Happy New Year!
It is the end of 2009 and the end of my annual retrospective. If you’ve just found this, I’m looking back at 2009 by reviewing each month’s most interesting commentary and republishing them as highlights to help me encapsulate the year as well as prepare for the coming year. Here are the previous months:
And these are the highlights for December 2009:
- Gold Bulls Are Rebels… Just Like Everyone Else
I was beating the drum pretty hard throughout November as gold reached skyward. This comment on the overcrowded long gold trade coincided with the peak in prices.
- What Do Rates Rising from Zero Mean for Equities?
One of the longest standing market shibboleths is that rising interest rates are bad for the stock market. A historical study of the relationship however reveals that the truth is the exact opposite. Also, see The Interest Rate Myth
- Lowry Research: Rally Getting Tired But Not Over
After turning bullish quite late in the game, Lowry continued to believe that the stock market would continue to see gains. The pointed out the relative weakness in smaller capitalization stocks as a sign of a maturing rally. One problem though… small stocks even fooled me as they staged a come back later in December and made new year highs.
- US Dollar Begins To Shake Off Carry Trade Woes
For the past few months the sentiment on the US dollar had gotten so extreme that we were making comparisons going back decades. The first sign of a counter trend rally was the trade weighted dollar breaking above its down trend line and then the US dollar index trading above its 50 day moving average.
- My Year End Strategy For 2009
This year proved to be a challenging year because this strategy relies on tax loss selling and almost every single risky investment had positive returns. Still, there were opportunities around (as always). This high probability, high return strategy is one of the reasons why the Efficient Market Hypothesis (EMH) is bunk.
- Operating Company Only Cumulative Advance-Decline
The NYSE advance decline line is far too polluted with interest rate sensitive securities to provide any meaningful measure of breadth. The OCO advance decline line filters out that effect and presents rather anemic momentum.
- S&P 500: Rounding Top Formation
We could be seeing this rather rare technical pattern completing in the major indexes. The factors to watch for are a slow waning of momentum (as hinted by the advance decline line) and a gradual weakening of the bulls. But if we see a decisive break, say to 1150, then the pattern is nullified.
- NYSE Advance-Decline Volume Line Betrays Weakness
Another measure of the underlying momentum behind stock market indexes reveals that there isn’t much broad based support for the rally. While the indexes are slowly pushing higher, they are doing so with the help of fewer and fewer actual stocks trading higher.
- US Dollar Update: Sudden Shift In Sentiment
The sudden shift in US dollar price and sentiment suddenly brought us to the other extreme! Now, sandwiched between the 50 and 20 day moving averages, the US dollar index corrects as traders pile on the other side.
- Stock Market Outlook For 2010
This guest post by Wayne Whaley looks at the selling capitulation we saw in late 2008, market breadth, earnings projections, sentiment and a host of other factors to summaries an outlook for the year ahead. While it wisely sidesteps the farcical exercise of predictions so popular at this time of year, it provides a guideline based on present factors and historical precedents.
- Dow Theory’s 50% Retracement Principle
Both the S&P 500 and the Dow Jones Industrial index have managed to claw their way back and retrace 50% (or more) of their bear market losses. In this comment I analyse this factoid from the perspective of Dow Theory and offer the wisdom of one of its most popular practitioners.
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