What We're Reading

You mean when you raise prices, it affects subscriber levels?  No one told Reed Hastings and nor did he forewarn the market of the drop which was coming.  NFLX already has streaming competition from HBO (TWC) and talk is being bandied about that CBS will be joining that pool along side AMZN and others and well, it all equals = more competition.  NFLX is no longer 'unique'.  Yes I am short this pos based off the technical divergences on the daily chart.  Burnt popcorn anyone?

Stock repurchase programs as well as dividends, are a great way to "return value to the shareholder" and also a way to "prop up" a stock price or keep funds in the game.  Unfortunately, nothing lasts forever and repurchase programs are unsustainable longer term.  At some point the market must heed the fundamentals, earnings growth and if margins contract, the positive effect of buybacks is lessened.   This from one of my favs, Variant Perception

A Ribbon Study consists of 8 or more Simple Moving Average plots having different lengths thus forming a "ribbon". The lengths of those averages are in an arithmetic progression relation: the increment of the progression is defined by the initial and the final Moving Average lengths.

The way I view a moving average, especially a large one, is that is the average price of stockholders who have held since "that" point in time.  So if you're looking at a 50d, it's the average price of shareholders who purchased in the last 50 days.  If it's a MONTHLY moving average............NOW you're talking funds who have skin in the game and HAVE had skin in the game for months or years.  I want to be one of them if I'm a long/hold investor.  I want to "buy" when they buy.

I've always felt, that from a long/holding investing point of view, this study can also be an interesting way to view a coming expansion, after a long market consolidation.  View these historical charts and give me your view.  Ex

Merely my observation of the S&P500 based on it's 20 year monthly chart.  It would appear most 'dips' were bought heavily at the 20month SMA with the 20month (off the low) SMA being the line in the sand..........at least on the last two 'bubbles'.

The 20m (off the low) then became overhead resistance. 

Just food for thought.  I have sent an alert for SPX at both levels in an effort to "buy like the big boys".  At least buying 'there' is limiting my downside risk (wink wink).  We could definitely bounce before then but the MACD looks to be rolling over somewhat and let's face it; October is a tough month.  I'm sincerely anticipating further volatility as even semiconductors and rails are exhibiting signs of selling.  I look forward to buying cheaper; aren't you?

[Source: U.S. Census Bureau]

Very quickly some morning headlines.  While a few of the geopolitical risk headlines may be behind us (Brazil election, Russian border, etc) I believe markets are waiting for this quarters earnings (and guidance) to set the stage.  Multi-nationals with exposure overseas may struggle going forward if one believes the headlines below:

• IMF revises and raises growth for the US BUT lowers prospects for the world (4.0 to 3.0%)
• IMF says some valuations are "frothy"
• SODA warns of miss and citing lower US demand (stick a fork in it)
• Women's apparel mfgr CBK warns of lower sales; blames low mall traffic.
• Hong Kong retailers experience sharp sales decline (blames protests of course because happy people would be spending)
• AGCO cuts forecast, shares down 6% premarket
• Taiwan's exports growth slips
• MCD Japan expects net loss this year
• Slide in German industrial output stokes fear of recession

The ECB left its key lending rates at record low levels, and the four-week moving average for initial claims is at an eight-year low.  That sounds like a pretty good setup for a stock market that worries about earnings prospects tied to a stronger dollar, loves the thought of central bank policy rates holding near the zero bound, and is anxious to see evidence the U.S. economy is gaining momentum.

Despite the setup, it has been a swing and a miss so far for the stock market, which has once again been greeted with steady, and broad-based, selling pressure.

ECB President Mario Draghi is getting a lot of blame for the disappointing price action based on reports that his presentation regarding the ECB's asset-backed securities purchase program was lacking and the impression from today's press conference that the ECB's ability to change the economic dynamic in the eurozone is also lacking.

There is some merit to the latter claim given the seeming lack of urgency to implement structural r

Last week it was amazing to witness entire expressways shut down during the Hong Kong protests.  Something which was not surprisingly given little attention by our "keep the advertisers happy at all costs" mainstream media.  *cough cough*  Thank goodness for technology with this amazing drone footage and social media for 'getting it out there'.  Afterwards I decided to take a further look into the area of investing in drone (and drone component) manufacturers.

I've thrown this together, running on battery only and no internet after having lost power due to a strong storm rolling through the region.  Hey, it's a start, right?

Face it America.  It’s only a matter of time before drone applications become commonplace and drones are buzzing past our homes like flies.  Imagine the possibilities.  Packages, mail, medical supplies, internet and wireless signals to remote or under served areas, news coverage, spraying fields with pesticides, no more lost hikers (or drivers for that matte

The odds of any weather forecast predicting rain in the Dallas-Fort Worth area of Texas are heavily skewed in favor of the naysayers any given time of year.   

