Friday, 30 March 2018

Weekend Update 31/03/2018 A New Bear Market? The Duck Test.

Posted Early.

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

While it’s too soon to declare the bull market dead and a new bear market starting, given the duck test, rising interest rates, and that it was "dress up month-end,  that’s probably the way to bet.  Looks like “sell in May, go away,” came early this year.

The race is not always to the swift, nor the battle to the strong, but that's the way to bet.

Damon Runyon

The simple reason the Dow snapped a 9-quarter win streak: Wall Street’s surging ‘fear index’

Published: Mar 29, 2018 5:24 p.m. ET
The Dow and the S&P 500 halted a record-setting streak of quarterly wins at nine, and the clearest reason why may be explained by the VIX index, widely known as Wall Street’s “fear gauge.”

The Dow Jones Industrial Average DJIA, +1.07% posted a quarterly decline of more than 2.3%, snapping the longest streak of quarterly gains for the blue-chip average since an 11-quarter rally that ended in the third quarter of 1997. The S&P 500 index SPX, +1.38% booked a 1.2% quarterly fall, ending its longest such stretch since the first quarter of 2015.

Read: The Dow’s streak of quarterly gains is at risk of ending at nine

There are perhaps a host of reasons for the surcease of such a lengthy bullish run for the most prominent equity benchmarks: The Federal Reserve’s normalization of monetary policy, with the central bank lifting rates for the fifth time this month since December 2015; Intensifying uncertainty in the makeup and agenda of President Donald Trump’s administration, underscored by a number of high-profile departures; and the intensification of trade-war fears, after the president imposed duties on steel and aluminum imports and leveled more targeted tariffs at the world’s second-largest economy: China.

However, the surge in the Cboe Volatility Index VIX, -12.68%  is perhaps the most correlated with the market’s downtrend. According to WSJ Market Data Group, the VIX posted its biggest quarterly rise, up more than 80% (on a preliminary basis) since it jumped in the third-quarter of 2011following Standard & Poor’s historical downgrade of the U.S. credit rating and worries about Europe’s debt-crisis jitters.

The VIX reflects option traders’ collective expectations for S&P 500 volatility in the coming 30-day period.

Much had been made about the gauge’s subdued readings over the previous 18 months, a period that ended when the index surged 115% on Feb. 5.

Since that period of unnatural calm came to an abrupt end, the index has climbed to trade near its historical average around 19 or 20.

----Of course, its hard to say if the VIX is driving stock moves or if the decline in stocks represents a shift in the volatility dynamic. But one thing is certain: a stretch of extraordinary placidity is over.

VIX Up 81% Shows Extent of Stock Market Pain in Jarring Quarter

By Elena Popina, Sarah Ponczek, and Lu Wang
Are we having fun yet?

For two years traders bemoaned the tranquility in global equity markets. That era just ended in a fit of turbulence, as stocks plunged into the first correction since early 2016 and volatility almost doubled from historically low levels over the past three months. Dip buying no longer worked, and holding tight on the S&P 500 Index delivered the first quarterly loss in 2 1/2 years.

With the White House spoiling to reorder the global trade hierarchy and the Federal Reserve raising interest rates, the word on Wall Street is: get used to the swings.

“Think about all the waves and stress caused on the surface of the water when a boat is changing directions,” said Michael Cuggino, president and portfolio manager at the Permanent Portfolio Family of Funds in San Francisco. “You have a transitory period of changing directions in monetary policy and growth expectations. As investors try to sort through that, that creates volatility.”

Even though most of the market’s worries can be countered -- after all, interest rates are meant to go up sometimes, stocks are meant to go down sometimes -- the handwringing is amplified by the torpor that came before. The S&P 500 gained or lost 1 percent in a single day 23 times this quarter; in most of 2016 and 2017, it went for months without a single such move.

