Although the beginning to 2016 has been dismal, a recent seasonal pattern may suggest that better times lies ahead. The recent “January effect” is nothing unusual, even though the declines have been greater, the last two years have also seen similar declines to bring in the new year. In 2014, we began the year with a 6.1% decline from the highs to a low on February 5th, 2014. In 2015, we began the year with a 5.4% decline from highs to the low on February 2nd, 2015. In both cases the market continued to rally higher in April/May. As they say, patterns are made to be broken, and two cases is hardly a big enough sample size to draw any firm...
The High Yield Dividend Champion Portfolio is a publicly tracked stock portfolio on Scott’s Investments. Its goal is to capture quality high yield stocks with a history of raising dividends. The screening process for this portfolio starts with the “Dividend Champions” as compiled by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years. For 2016 I made one change to the screen methodology in order to further simplify the process. Stocks from the Dividend Champion list were previously ranked on yield, payout ratio, P/E, and 3 year dividend growth rate. In 2016 ...
The U.S. jobs numbers for January, 2016 were good enough to send odds for the next rate hike from the U.S. Federal Reserve to jump across the scheduled meetings for 2016. Yet, the odds for December as the next month for a rate hike are still well under 50%. The odds for another rate hike this year remain unlikely with December sitting at 44% as the odds for the next hike. Source: CME Group FedWatch Although the odds still favor no rate hike for 2016, the rise across the remaining months was high enough to help the U.S. dollar index (DXY0) to maintain support at its 200-day moving average (DMA). The U.S. dollar index had an awful week but en...
By “Chowder” The question comes up again and again; “where do you put your money?” [Well,] there is a way to invest that makes sense, that’s easy to implement, and that has a high chance of succeeding in meeting your long-term goals at the end of the road. [Let me explain.] There is, if you’re a long-term investor, a person that can look out a minimum of 10 years and more and if you are a saver and builder, for people who understand (or want to understand) that the forces of time, modest and reliable growth, and compounding are on their side. Investing means investing … the methodical accumulation o...
After a gap in time of almost a decade the Fed increased interest rates on December 16th, 2015,. The SPX has a one day bounce from the news on the day of the announcement, then it turned negative and since that time the index plummeted 13%. The markets, which were rising, due to the low-interest-rate environment, encountered a rude awakening, catching most investors off guard. Was this a surprise reaction from the market? Absolutely not. Just look back in time and compare interest rates and the stock market. When the Fed starts to raise rates equities typically top out and fall. On January 29th, 2016, the Bank of Japan lowered their interes...
It appears as if the downtrend for the S&P 500 index (SPX) is resuming. The most notable sign comes from 7 day momentum for SPX. It is turning down from below the zero line. When this occurs it usually means more pain ahead. With our breadth indicator below zero, bear market rules apply so we should expect downturns in 7 day momentum to precede strong declines. For those of you interested, I’ve been chronicling some of the “traditional” technical analysis indicators that indicate we’re in a bear market here. Breadth calculated between bullish and bearish stocks on Twitter is moving sideways, with the number of bearish stocks hitt...
Market Overview After reaching its projection target of 1946, which was probably (but unconfirmed) the top of the a-b-c corrective rally from 1812, SPX retraced to 1872, rallied to 1927, and toward the end of the week came back down to re-test the 1872 level once more. It appeared to hold once again, since we closed at 1880, but we’ll find out for sure on Monday morning when the market opens. Since the rally from the 1812 low, that level has been tested at least four times and held each time. That makes it an important support level; all the more because the index appears to be making a head & shoulders formation with a horizontal line ...
Light economic calendar During the day on Monday, we have almost nothing as far as economic calendar is concerned. In fact, we believe that this will be simply a technical day more than anything else, so we are looking for the following trades to occur. Nasdaq 100 looking soft The Nasdaq 100 looks very soft at the moment, but quite frankly there is a massive amount of support all the way down to the 4000 level. Because of this, the best trade is to simply wait to see whether or not we get a bounce. A supportive candle would also be reason enough to start buying calls. While the Nasdaq 100 looks very tempting to buy puts in at the moment, it...