Weekly Cycle: Market Outlook for 08.13.2018

Weekly Cycle: Market Outlook for 08.13.2018

Each week, we review the stock market using a specific set of information sources in order to cut through the noise generated by media publishing attention grabbing headlines. Weekly updates give e the opportunity to play trends while not overreacting on a daily basis.

 

“Einstein also recognized the power of simplicity, and it was the key to his breakthroughs in physics. He noted that the five ascending levels of intellect were, “Smart, Intelligent, Brilliant, Genius, Simple.” For Einstein, simplicity was simply the highest level of intellect.”

― Mohnish PabraiThe Dhandho Investor: The Low-Risk Value Method to High Returns

 

Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest.

 

Observations:

  • SPY relatively flat over last month
  • CQQQ down over 10% over last month at nearly 15% over last 90 days
  • QQQ up over 7% over last 90 days

Technical Indicators

Based on data and info from TradingView (Click for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

 

Observations:

  • SPY, VTI continue to show bullish trading signals
  • QQQ remains very strong
  • VFH continues with relatively strong trading signals
  • HACK remains somewhat weak

 

OldProf’s Risk Analysis

Each week, at the Dash of Insight blog, OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

This week, in Weighing the Week Ahead: Don’t Get Framed!:

“Short-term trading conditions continue at highly favorable levels. Actual volatility remains low”

“Here are the most important misleading frames:

The bad driver, constantly watching the rear-view mirror. Adherents of this approach believe the best way to determine future expectations is to look at the past, often an arbitrary period. This may include considering past earnings, past business cycles.

The anthropologist, who insists on humanizing the market. Statements like “This market is trapped in a narrow range and just wants to break out” provide no analytic content. Since most people believe they understand human behavior, but do not know much about group behavior, these statements have unwarranted appeal.

The announcer interprets daily market action as if it were a sporting event. “The bulls need to hold 2820 or look out below.”

The breathless newscaster exaggerates the importance of minor events or modest market moves. “The Dow is 40 points off the low of the day!”

The ideologue uses political viewpoints as a basis for finding investments. Just because a policy is endorsed by a leader you favor, does not mean that it will be effective. And vice-versa.

The weatherman makes lists of headwinds or tailwinds. These are especially easy to distort. There is so much to choose from and any can be made to seem important.

The rationalizer makes excuses for poor decisions. In this viewpoint it is better to be thought right than to be right. The most popular excuse is to blame everything on the Fed.1

 

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Mark writes in Weekly Market Recap Aug 12, 2018

“When this happens it is usually a good idea for short term traders to go cautious but in this case the indexes have held up quite well”

“The NYSE McClellan Oscillator stayed in the red for a FOURTH week in a row (a full month).  When this happens it is usually a good idea for short term traders to go cautious but in this case the indexes have held up quite well.2

Mark Hanna StockTrader.com

Articles of note

— 

“Pricing process is based on mood and momentum – does not affect value of a company”

Prof Aswath Damodaran on Valuation
Jae Jun The Value Investing Blog of Old School Value

“US Market Valuation

Looking at the equity risk premium, price can be justified.
The big question is whether buybacks is trapped cash being returned, or whether it’s going to subside.
Good as long as there’s growth backing the buybacks.
Keep eyes on economic growth.
Start worrying if there is staggering and weakness in economic growth.
I’m not looking at the market, or CAPE or P/E, or other traditional measures, I’m looking at economic growth.
As long as economic growth is solid, I’m okay with the market.3

— 

“Disney is starting to work it’s way toward them both” ( yearly and all-time highs)

The Wonderful World of Disney
Howard Lindzon Howard Lindzon

“I expect the eventual announcement of Disneyflix will pull Disney’s stock out of it’s current base into into the digital subscription age that Wall Street loves.4

— 

“The best investments are the ones that are the biggest no brainers.”

Mohnish Pabrai’s Advice for Value Investors
Jae Jun The Value Investing Blog of Old School Value

“How concentrated is your portfolio & how often do you trade in & out of positions

By the time you get to the 6th position that accounts for 75% of the portfolio. The top two positions, top two or three, might approach 50% of the portfolio.

