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Last 20 Shows Tearing Apart the Headlines Did you know General Electric (GE) posted record revenues last quarter? That has not really helped their stock, has it?  Remember always, price is the ultimate indicator, which is why I rely more and more on charts. Fundamental analysts and company management can pontificate all day long about market share, earnings and revenues. If the market doesn't like it, the stock is going down. (...)Listen | Listen in your iPhone | Download | View full cache | Visit Website
Morgan Stanley buying Smith Barney from Citibank: Why?In this podcast, Tom Mullooly discusses several reasons why
Citibank would consider selling Smith Barney, to their competitor, Morgan Stanley.
There are several reasons why Citibank may be considering this transaction, including:
Citibank simply needs the money
Volume is down, and projected to stay down in stocks and products
Margins are down
The new product pipeline has dried up
Liabilities are increasing (including legal expenses and the cost of severance)
And finally, Tom di ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
The Economic Recovery of 2009Economic recessions and economic depressionsSince 1854, the United States has been through 32 economic cycles, one cycle lasting (average) nearly 5 years. That'snotthe length of a recession, that's an entire economiccycle. This includes some recessions/depressions in the 1800's that lasted 3 years, another for 6 years and a long depression that lasted from 1873 through 1896, a period of 23 years.And that's just the 1800s!A recession is"often defined" as two ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Covered Call Writing(Warning: math ahead!)
Covered call writing is when you own a stock (or buy a stock today)
…and also sell (or write) a call option against that position.
The main thing people forget about covered call writing is this: anytime you sell something, you are bringing money into your account.
Just remember that as we walk through the example.
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Say we're going to buy XYZ at $32/share. 1000 shares wil ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Why Support Lines MatterSuddenly stopping…from Belmar, NJ along the way to NYC.
A question came up recently from a client… "we invested in the stock recently, and it went up nicely at first. But recently, the stock has started to fall. I'm not sure if we should close this position out… or should we just hang on. What do you advise?"
The answer is… "it depends."
It depends on several factors. And it depends on the answers to some questions. Some of the questions ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Volatile Stock MarketNow, sometimes the “short-term” turns into the “long term,” so we’ll monitor what unfolds in the next few days. And keep you posted if conditions change.
But my experience tells me we’re not out of the woods yet. At least, on a longer term basis.
Now, you’ve likely heard me say that “support line” breaks are pretty important, right? And, you also heard me say “we get double bottom sell signals periodically — one double bottom ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
One of Our Better ToolsOne of Our Better Tools
We’ve got a tool we rely on here at Mullooly Asset Management called “relative strength.” This tool simply tells us which investments are moving faster than the entire market, or moving slower than the entire market.
Pretty powerful tool!
That’s important - if we want to beat the market, we need to own things that are moving faster than the overall market, right? And when the market is falling, some stocks just seem to really get crushed, whil ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Stock Market Reversal?Short term indicators say the party may be ending soon. We’re starting to get the feeling that we’re in the 8th or 9th inning of the game. Three out of the four short-term charts we follow are now in a column of O’s, moving down.
The Hi-Lo chart for the NYSE is still in X’s. That’s the only one of the four short-term charts I follow that hasn’t reversed down. But for goodness sake, it’s sitting at 90%, historically a pretty high level. The odds of r ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Greenspan Predicts Chinese Stock Market ContractionLet’s talk about “dramatic contractions” and “irrational exuberance.”
Yesterday (May 23, 2007), former Federal Reserve Chairman Alan Greenspan made a comment in a televised speech (at a conference in Madrid) that the boom in the Chinese stock market is “clearly unsustainable. There is going to be a dramatic contraction at some point.”
Well. That comment may be one part obvious and one part ridiculous.
The obvious part: the Chinese market has exceeded most expe ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Are we doing this right?I get calls from folks with money in the market, wanting to know if they’re in “the right position” or are they still in “good shape” with current market conditions.
Here’s my reply:
I am comfortable with what’s happening. I hope you are too. There are a lot of folks I manage money for with more cash ON the sidelines than they’re normally used to. Again, I’m OK with that.
Now here’s the reason WHY I’m ok with that:
When this ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Short-Term Indicators Move DownAll four of the short-term indicators that I use to track the market have now moved down. The fourth indicator to finally capitulate and reverse down was the high low index, which occurred in just the last few days. This means that more new low’s are being set in the market then new highs.
