International Index Trading

[Edwood]

yeah they'll no doubt revise the figure up next time too!

I may as well go to bed at this rate, doesn't look like it'll lose support tonight

have a good one guys!

 

[Freeballinginawetsuit]

I'm sure we'll be seeing headlines like:

Stocks surged on news of the 16th qtr of economic contraction and disastrous employment figures.

Yeah its a worry , what the yen carry trade pointing to Wayne?

 

[wayneL]

Yeah its a worry , what the yen carry trade pointing to Wayne?

It's off the agenda at the moment.

 

[Freeballinginawetsuit]

It's off the agenda at the moment.

Cheers, let me know when its back on the agenda, always appreciate your heads up.

 

[bean]

Dow is down Gold and gold stocks up at the moment I have a problem.
They both will fisnish in the same direction?

 

[wayneL]

Dow is down Gold and gold stocks up at the moment I have a problem.
They both will fisnish in the same direction?

Sellers are getting swamped buy buyers in the futures, watch it go green.

 

[bean]

The Blow off is continuing

 

[bean]

Yes we have green on all fronts now.
for those who want charts
I hope "pink" is number one still she is a good singer

 

[Edwood]

Mike Burke this week on the SPX and Nasdaq stats:

"The last similar instance of AT being negative (bespoke indicator) while the indices were hitting new highs was in July 1999. From this point the indices declined about 10% before resuming their upward move. 1999 was also the 3rd year of the Presidential Cycle and the market was manic in its upward move, similar to what we have been seeing for the past 9 months."...

but then later in the report

..."Next week has a very positive seasonal bias. Both the OTC and SPX have been up about 75% of the time with an average gain in excess of 1%."

 

[wayneL]

bespoke

Aye

(off topic)
You're an expat aren't you?

 

[Edwood]

sort of - spent the last 10 years in the UK, came to NZ to get some low-stress living before we decide where to send the kids to school. figure once they're in school we'll be stuck for 10-15 years so we want to make the most of the time available now really

 

[wayneL]

Sounds like a good plan Edwood.

Anyhow, Interesting post from Ritholtz:

Which is Performing Better, the Dow or the S&P500 ?
in Data Analysis | Index/ETFs | Investing | Markets

The short answer is, depends on how you calculate it.

The results of looking at these two indices from various angles may surprise you.

The Dow is at an all time high, the S&P500 a few percent below. But it turns out that, as a whole the SPX is doing much better than the Dow.

The New York Times' Floyd Norris gives us the details:

"The Dow is normally calculated as a price-weighted index, meaning that stocks with the highest price for a share get the heaviest weighting. That is largely a historical accident, as it was the easiest way to do it in the 19th century, when the best calculator available was a person with a pencil.

The most common method of calculating indexes is by market capitalization, in which the companies with the largest market value count for the most. The chart [below] shows how the Dow would look if it were calculated in that manner, instead of the other.

While the Dow is up 18 percent from March 24, 2000, when the S.& P. peaked, it would have been down 8 percent had market capitalizations been used in the computation. That reflects the fact that some of the Dow stocks that did the worst, including General Electric, Microsoft, Intel and Pfizer, are large capitalization stocks that had relatively low share prices. That meant they had little impact on the Dow as normally calculated, but a large effect on the Dow as computed using capitalization figures."

What about equal weight computation? Hasn't that ETF (RSP) out performed the standard S&P500? Glad you asked -- yes, yes it has:

"The third method often used in index calculations is one of equal weighting, which assumes that one puts the same dollar value into each stock in the index.

The chart [below] shows that the S.& P. 500, calculated by market capitalization, is still 2 percent below where it was on March 24, 2000. But that reflects poor performances by some of the same very large companies that starred before 2000 and have not done as well since. Calculated by equal-weighting, the S.& P. 500 is 82 percent higher than it was in 2000."


The following charts show Dow and S&P500 performance since March 24 2000 (the day the S&P500 peaked):
>
click or much larger graphic

Graphic courtesy of NYTimes;
Sources: S&P, Bloomberg

>
>

It would be interesting to see a price-weighted version of the SPX, or a an equal-weighted version of the Dow.

Norris adds that by the market capitalization version makes clear that "the Dow has underperformed, even if it is the Dow that is the index setting records these days."

Of course, all of these measures are domestic. Measured in euros, the price-weighted Dow is 15% lower than its 2000 peak . . .

 

[Edwood]

interesting stuff Wayne - so this record setting is just an illusion...

 

[wayneL]

interesting stuff Wayne - so this record setting is just an illusion...

If you look at the broader indices (SP500, Naz, R2K), none are at new highs, so yes a bit of an illusion.

Bears managed to kick a goal today. Are the Bulls simply exhausted? Even the Bobbleheads had no excuses for it apart from some mutterings about a stale rally.

Now, let's see if the cavalry turn up tommorrow.

I know many of you "bear grabbers" out there profess the demise of the U.S. consumer, with all of his credit card debt and utter insanity. Clearly, you underestimate the resilience or stupidity of the U.S. consumer.

See, if our bank accounts run dry and credit cards get canceled, we will steal hub caps or sell off valuable family heirlooms, in order to buy the new iPHONE or flat panel T.V.

There is no stopping us. Ever!

Short term I think he is right. Medium term... Mr Fly may get "Bear Grabbed"

 

[Edwood]

yes I get the feeling that this bit of congestion on ASX anyway will be as good as a pull-back for the bulls and they'll just use the opportunity to step it up again from here.

but having said that, based on past experience I have a habit of getting into short swings a couple of days early. have been short since Friday so maybe we'll get some down today. if not will look to cover & play that bullish looking pennant / flag on ASX200

 

[wayneL]

Dip buyers in. P$#@weak effort from the bears TBH.

Bovine mode on.

 

[wayneL]

Dip buyers in. P$#@weak effort from the bears TBH.

Bovine mode on.

Trying to get to the pivot, but textbook bounce off support for daytraders.

Dip buying is the only game in town for swingers ATM.

 

[bean]

However, yes however there is still strength in the DOW & NYSE it still wants to go higher although it has weakened slightly a number of indicators are still quite strongly positive and may require what I have mention above.

Tonight and tomorrow hold the key as to whether this is the start of a severve correction or not or a breather before the Dow advances and it has to advance with strength because the ‘Nasdaq needs help’

Part of what I mentioned in where the price of gold is going.

And yes the Nasdaq needs help all the help it can get. It may also limit how far the Dow can advance. The Nasdaq reached its high on friday?

It is being sold to the fund mangers who do their buying at this time of month???

 

[wayneL]

The DOW fraud makes a new high, but interestingly the broad based indices (SPooze, NAZ & R2K) DIDN'T.

Still, quite a nice run up from the 2x bottom at the pivot levels yesterday and a nice trade for those who caught it. The DOW fraud, being the headline index, might just excite folks into more buying but I'll have my eye on this resistance in the SPs for signs of a sell.

 

[Edwood]

onwards & upwards! found this little gem...