5

— 

“Doesn’t technology present a massive risk to gold’s standing as a store of value going forward?”

8 Questions I’ve Been Pondering
Posted August 12, 2018 by Ben Carlson awealthofcommonsense.com

“1. What if gold dies out with the boomer generation? The market value of gold around the globe is estimated at more than $7 trillion. I understand some of the reasoning behind the fact that people still put a lot of faith in the yellow rock — it’s survived as a store of value for thousands of years and can act as an uncorrelated asset.
But isn’t it possible faith in gold could potentially die out with the older generations? Doesn’t technology present a massive risk to gold’s standing as a store of value going forward? I don’t know the answers to these questions and I think it’s going too far in the other direction to assume bitcoin or something similar will completely replace gold. But I don’t think you can rule out the possibility that gold’s value to society could be called into question in the decades ahead.6

— 

“I think that’s how this widening gyre ultimately resolves itself, too. In a big war.”

Things Fall Apart (pt. 1)
Ben Hunt Epsilon Theory

“I think that’s how this widening gyre ultimately resolves itself, too. In a big war.7

“But this “more” has a cost, a cost we don’t see at the time: time with our family.”

Being A Father
Alimov Dmitriy Vitaliy Katsenelson Contrarian Edge

“But this “more” has a cost, a cost we don’t see at the time: time with our family. 8

“That is why I hope, for Tesla’s sake, that Musk’s personal dislike of short sellers did not lead him to tweet out that Tesla would go private

The Privatization of Tesla: Stray Tweet or Game Changing News?
Aswath Damodaran Musings on Markets

“That is why I hope, for Tesla’s sake, that Musk’s personal dislike of short sellers did not lead him to tweet out that Tesla would go private9

  1. https://dashofinsight.com/weighing-the-week-ahead-dont-get-framed/
  2. https://www.stocktrader.com/2018/08/12/weekly-market-recap-aug-12-2018/
  3. https://www.oldschoolvalue.com/blog/investing-perspective/prof-aswath-damodaran-valuation/?source=rss
  4. http://howardlindzon.com/the-wonderful-world-of-disney/
  5. https://www.oldschoolvalue.com/blog/investing-perspective/mohnish-pabrais-advice-value-investors/?source=rss
  6. http://awealthofcommonsense.com/2018/08/8-questions-ive-been-pondering/
  7. http://www.epsilontheory.com/things-fall-apart-pt-1/
  8. https://contrarianedge.com/2018/08/07/being-a-father/
  9. http://aswathdamodaran.blogspot.com/2018/08/the-privatization-of-tesla-stray-tweet.html

Crypto Market Update for 08.10.2018

Crypto Market Update 08.10.2018

Our weekly crypto market update uses a standard set of information sources in an effort to get a less biased opinion of the market. 

 

 

 

CRYPTO INDEX PERFORMANCE

The Bletchley Indexes “offer the most thoughtful and consistent approach to index construction” according to CoinMetrics. 

Original “top X” indexes were launched in June 2017, followed by a market-wide index in December 2017 and sector specific indexes in February 2018. In total, there are 13 Bletchley indexes, with charts over various timetables available for each on their site.

Below is an alternate view of the performance based on the downloadable data made available by Bletchley. This view is intended to give a side-by-side snapshot of a handful of indexes.

Observations

  • B10  down over 40% in 3 months vs USD, while down 23% vs BTC
  • B10 even index is roughly even over last ~400 days
  • BTotal down nearly 50% over last 30 days vs USD
  • Platform, application, and currency are all down over 50% vs USD last 3 months

 

Global Crypto Charts

For a quick look at the global markets from another perspective, Coinlib.io provides simple charts with a lot of info, including Bitcoin marketshare, a visualization of the top 20 currencies by volume and market cap, and more.

Total Market Cap of Cryptocurrencies: $223.35 billion 

Market Share of Top Cryptocurrencies

Bitcoin’s market share has risen to 50%, a dominance which hasn’t been seen since December.

 

Market share of top 20 cryptocurrencies

The top 20 currencies (by market cap) currently make up roughly 90% of the total crypto market share.

