Trader’s Narrative

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Man does not live by bread alone.

And neither is the US stock market the only market out there.

But we usually tend to act as if it was the only one that counts. One of the many lessons I learned from Weinstein’s excellent book: Secrets for Profiting in Bull and Bear Markets, is to monitor global indexes. Cheesy title, but excellent book - if you don’t have it, get it today.

This takes on extra importance at important inflection points - which are difficult to spot in the moment, as you’ve no doubt noticed. While the US market is probably the most important in the world, due to the interconnectedness of our world, it can not decouple from the rest. So by comparing it to the others, we can gain insight into bull and bear markets.

So with that in mind, below is a (not so random) walk through the world’s major stock markets. First, let’s take a look at the European exchanges, then Toronto and the South American Indexes and finally, Asia.

Since looking at so many charts can be dizzying, I’ll keep tabs on a couple of specific technical criteria. For example, the slope of the moving averages as well as whether price is uptrending or downtrending (making a higher high and a lower high or vice versa).

FTSE (England)

• made a new low in March 2009 (still downtrending)
• yet to break above January 2009 highs
• slope of 200 day moving average is down
• 50 day moving average is below price & climbing

CAC 40 (France)

• made a new low in March 2009 (still downtrending)
• yet to break above January 2009 highs
• slope of 200 day moving average is down
• 50 day moving average is below price & climbing

Continue reading ‘A Walk Through World Stock Markets’

Once again swine flu is causing headlines and the mobilization of health professionals and the government in combating it. Again? In 1976 President Gerald Ford put into motion a massive vaccination effort to halt the spread of swine flu on the advice of medical experts. About 40 million Americans were inoculated before the program was stopped.

While death is tragic, it isn’t helpful to sensationalize what is happening. For example:

…CDC scientists estimate that an average of 36,000 people (up from 20,000 in previous estimates) die from influenza-related complications each year in the United States

That was in 2003, and refers to regular flu. So far, counting all deaths around the world, we aren’t even close to 10% of that figure. While I’m not prescribing that we not take any measures, I hope that this puts into perspective what is happening so that we don’t panic.

Although it might seem callous, as traders, the proper reaction should be, where’s the opportunity? I’ve created a watchlist (see below) for stocks that are in play.

There are also many general stocks like FEMSA (FMX) and Grupo Televisa (TV), being hit just because they are Mexican and not because they are in any direct way related to the swine flu pandemonium. Of course, this makes no sense but since when was the stock market supposed to make sense? When this blows over, they will be the first to recover and the biotech related stocks in turn, will rediscover gravity.

Food Industry:

• Smithfield (SFD) - unconfirmed reports a farm owned by SFD was ground zero
• Tyson Foods (TSN)
• Hormel Foods (HRL)
• Industrias Bachoco (IBA) - producers of poultry and pork products

Biotech & Health:

• Novavax (NVAX)
• Quidel (QDEL) - makers of a flu test
• Luminex (LMNX)
• Qiagen (QGEN)
• BioCryst Pharmaceuticals (BCRX) - products still in clinical trials
• Baxter (BAX)
• Crucell (CRXL)
• Generex Biotechnology (GNBT) - drugs in pipeline for general influenza
• GlaxoSmith Kline (GSK) - makers of Relenza an antiviral for swine flu
• Gilead Sciences (GILD) - receive 20% royalty for Tamiflu
• Roche Holding (RHHBY) - original makers of Tamiflu
• Sinovac Biotech (SVA) - Chinese drug maker working on a vaccine
• Johnson & Johnson (JNJ) - Purell hand sanitizer & surgical masks
• Noveko (EKO) - makers of surgical masks (traded on Canadian exchange)

Travel:

• Grupo Aeroportuario del Sureste (ASR)
• Grupo Aeroportuario del Pacifico (PAC)
• Grupo Aeroportuario del Centro Norte (OMAB)
• Grupo TMM (TMM)

Have I missed any? Let me know of any stocks that should be up there by leaving a comment below.