The 81 percent jump in the Cboe Volatility Index tells the story of a quarter when stocks went from euphoria to correction in a matter of weeks. Optimism over Donald Trump’s tax cuts triggered unprecedented inflows into U.S equity funds in January as the S&P 500 jumped the most in 22 months. Then, a popular short volatility trade blew up, triggering a 10 percent correction that wiped $2 trillion from U.S. stocks.
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Here’s how the stock market’s performance stacks up over the week, month and quarter

Published: Mar 29, 2018 4:31 p.m. ET
With the U.S. stock market closed on Good Friday, Thursday’s closing bell not only marks the end to the latest week of trading on Wall Street, but the close of March and the first quarter of 2018.

All of those time periods have featured some of the sharpest volatility in stocks in years, and the sharp swings back and forth—sometimes in the same session—may have market watchers confounded about the latest trends. Here’s how the major indexes have performed.

Weekly performance:
The Dow Jones Industrial Average DJIA, +1.07%  gained 2.4% this week.

The S&P 500 SPX, +1.38%  is up 2% this week.

The Nasdaq Composite Index COMP, +1.64%  rose 1%, turning positive for the week with Thursday’s gain of 1.6%.

The Russell 2000 index RUT, +1.08%  of small capitalization shares rose 1.3% over the week.

All four indexes are coming off a two-week decline.

Monthly performance:
The Dow lost 3.7% over the month of March, its second straight negative month, although February’s drop was steeper—down 4.3%. The longer-term uptrend has been positive, however, as February’s drop followed a 10-month rally, which had been its longest such streak since 1959.

The S&P fell 2.7% in its second straight monthly decline.

The Nasdaq fell 2.9%. Like the Dow and the S&P, this is its second straight monthly decline, although it is also its biggest monthly drop since January 2016.

The Russell rose 1.1% over the month.

Quarterly performance:
The Dow is down 2.5% over the first quarter, putting an end to a nine-quarter streak of gains, its longest such rally since an 11-quarter rally that ended in the third quarter of 1997.

The S&P 500 is down 1.2% for the first quarter, and the benchmark index also put an end to a nine-quarter rally. However, that was only the longest such streak since one ending in the first quarter of 2015.

The Nasdaq is up 2.3% over the first quarter, its seventh straight quarterly gain, its longest such streak since a 10-quarter rally that ended in 2015.

The Russell is down 0.4% over the first quarter. This puts an end to a seven-quarter streak of gains, its longest since an eight-quarter stretch ending in the second quarter 2014.

The monthly Coppock Indicators finished March.

DJIA: 24,103 +272 Down 10. NASDAQ: 7,063 +300 Down 13. SP500: 2,641 +202 Down 10.
All three slow indicators moved down in March. For some a new bear signal, for others a take profits and get back to cash signal. 
DJIA. Buy: 29/7/16 - 18,432.  Sell: 29/3/18 – 24,103.
SP500. Buy: 29/7/16 – 2,174.  Sell: 29/3/18 – 2,641.

NASDAQ. Buy: 29/7/16 – 5,762.  Sell: 29/3/18 – 7,063.

I long ago came to the conclusion that all life is 6 to 5 against.

Damon Runyon

Thursday, 29 March 2018

Rocky Stocks Meet Dress Up Quarter?


Baltic Dry Index. 1080 -37    Brent Crude 69.91

“There is only one side of the market and it is not the bull side or the bear side, but the right side.”

Jesse Livermore

Note the next LIR update will be on Saturday.

Normally in our current casino, central bankster rigged stock markets, as we approach the all important end of first quarter, money managers and other “smart money” operatives, attempt to game the market close, knowing that the central banks have their backs covered by the Greenspan-Bernanke-Yellen “Put.” Under Fed newbie Jerome Powell, that Put is in question, and it shows in this week’s market action.

Below, some reasons to think that the Put is so old last year. Scroll down to the Coppock long term indicators.

“If you have timed the movement correctly, your first commitment will show you a profit at the start.”