This indicator by itself should tell you that money is starting to move out of the market.
The short-term indicators are just that — signs of what’s happening on a daily basis in the market. I ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Interest Rates are RisingInterest rates are on the rise. Why?
In my line of work, we never know the reason why certain events took place — until after they’ve occurred. Then we have to deal with picking up the pieces, or mopping up the spilled milk.
As many people smarter than me have noted, they don’t ring a bell at market tops – or at market bottoms. Instead, we need to look for clues or indicators that tell us the sands under our feet are starting to shift. This is why I rely on point and figur ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Look at the Bond MarketLook At The Bond Market
Hate being the party pooper, but I think it’s important to remind people that when interest rates start to creep up, that’s usually a sign that the party in the stock market may be taking a pause, or even coming to a close.
Look at what’s happening in the bond market right now.
The projected yield on the five-year Treasury note has jumped from 4.4% in March (just three months ago) to 4.9% today. Most of this move has happened in the last two weeks.
... Listen | Listen in your iPhone | Download | View full cache | Visit Website
China, Latin America, and BondsChina and Latin America currently holds the top scores for mutual funds. This is clearly where the money is being made at the moment. And the average Chinese mutual fund is way overbought. In other words, the average mutual fund in this group is currently trading above the top of the ten-week trading band, but historically speaking, these kind of overbought levels are not uncommon for this group.
So, while the current overbought reading for China is certainly elevated at this time, we’ve se ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
Market Averages Head LowerAm I a broken clock?
Or is the rest of the world figuring out what we’ve been saying all along?
The primary indicator that I use to measure risk in the market is the New York Stock exchange bullish percent chart. This chart merely tells us the percentage of stocks that are currently on buy signals.
Historically, we entered the “high risk zone” when we are in X’s and this number exceeds 70%. We are currently in X’s at 74%.
But this indicator moves a little slower than I wou ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
The Tide Is Starting To Move OutThe primary indicator that I follow, the New York Stock Exchange Bullish Percent chart is within 1% of a move from a column of X’s to a column of O’s. This kind of shift indicates a move from offense to defense.
Moving to defense does NOT mean that the market will start moving down. In fact, getting a signal like this is practically a confirmation that the market IS moving down! This is because technically, the indicator has to move down by 6% to move from a column of X’s to a column of O’s ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
NYSE Bullish PercentOur main coach, the New York Stock Exchange bullish percent chart has signaled this week it’s time to bring the defensive playbook out. “Wealth preservation” becomes the key now.
The bullish percent is a “risk” indicator, not a predictor. It means stay alert, clear out your weak holdings, take sell signals seriously. It doesn’t mean “sell it all.”
And it doesn’t mean “Let’s wait and see,” either.
Regardless of what happens in the M ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
The Bullish Percent IndexRemember that the NYSE Bullish Percent tells us the amount of risk currently in the market. It’s not a tool that will tell us whether the market will zoom up or down.
Currently, it’s telling us the risk in the market is at it’s highest, and the chance of losing money now is pretty good. The reason why we say it measures the risk in the entire market is this:
The Dow Jones is a basket of only 30 stocks, and is a price weighted index. And since the S&P 500 is a cap-weig ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
How the Bullish Percent Index worksHow the Bullish Percent Index works
To understand how the bullish percent index, our main coach, works, you need to begin with and understand three main concepts.
First, the bullish percent index merely measures the percentage of stocks currently on buy signals. It’s simply a chart that runs from zero to 100%.
Second, the only way a stock can give a buy signal is to see a price increase. The only way a stock can be on a sell signal is to have a price drop.
Third, stocks are either on buy si ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
More about the Bullish PercentMore about the Bullish Percent
A question that’s often asked is, “if your signals suggest we are on defense, why does it seem like the market is still going up?”
Over the last few years, we’ve seen many pullbacks in the range of 5% to 8%. So it’s quite normal (and to be expected), that when we move to defense –an initial 6% drop has already taken place.
So we sometimes see a pause (or even a brief rally), as soon as we get the signal to move to defense. It’s this pa ... Listen | Listen in your iPhone | Download | View full cache | Visit Website
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