TradingView Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

  • BTC and ETH negative vs USD
  • ETH is much more negative than USD

 

CRYPTO PERFORMANCE

  • BTC/USD down nearly 15% over last wee, while up slightly over last 30 days
  • ETHBTC down nearly 20% vs USD last month

 

Google Trends

 

Google Trends has continued slight downward trend over last 90 days.

 

WooBull Charts

NVT Ratio –  185 – This long-term cycle tracking ratio has move somewhat higher recently. The ratio is very high and suggests BTC is towards the end of long-term cycle.

NVT Signal -140

In the original post introducing NVT Signal, 150 was indicated as an overbought signal.

Willy Woo also recently published a Tweet thread where he suggested BTC may go to $5500-5700 next.

Articles of Note

 

—  

“dApps and blockchain games can design their non-fungible tokens to create more open ecosystems & include creators”

Designing Non-Fungible Tokens as Open Ecosystems
Brian Flynn Token Economy – Medium

“Developers are currently creating closed ecosystems to foster a community of players inside of their platform. We need to start creating open ecosystems by utilizing blockchain mechanics so third-party developers and creators can benefit from contributing to the ecosystem and earn real, sustainable revenue for doing so. A non-fungible token community needs not just players, but a community of creators.1

– 

“cryptocurrency returns can be predicted by factors which are specific to cryptocurrency markets”

Cryptocurrency risk and return
Tyler Cowen Marginal REVOLUTION

“Specifically, we determine that there is a strong time-series momentum effect and that proxies for investor attention strongly forecast cryptocurrency returns. Finally, we create an index of exposures to cryptocurrencies of 354 industries in the US and 137 industries in China.2

— 

— 

 

  1. https://tokeneconomy.co/designing-non-fungible-tokens-as-open-ecosystems-a0f28ae213ee?source=rss—-fbbd350c08fc—4
  2. http://marginalrevolution.com/marginalrevolution/2018/08/cryptocurrency-sentences-ponder.html

Weekly Cycle: Market Outlook for 08.06.2018

Weekly Cycle: Market Outlook for 08.06.2018

Each week, we review the stock market using a specific set of information sources in order to cut through the noise generated by media publishing attention grabbing headlines. Weekly updates give e the opportunity to play trends while not overreacting on a daily basis.

 

“Prices are too high” is far from synonymous with “the next move will be downward.” Things can be overpriced and stay that way for a long time . . . or become far more so.”

― Howard MarksThe Most Important Thing: Uncommon Sense for the Thoughtful Investor

 

Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest.

 

Observations:

  • SPY and VTI up over 2% over last month, nearly 7% over last 90 days
  • CQQQ down nearly 15% in last 3 months
  • Meanwhile, QQQ up almost 9% in last 3 months
  • MJ down nearly 10% in last month

 

Technical Indicators

Based on data and info from TradingView (Click for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

 

Observations:

  • SPY, VTI show very bullish trading signals
  • QQQ remains very strong
  • VFH continues with strong trading signals
  • HACK remains somewhat weak

 

OldProf’s Risk Analysis

Each week, at the Dash of Insight blog, OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

Note: No updates since July 23, 2018.

 

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Mark writes in

“Short term: The S&P 500 is holding its breakout – watch that level just below 2800 if there is any selling.”

“We began last week’s recap with this chart regarding the percent of stocks in the NASDAQ over their 50 day moving average – it was at 42%.   Fast forward a week and the number is 42% again – despite a 1% gain for the week in the index.  So a bit of a divergence here; mega stocks like Apple – the first trillion dollar company in the U.S., are masking some weakness below the surface.1

Mark Hanna StockTrader.com

Articles of note

— Chipotle’s app is driving huge revenue growth and growing quickly. 

“Chipotle’s digital sales grew 33% in the last single quarter after growing 20% the quarter before”

The dead simple strategy behind Chipotle’s $1.3B second life
About the author Fast Company

” Its latest quarterly earnings beat all expectations, with an 8% increase in revenue to $1.3 billion, for which it has four things to thank: raising its prices, cheaper avocados (sweet, green profit margins!), a maturing delivery business, and a digital app that is growing at a phenomenal rate.2

FANG stocks are not the only highly valued companies currently. 