Jesse Livermore, How to Trade In Stocks

Asian markets drive toward gains following early dips

Published: Mar 28, 2018 11:33 p.m. ET
Many Asia-Pacific stock markets rebounded from declines Thursday after the tech sector dragged U.S. stocks lower and oil prices dropped.

Indexes in Shanghai SHCOMP, +0.09%  and Hong Kong HSI, -0.17%   were down by as much as 0.8% early before rebounding, with mainland benchmarks turning higher by the midday break. Taiwan Y9999, +0.01%   and South Korea SEU, +0.22%   also edged into positive territory as the morning progressed.

Meanwhile, signs of easing geopolitical tension allowed for solid gains throughout Thursday’s early trading in Japan NIK, +0.46%  .

The tech sector continues to be under pressure globally due to fears about more regulatory oversight. The tech-heavy Nasdaq Composite COMP, -0.85%   closed down 0.9%, underperforming the Dow Industrials DJIA, -0.04%   and the S&P 500 SPX, -0.29%  . Amazon.com AMZN, -4.38%  , Netflix NFLX, -4.96%   and Tesla TSLA, -7.67%   were among the biggest losers.

Energy shares helped push down Australia’s S&P/ASX 200 XJO, -0.47%   after crude prices fell on higher U.S. inventory levels. New Zealand’s NZX 50 NZ50GR, -0.82%   slipped 0.7% as a2 Milk ATM, -4.17%   and Synlait Milk SML, -3.34%   dropped more than 4%.

Japan has contacted North Korea about a possible meeting between Kim Jong Un and Prime Minister Shinzo Abe, according to Japan’s Asahi Shimbun newspaper. That report comes after Kim met Chinese President Xi Jinping in Beijing earlier this week and a possible summit with President Donald Trump is also looming. This may mean that Pyongyang is willing to negotiate about its weapons development.

The easing of geopolitical tension contributed to the yen’s sharp fall against the U.S. dollar, said Stephen Innes, senior trader with Oanda, though he also flagged an uptick in the dollar, helped by better-than-expected U.S. economic growth figures overnight.
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Amazon Loses $53 Billion in Market Value, Becoming FAANG's Biggest Loser

By Elena Popina and Kamaron Leach
Updated on 28 March 2018, 21:49 GMT+1
Move over, Facebook. U.S. investors have a new punching bag among the FAANGs: Amazon.com, Inc.

Facebook Inc. gave up the top loser spot to Amazon.com, which lost $53 billion in market value on Wednesday after Axios reported that President Donald Trump is “obsessed” with regulating the e-commerce behemoth. The social media giant had previously underperformed the tech megacap group amid concern over the company’s handling of its users’ personal information.

The FAANG stocks, once assumed to be a monolith of performance, have suffered degrees of decoupling recently, including the outperformance by Netflix Inc. earlier in the year.

Amazon.com fell as much as 7.4 percent Wednesday before paring some losses to close 4.4 percent lower after a Stifel Nicolaus & Co. analyst said the weakness created a buying opportunity. Facebook diverged from the group in early trading, rallying 0.5 percent after announcing it’s redesigning a menu of privacy settings in response to public outrage over the user data practices. Netflix was the second-biggest loser in the FAANG group of stocks, sliding 5 percent on the heels of the #DeleteNetflix campaign.

“Netflix and Amazon haven’t really experienced the intense selling that Facebook did,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. “The ‘flu’ that Facebook got is now spreading to the others.”
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Tesla Plunges Again as Questions Swirl Around Fatal Accident

By Dana Hull and Ville Heiskanen
Updated on 28 March 2018, 21:40 GMT+1
Tesla Inc. shares dropped for a second day as questions about a fatal Model X crash in California intensified the pressure on Elon Musk’s electric-car maker.

The company is working with authorities to retrieve data logs from the vehicle that crashed Friday, killing the driver, according to a Tesla blog post. Tesla didn’t say whether the vehicle’s Autopilot system was engaged but preemptively defended the driver-assist feature, which it’s developing as a precursor to autonomous driving.

