2014 Ending So Are Trends

CoverRisk.com will start recalibrating trend data as this trading year comes to an end.  That goes for the risk rankings as well for AAPL, BAC, GOOG, GS, IBM, MSFT, F, PFE.  Trends have obviously been strong for the indexes as CoverRisk established long positions in February well under 2013 closing levels.

Valuations by various measures seem stretched and any selling that offsets closing year end marking could indicate January pressure.  The Fed will finally begin to raise rates in 2015 but at what pace is not known.  HFT operations will lean on downside volatility with potentially little resistance other than waning stock buy back programs.

Record S&P500 Close

S&P500 record close today.  Beating the indexes is especially hard the last couple of years and John Bogle followers believe they are proving that passive index investing cannot be beat.  But the truth be told, many of us design models which consistently beat passive indexes, including this year, even when considering the equities have been so heavily subsidized by the Fed and Treasury for at least the last 5 years.

IBM got a large dose of stock buy back today as it continues to teeter near critical price areas.  It remains number #1 in the risk ranking out of the Q8. 

 

Market Reset But IBM Near Edge

Rally squeezed every short again as hedge funds, sovereigns, and the fainthearted  were left reaching for cover in an absurdly comical play of trend rebound.  As stated here before the overall trend is still up and the explosive nature of rallies is leaving hedge fund and option boys bleeding.  Once again we see that the world is priced in equities because that is shortest distance between two points.  The first point being the slow spin downward in post WWII economic growth and the second point being what we imagine the world should be like.  One is real, the other is OZ.  There will of course be a mechanical price failure of world record proportion at some point as structural fatigue of the Fed asset price monster will collapse.  But no one has any idea when that will happen.

There is however one asset price indicator which may tell us if the deflation slow growth pig is here to stay.  IBM.  Big Blue has had a virtual price collapse and represents the structural nature of corporate operations and job growth. Though the world wants to price itself in tech and in its the narrow nature and overpriced equity values, the real world is represented still by IBM and its combination of technology, broad employment, and practical world solutions.

IBM has come dangerously close to confirming a major structural price decline according to CoverRisk.com.  A world priced in the technology of gadgets will suffer greatly if IBM falters. 

Yellen: Soccer Mom

Yellen has delivered her upside asset price spin once again.  The Fed is always caught defending stock prices, shepherding participation like a soccer mom protecting her not so talented child from the true nature of competition.  Down is unacceptable in a world where social interaction is delivered through device and applications molding negative event information into general rationalizations and framing views that some how all can be made right by simply explaining calmly why anything bad can be wished away.   Yellen, like Bernanke, like Greenspan, can never bring themselves to deliver bad news.  The vanishing middle class, a growing elite, are not the story to them.  Their view is always if you can save just one millionaire, think of the possibilities. 

Ruble, Putin, and Game Decisions

Ruble troubles making markets a bit nervous.  While Russia is certainly taking some major economic hits,  Putin is in a game decision position where he can execute strategies which have a great impact on what the western nations are most concerned about, asset prices.  His accountability rests on a different set of power rules than the west and so he can bring into play decision choices which have greater leverage when ultimately there are discussions to arrive at some compromise plan to stabilize world economic markets.

Soveriegns and Feds vs Bears

Bears bringing on the push lower late morning Chicago.  Momentum quants front running order flows keeping the offers coming for now although allegiance can be quickly turned to front running the bids.  Market shall see if the sovereign buy programs along with Fed's whatever it takes attitude is up to the task of pushing back the much smaller bears.

Oil Leaks, Markets Adjust

Markets continue to worry about oil but we shall see how much the Fed on Wednesday will be the supportive element.   After Wednesday it will be a play to see if there is a continued oil leak and just what kind of year end buying shows up.  Current retracement from the December 5th all time high in S&P500 is only around 4% while the break in October was 10%.  If you have just been lugging stock this year from the long investment side then you have little padding while absolute strategies have already won. 

Markets, Oil, and Trends

It is certainly more fun when decision strategies  are short these indexes and it appears a continued run on the downside would go hand in hand with a further sell off in oil.  To many elements of the economic engine rely on higher oil prices which simply out way any gain the consumer may get in return.  Oil is tied to business debt and some of that debt will now not be repaid.  However, being an old soybean trader, oil is entering a % decline area where no one wants to initiate new shorts.

As for the overall trend in the indexes as viewed here, the data via CoverRisk, via QRiskValue still show the trend in stocks as higher.   This is from composite decision programs which once again lead any reviewable industry model performances.  But these things don't pick tops or bottoms so turning points come after decent moves against prior trend.   Head fakes abound and year end marking is an art form with few trading days left.  Some will have to do some pricing yet and be aboard indexes currently showing big gains.