“The median price-to-sales ratio on the S&P 500 currently stands at an unprecedented extreme”

It’s More Than Just FANG Stocks Investors Should Be Worried About
jessefelder
August 1, 2018
The Felder Report

“What investors really should be worried about then is the possibility that the reappraisal of the FANG stocks is representative of a much wider reappraisal that began back in February. Because if the heroic assumptions behind these unprecedented valuations are not met the repricing for not just the FANGs or MCBM but the entire stock market could be significant.3

Katsnelson received an email from Tesla saying cars can now be ordered and ready in a few months. Most of the nearly 350,000 pre-orders are unfilled and production rate is nowhere near great enough to deliver all in four months. 

“You can design and order [a Tesla Model 3] today for delivery in approximately 2–4 months.
…What happened to 345,000 orders?”

Questions I’d be Asking If I Owned Tesla Stock
Vitaliy Katsenelson Vitaliy Katsenelson Contrarian Edge

“If I was a Tesla investor I’d be seriously worried about the company’s balance sheet. There are some ominous signs that Tesla’s financial situation is deteriorating rapidly. Tesla reportedly recently sent an email to its suppliers asking them to give some money back to help the company with its profitability.
Such requests are made by companies looking for Hail Mary solutions to significant financial problems. If suppliers start questioning Tesla’s financial viability, they’ll start shortening their accounts receivables periods and start requesting letters of credit. This would escalate the company’s problems. Hail Marys are acts of desperation. Putting this in the context of the likely Model 3 cancellations, — Tesla’s cash burn has likely gotten a lot worse.4

— Unlike past decades, there are more young, growing, and unprofitable companies in public markets. Many times, these young companies have dilution, options and share classes that make a discounted cash flow analysis more complex. 

“Dilution, share based compensation and shares with different rights are just as much an issue when you compare multiples across companies”

Share Count Confusion: Dilution, Employee Options and Multiple Share Classes!
Aswath Damodaran Musings on Markets

” Dilution, share based compensation and shares with different rights are just as much an issue when you compare multiples across companies, and ignoring them or using short cuts (like full dilution) will only skew your comparisons and lead to mis-pricing stocks. I would suggest four general rules:5

— A recommendation of poker player Annie Duke’s book, Thinking in Bets, and her recommendation to omit outcome when analyzing decisions. 

“any talk of outcomes when analyzing decision quality, especially when you have incomplete information”

The Right Place, The Right Time – Of Dollars And Data
Of Dollars And Data

“For example, you wouldn’t think that someone who drove home drunk and survived had a good decision-making process.  Why?  You have information that suggests otherwise.  However, when someone gets rich by day trading you aren’t as sure as to whether this was good decision-making or good luck.  You have less information, so you are more prone to judge the decision based on the outcome.
As I have discussed before, focus on your efforts, not your results.  It’s the only thing you can control.  With that being said, I am once again going to recommend checking out Annie’s book to help you focus on the things you can control.6

— More information doesn’t necessarily lead to a better decision; often it just gives a false sense of control. 

“you should concentrate on a few key elements in stock selection, i.e., what are the 5-10 most important things”

Illusion of Control in Stock Analysis | Safal Niveshak
Safal Niveshak

“Trying to increase your confidence by gathering information that is supposedly unknown to most others really only makes you more comfortable with your investment decisions, not better at them, and is generally an unproductive use of your limited time.7

  1. https://www.stocktrader.com/2018/08/06/weekly-market-recap-aug-05-2018/
  2. https://www.fastcompany.com/90209037/the-dead-simple-strategy-behind-chipotles-1-3b-second-life
  3. https://thefelderreport.com/2018/08/01/its-more-than-just-fang-stocks-investors-should-be-worried-about/
  4. https://contrarianedge.com/2018/07/31/questions-id-be-asking-if-i-owned-tesla-stock/
  5. http://aswathdamodaran.blogspot.com/2018/07/share-count-confusion-dilution-employee.html
  6. https://ofdollarsanddata.com/the-right-place-the-right-time/
  7. https://www.safalniveshak.com/stock-analysis-and-illusion-of-control/

Crypto Market Update 07.23.2018

Crypto Market Update 07.23.2018

Our weekly crypto market update uses a standard set of information sources in an effort to get a less biased opinion of the market. 