March has been brutal for Tesla, with shares falling on all but five days and the company this week losing its perch to General Motors Co. as the most valuable U.S. automaker. The stock declined 7.7 percent Wednesday to $257.78. Its unsecured bonds have hit all-time lows ahead of the release of first-quarter production results expected next week. The tone of the day was captured in analyst reports, with Cowen & Co. saying it’s time to “question Autopilot leadership” at Tesla and Sanford C. Bernstein focusing on the “fallacy of automation” to boost production.

The crash, which is being investigated by U.S. authorities, adds to Chief Executive Officer Musk’s challenges including concerns that the electric-car maker won’t reach its production targets for the all-important Model 3 sedan. The accident also potentially raises fresh questions about self-driving features after a deadly Uber Technologies Inc. accident that happened days earlier and sent ripples across the broader autonomous-vehicle industry.

“We have in the past questioned Tesla’s promise that the current hardware will be able to eventually provide full self-driving capability,” Cowen analyst Jeffrey Osborne, who rates Tesla as “underperform,” wrote in a note. Given regulators’ reaction to the fatal Uber crash, “we see a large risk” that the self-driving equipment and capabilities Tesla has been touting to customers many not meet the eventual government standards, he wrote.

Tesla’s bonds dropped 3 cents on the dollar to 88 cents at 4:36 p.m. in New York, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority after reaching their lowest price ever earlier Wednesday.
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Fed mistakes could spark ‘unusually fast’ bear market, ‘lost decade’ for stocks

Published: Mar 28, 2018 4:48 p.m. ET
Uncertainty over trade policy may be the primary driver of the U.S. stock market at the moment, but the real policy risk facing equities could be coming from the Federal Reserve, with the potential downside a lot more pronounced than investors are currently anticipating.

Last week, Fed Chairman Jerome Powell said the economic outlook had strengthened, but he painted a mixed picture about what policy might look like going forward. The U.S. central bank raised interest rates but indicated it would only do a total of three rate hikes in 2018, which some saw as a dovish signal given that a number of investors had expected four this year. However, the Fed pushed up its expected rate path in 2019 and 2020.

Barry Bannister, head of institutional equity strategy at Stifel, said it was a concern that the Fed’s view for 2019 and 2020 had grown more hawkish, which raised the risk of the central bank making a policy mistake.

“What matters for investors is that any decline is likely to be unusually rapid and occur as a result of P/E compression, resulting from policy risks not weak GDP,” he wrote in a research report. “Investors need a bit more acrophobia, as our best model points to a bear market and lost decade for stocks.”

Bannister argued the new Fed, under Powell, “wishes to fade the ‘Fed put,’” or the idea that the central bank would step in to prop up falling equity prices. “The cost may be a 16% P/E drop,” he wrote, referring to price-to-earnings, a popular measure of equity valuation.

The Fed is expected to regularly raise rates over the coming years, and some investors think it may hasten its pace of increases to rates in the event that inflation returns to the market in a more pronounced fashion.
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In other autopilot car news, Uber wisely decides to avoid a clash with America’s notorious tort bar.

March 29, 2018 / 3:38 AM

Uber reaches settlement with family of autonomous vehicle victim

TEMPE, Ariz. (Reuters) - The family of the woman killed by an Uber Technologies Inc [UBER.UL] self-driving vehicle in Arizona has reached a settlement with the ride services company, ending a potential legal battle over the first fatality caused by an autonomous vehicle.

Cristina Perez Hesano, attorney with the firm of Bellah Perez in Glendale, Arizona, said “the matter has been resolved” between Uber and daughter and husband of Elaine Herzberg, 49, who died after being hit by an Uber self-driving SUV in the Phoenix suburb of Tempe earlier this month.

Terms of the settlement were not given. The law firm representing them said that Herzberg’s daughter and husband, whose names were not disclosed, will have no further comment on the matter as they consider it resolved.