We live with 0-20% humidity daily; a far cry from the Chicago of which I was accustomed for 50 years.  Down here arthritis pain, or I should say inflation due to humidity or cold, is a distant memory (thank goodness).

So one becomes the Rodney Dangerfield heckler in the crowd when the weatherman, or weather[dot]com for that matter, forecasts rain.  You plow ahead and plan that birthday BBQ or soccer game anyway.  You wash the car and exterior windows of the house in full anticipation that once again, the rain will evaporate before ever hitting the ground once more.  Rain is seldom, welcomed and evaporates quickly.  Welcome to DFW.

Yesterday was such a day as I monitored weather[dot]com’s radar map and posted to my old Chicago friends on Facebook “it looks as though we’re going to miss the rain once again but I can’t say the s

We've all watching the weakness unfold in small caps and I would question whether it is truly weakness or has merely been consolidating after running too far, too quickly.  One distinct possibility is that it has now formed a bullish butterfly as shown right (click image to enlarge).

The measurements using a fat crayola are there, although butterfly patterns can extend down to a 161.8% extension so further downside would not void the possibility.  It would merely wash out all weak hands by taking out the low before reversing.

If so, here is your entry to get long with risk being very limited with a stop (alert) below the lows......along with everyone else's.

I would point out that even though everyone has wondered if small caps divergence from it's large caps brothers, there are no negative divergences really when it comes to indicators.  If it were bearish, one would expect to see bearish divergences indicating a further decline. 

We are not witnessing that in small caps.  I am al

Pro-democracy protesters in Hong Kong have set a Wednesday deadline for a response from the government to meet their demands for reforms, threatening wider actions if Hong Kong's top leader does not meet with them.  Reports are that the protestors were considering various options, including widening the protests, pushing for a labor strike and possibly occupying a government building if the deadline is not met.

The protesters want a reversal of a decision by China's government in August that a pro-Beijing panel will screen all candidates in the territory's first direct elections, scheduled for 2017 — a move they view as reneging on a promise that the chief executive will be chosen through "universal suffrage."

The Economist took a look at other such protests which have transpired since the credit crisis.

Are the protests truly affecting global stock markets and overall risk appetite or it is just one more log thrown on the (possibly growing) fire?

(click on image to enlarge)

As the old saying goes, 'buy' when stocks are hated and there's blood in the streets but for the Russian market, one might want to sit on their hands before buying the Russian ETF RSX until Mr. Putin becomes more "market friendly".

It would seem Putin’s dream of making Russia one of the world’s five biggest economies by 2020 is now in ruins, according to Sergei Guriev, a former economic adviser to Prime Minister Dmitry Medvedev who fled to Paris last year. He says it could have been achieved had Putin focused on delivering economic growth of 5 percent to 6 percent as promised.

“Russia had such a massive potential because of its inefficiencies that it was perfectly feasible to achieve this rate of economic growth,” said Guriev. “What changed is that the government decided not to fulfill its promises.”

According to Bloomberg The sentiment was different in 2000, when Putin replaced Boris Yeltsin. One of his early acts was to close Russia’s radar base in Cuba, the only intelligence-gath

Having recommended DWA long earlier this month, I was thrilled to see this headline today.  Now we're beginning to see what Softbank will do with a portion of their profits from the Alibaba ($BABA) investment after their IPO last week.

According to Hollywood Reporter, Japanese conglomerate SoftBank is in talks to acquire DreamWorks Animation in a deal that would value the company at $3.4 billion, according to a source with knowledge of the situation. 

SoftBank has been in the news lately because of its $20 million investment in Chinese Internet giant Alibaba (BABA), a stake now worth a minimum of $60 billion. The sprawling company is considered undervalued and on Sept. 25, Jefferies Group LLC rated SoftBank as "a compelling buy opportunity."

DWA founder and CEO Jeffrey Katzenberg would sign a five-year contract to remain with the company, according to the source, who says the DWA board held an emergency meeting Thursday to consider the offer. SoftBank is said to have offered $32 a shar

China traders on margin accounts is a thought both wildly exciting, yet utterly terrifying at the same time.  Even more so in the wake of $10 billion in fraudulent currency trades discovered just last week. 

Chinese markets have had a long standing reputation as being nothing more than unmonitored casinos plagued with corruption and insider trading.  What could possibly go wrong?

According to the WSJ, the Hong Kong and Shanghai stock exchanges have published an overhaul of rules governing a new trading link that will open China's tightly held capital markets to the investing public, ahead of a launch that could take place as early as end of October.

The Chinese government has vowed to encourage further capital flow and open the country’s markets to international investors and conceded previously that numerous reforms would have to take place.  Such reforms risk destabilizing its economy, which is still veiled by strict capital controls.  Therefore the government has been implementin

Pick any one of 10 difference reasons; does it really matter?

