points above its 200-day moving average. Those were two of the things I told you to look for last Wednesday. On a technical basis if the S&P 500 closes below 1,900 today I'd put the chances at about 75% that it hits 1,800 within a month.
- Jeff Macke at Yahoo Finance12 days ago
The food service industry and retailers have spent years trying to figure out how to use touchscreen devices to drive business. Restaurants have tried apps, tablets and all manner of tabletop devices but nothing has resonated with customers in a meaningful way.
At least not until now. A company called Ziosk seems to have cracked the code on how to marry technology and human customer service. The company recently scored a huge deal with Brinker International (EAT) that has already resulted in Ziosk devices put on the tables of every company-owned Chili’s in the U.S.
In the attached video Ziosk CEO Austen Mulinder explains the value proposition that allowed his company to succeed where others failed.
“To build the company is tens of millions of dollars," Mulinder says, "and I don't think any individual chain really has that kind of money to speculate with. And so the industry left it up to people like us to say 'OK can this be done?' and I'm delighted to say that it can.”
- Jeff Macke at Yahoo Finance13 days ago
Wednesday and Thursday marked the biggest one day rally and worst one day drop for the Dow Jones Industrial average for all of 2014. That’s the first time those extremes have been hit on back to back days in nearly 17 years. Then again, neither 2014 nor this sell-off are over just yet. With pre -market futures for the Dow off by more than 100 points it’s likely the Dow will have given back all of this year’s gains and be negative for the year when the market opens.
That’s sort of a good thing. This sell-off has been noteworthy in its volatility but with decidedly too little fear. Yes the the deeply flawed measure of “fear” among traders, has risen 24% in the last 5 trading days but it’s still in the teens. To put that in perspective, the VIX topped out over 20 in February of this year. Historically about 40 on the VIX is the point at which it can be fairly assumed there’s genuine fear in the market.