Fall-out from the accident could stall the development and testing of self-driving vehicles, which are designed to eventually perform far better than human drivers and sharply reduce the number of motor vehicle fatalities that occur each year.

Uber has suspended its testing in the wake of the incident. Toyota Motor Corp (7203.T) and chipmaker Nvidia Corp (NVDA.O) have also suspended self-driving car testing on public roads, as they and other companies await the results of an ongoing investigation into the Tempe incident, which is believed to be the first death of a pedestrian struck by a self-driving vehicle.

Uber does not use the self-driving platform architecture of Nvidia, the chipmaker’s Chief Executive Jensen Huang

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Finally, how Facebook, Apple and Google, turned us all into a Chinese (and others) takeaway!

Nothing You Say Online Is Private

By Shelly Banjo
28 March 2018, 07:03 GMT+1
As Facebook’s latest privacy missteps unfolded via the Cambridge Analytica imbroglio, the skeptical side of me couldn’t help but wonder how anyone would be surprised that what they post on the internet could be co-opted for marketing — or more nefarious purposes.

People in China, for one, seem to know better. Internet users here are all too aware that what’s posted online can and will be used against them.

Which is why it was so ironic when the operator of the country’s single most dominant social media platform — WeChat — declared at an earnings briefing last week that its one billion-plus users can trust their data would never "leak" like Facebook did. When the obvious follow-up question came about the Chinese government’s access to said data, Tencent President Martin Lau backpedaled and said cooperating with law enforcement was a different story.

Most Chinese internet users have the built-in assumption that pretty much everything is monitored. Some don’t seem to care. But many more are just much savvier about what personal information, photos and content they post online. Or how they post it: web users employ a constantly evolving palette of code-words to evade the all-seeing eye whenever they simply must speak up (say, “river crab” as a proxy for the Communist Party).

When I asked a friend living in China recently whether she took more precautions on social media than she did in the U.S., she instinctively replied “let’s talk about this offline, not on Wechat.” It’s pretty common for people to mandate face-to-face meetings in fear of online communication.

Another friend spoke of turning off location services, avoiding keywords that could alert government or company censors, and staying off rival firms’ products to prevent corporate spying. Others mentioned never posting on WeChat Moments, akin to Facebook’s newsfeed, or deleting Moments posts after a day or even an hour so friends can see your photos but not indefinitely. (This often happens with news articles and blog posts, too).

But even private or small group chats can only be trusted as much as the person on the other side of the conversation. A string of recent scandals in China that originated from screenshots taken of private chats have put some users on notice.

As guides on how to better safeguard your data or #deleteFacebook spread across the internet, the bigger question is whether it’s time to abandon the idea that any company, government or other entity is going to protect our privacy for us — especially those whose business models depend on monetizing user data.
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“It has always been my experience that I never benefited much from a move if I did not get in at somewhere near the beginning of that move.”

Jesse Livermore, How to Trade In Stocks

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, VW again. With a horrible noisy clattering sound, a great cloud of black smoke, and a trail of noxious gases, Britain’s duped and conned VW diesel victims, finally got around to filing their long overdue lawsuit. GB’s ambulance chasing tort bar, unlike its American cousins, has never been accused of being swift. I think heavily polluted London should follow Europe’s lead and ban all diesels from London’s city centre. Minus its busses and taxis, and two thirds of its commercial vehicles, the rest of us can get back to zipping around like the 1970s again.
March 27, 2018 / 1:44 PM

British VW drivers start 'dieselgate' claim in High Court

LONDON (Reuters) - Lawyers for more than 50,000 British car owners kicked off a lawsuit against Volkswagen (VOWG_p.DE) in London’s High Court on Tuesday in a battle for compensation over a diesel emissions scandal that has engulfed Europe’s largest carmaker since 2015.
The three-day hearing will determine whether the claims can be managed collectively under a Group Litigation Order (GLO) and will set a deadline for claimants to sign up to what lawyers say could become the largest group action in British legal history.