• Autumnal solstice
• End of quarter
• End of fiscal year
• Rosh Hashanah
• CALPERS beginning to liquidate hedge fund positions
• Curreny-related pressures
• Concern over weak earnings
• Weaker China growth
• Russia's asset seizure proposal
• EU growth concerns
• China's $10 in Biliion bogus trades
• QE taper
• Plain old valuation (nah, it's never that)

It is what it is.  (Click chart to enlarge) 

Small caps are definitely looking at the edge of a descending triangle.  Long TWM was recommended on this chart.

As warned previously, SPX has now broken $1979.  I have a sell signal in SPX.  Instead of buy the dips, I will be selling the rips with cover stop (alert) above $2003.00.   Be hedged or stay on the sidelines until after October 5th.  Work on your watch list of names you would like to buy.  Determine entry and exit points.  It's about time we got more than a 2-3% pullback.

If the stronger dollar persists, this wi

IT HAS been a consistent theme of this blog in recent months that global growth has been slowing, a fact some investors may have missed in the good news about American GDP. The latest confirmation came from the World Trade Organisation, which cut its forecast for trade growth this year from 4.6% to 3.1% and for 2015 from 5.3% to 4%. The WTO doesn't forecast economic growth directly; it takes its lead from other international organisations (Rabo Bank reckons the IMF is set to reduce its growth forecast in the next few weeks).

What is interesting from the WTO announcement is that even the revised forecast relies on a bit of optimism. Actual trade growth in the first half of the year was just 1.8%; the organisation is relying on a rebound in the second half. The first half regional numbers were revealing; Asia increased its exports by 4.2% but its imports by just 2.1%. In effect, it has been gaining market share. North America was more balanced, increasing exports by 3.3% and imports by

The weeks between Rosh Hashanah (which begins tonight at dusk) and Yom Kippur (October 4th) can be volatile ones with some traders taking time away from their desk to be at home with family and lower trading volumes exhibit themselves as a result.

While the old saying goes "never short a dull market", low volume tends to be bullish BUT there could also be a problem if there's no underlying bid, or bids are being lowered on a continual basis.

As of this moment, the September low is being tested; bears hoping to trigger stops below $1979 which would issue a wave of further selling.

It's important to understand the dynamics behind the candles on the screen, where stops lie and how the market has traded historically.  Be nimble or sit it out.

Data courtesy of the Stocktradersalmanac

Edited 9/24/14 7:40am

Market breadth has deteriorated badly once again. In fact, breadth hasn't been strong for several months (since early July).  Even last Friday, when the market gapped higher on the Alibaba (BABA) mania, breadth was negative — a divergence that proved to be significant so far this week.  Cumulative breadth has been a problem since July.  Were market makers (MM) merely propping up the market until the IPO went off?  Surely a market selloff leading up the launch could risk Alibaba founder Jack Ma to possibly post pone the event; a smear the market wouldn't want to face (not to mention unhappy investors).

I'm sure Jack Lew's comments at the G20 summit that he is pursuing methods to curb tax inversions (and soon) along with funds approaching end of their fiscal year is not helping matters. 

Cyclicals (XLY) and consumer staples (XLP) experienced big selling today; the former closing below it's 50d.  Retail (XRT) also closed below the 50d; filling the August gap howev

The 3D industry has reported grown by 21% last year alone and according to the 2014 Wholers Report, the worldwide 3D printing industry is now expected to grow from $3.07 billion in revenue in 2013 to $12.8 billion by 2018, and exceed $21 billion in worldwide revenue by 2020.

After testing 3D printing in it's San Diego stores, UPS has decided to expand it's partnership with SSYS to 100 stores nationwide.  California, Florida, New York, Pennsylvania, and Texas are just some of the states set to open stores with 3D-printing capabilities.

3D Systems (DDD) and Stratasys (SSYS) may be the largest 3D printing companies around, but together they only represented about one-third of worldwide 3D printing revenues in 2013. In other words, the 3D printing industry remains highly fragmented, and because no single company controls the majority of the market, there's a massive opportunity for a number of 3D printing companies to grow their revenue and market share considerably.  Other publicly trade

Small caps have been the 800 pound gorilla in the room as the Dow achieved a new all time high.  A stronger dollar would certainly have more of an impact on them of course as they tend not to have the cash reserves of their larger mid-cap and large cap cousins.  Lack of growth in the EU and China certainly do not help matters.

What some pose as a possible double top, could also be a bullish butterfly pattern beginning to emerge.  It's downside target would coincide quite nicely with it's rising 200 week simply moving average.*and* keep it within it's long term channel since the 2009 low (a buying opportunity) and then the reversal would kick in as the market would reverse (trapping shorts) and resume it's move upward.

BTW one must note that no support has truly broken yet.  It is entirely possible tomorrows opening drive low is bought and we begin to ramp up once again.  Just pointing that out.

The inverse ETF, $TWM, is nearing triangle resistance, which if broke, would give it a ta