Volkswagen has said about 11 million cars worldwide - and 1.2 million in the UK - were fitted with software that cheated diesel emissions tests designed to limit noxious car fumes and carbon dioxide (CO2) pollution.

VW agreed to pay up to $25 billion in the United States to settle claims from owners, environmental regulators, states and dealers. It offered to buy back 500,000 polluting U.S. vehicles.

The company has not reached a similar deal in Europe, where it faces billions of euros in claims from investors and customers in the worst business crisis of its 78-year history, dubbed “dieselgate”.

Law firm Slater and Gordon, which says it represents more than 40,000 claimants in Britain, alleges VW deceived people into buying cars that breached emissions regulations by installing “defeat devices”, engine management software designed to mask pollution levels.

The German company dismissed the allegations and said it intended to defend itself robustly. It said it had broken no English laws, that British drivers had suffered no loss and that the legal proceedings were premature and unfounded.

“We ... are confident of a successful outcome,” the firm said in a statement. It said it had not been established that the software was an illegal defeat device and emphasised that the U.S. situation was “materially different”.

“The vehicles are different, the regulatory environment is different and the technical measures are different. The affected vehicles in the UK do not cause more pollution on the road than expected,” it said.

Volkswagen has offered European drivers a software update removing a mode that operated when cars were experiencing test conditions.
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Technology Update.
With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards?

Is Offshore Wind a Better Deal With Batteries?

├śrsted news highlights the growing appetite for storage with offshore wind.

A partnership between developer Bay State Wind and NEC Energy Solutions this month highlighted a growing push to pair energy storage with offshore wind.

Bay State Wind said it will work with NEC Energy Solutions to add batteries to an 800-megawatt offshore wind farm planned for 15 miles off the coast of Martha’s Vineyard, Massachusetts.

The project will represent the world’s largest windpaired energy storage system for commercialscale energy, said Bay State Wind, which is a joint partnership between the Danish power company ├śrsted, formerly known as Dong, and U.S. transmission builder Eversource.

This month, Bay State Wind qualified for Title 41 of the Fixing America’s Surface Transportation Act (FAST-41), making it the first and only offshore wind project, and one of only 38 infrastructure projects in the U.S., to receive FAST-41 status.

NEC will add 55 megawatts and 110 megawatt-hours of storage to the wind farm “to help the region in overcoming winter reliability challenges by delivering energy when it is needed most and help to reduce winter peak energy prices and price volatility,” Bay State Wind said.

The developer highlighted the deal’s potential to create new jobs, since NEC Energy Solutions was born from the ashes of A123, a Massachusetts-based company.

Bay State Wind also said the offshore wind and energy storage combination would help cut winter electricity prices in Massachusetts by approximately $158 million a year, as well as enhance grid stability by shifting energy delivery to better meet demand.
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https://www.greentechmedia.com/articles/read/is-offshore-wind-a-better-deal-with-batteries?utm_source=Storage&utm_medium=email&utm_campaign=GTMStorage#gs.q6uJWOc

“I have been in the speculative game ever since I was fourteen. It is all I have ever done. I think I know what I am talking about. And the conclusion that I have reached after nearly thirty years of constant trading, both on a shoestring and with millions of dollars back of me, is this: A man may beat a stock or a group at a certain time, but no man living can beat the stock market! A man may make money out of individual deals in cotton or grain, but no man can beat the cotton market or the grain market. It's like the track. A man may beat a horse race, but he cannot beat horse racing.”

Jesse Livermore

The monthly Coppock Indicators finished February

DJIA: 25,029 +283 Up 01. NASDAQ:  7,273 +313 Up 03. SP500: 2,714 +212 Flat.

Barring some sort of miracle, all three monthly indicators will turn down at the close of the month later today. For some a new bear signal, for others a take profits and get back to cash signal.