 

CRYPTO INDEX PERFORMANCE

The Bletchley Indexes “offer the most thoughtful and consistent approach to index construction” according to CoinMetrics. 

Original “top X” indexes were launched in June 2017, followed by a market-wide index in December 2017 and sector specific indexes in February 2018. In total, there are 13 Bletchley indexes, with charts over various timetables available for each on their site.

Below is an alternate view of the performance based on the downloadable data made available by Bletchley. This view is intended to give a side-by-side snapshot of a handful of indexes.

Bletchley Crypto Indexes Performance 07-23-2018

Observations

  • Total market index up nearly 10% in past week
  • All indexes underperformed vs BTC over last 30 days, while mostly positive vs USD

 

Global Crypto Charts

For a quick look at the global markets from another perspective, Coinlib.io provides simple charts with a lot of info, including Bitcoin marketshare, a visualization of the top 20 currencies by volume and market cap, and more.

Total Market Cap of Cryptocurrencies: $287.87 billion  ( up from $262.05 billion 1 week ago)

crypto total market cap 07.23.18

Market Share of Top Cryptocurrencies

Top 5 cryptocurrency marketshare 07.23.2018

Bitcoin’s market share is up to 44%, up from a low of 34% in early May.

Market share of top 20 cryptocurrencies

Top 20 cryptocurrency marketshare 07.23.2018

The top 20 currencies (by market cap) currently make up roughly 89% of the total crypto market share.

TradingView Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

crypto tradingview technical signals 07.23.18

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

  • BTC has improved significantly vs last week
  • ETH has turned more negative

 

CRYPTO PERFORMANCE

Crypto Performance 07.23.2018

  • BTC/USD up over 16% over last week, over 20% in last month
  • ETH up slightly (3%) vs USD over last week

 

Google Trends

 

Google Trends Bitcoin + Crypto 07-23-2018

Google Trends showed a slight, brief uptick last week amid coinciding price surge.

WooBull Charts

Bitcoin NVT Ratio - 07.23.2018

NVTRatio –  179 – This long-term cycle tracking ratio has mostly sideways over the last few months and remains at a very high level, suggesting a “high speculative value.”

Bitcoin NVT Signal Chart 07.23.2018

NVT Signal -This short-term signal has spiked to 145, up from 118 a week ago.

In the original post introducing NVT Signal, 150 was indicated as an overbought signal.

While the short-term trend may continue upward, the 145 signal indicates a correction in price may be coming.

CoinMetrics Charts

CoinMetrics has provides great charting tools for a number of top cryptocurrencies. Kalvichkin’s NVT is a regular check for checking short term trading signals. 

Kalvichkin's NVT - BTC ETH 07.23.2018

Kalvichkin’s NVT – Kalvichikin’s NVT has moved sideways recently, similar to NVT Signal. This remains at a very high level historically.

Articles of Note

 

— Is Mastercard getting ready to offer a crypto-backed credit card?

“MasterCard has moved one step closer to developing a cryptocurrency-backed credit card”

Crypto Credit Card? MasterCard Wins Blockchain Payments Patent
Sam Bourgi Hacked: Hacking Finance

“According to the filing with the U.S. Patent and Trademark Office, MasterCard has received the green light to develop a proprietary method for “managing fractional reserves of blockchain currency.”

How is crypto changing the art world?

“Whether driven by fintech or funds, today’s finance-driven art world makes it quite easy to forget that” in the center of it all is artists

How Financial Products Drive Today’s Art World
The New York Times

“But the challenge for tokenization ventures such as Look Lateral is finding works of art of sufficient quality to hold their value after being exposed to fractional trading. The art market puts a premium on “blue chip” works that have not been overtraded, and these tend to be bought by wealthy individuals, not by fintech start-ups.

 The Case For Financial Business Documents as NFTs

‘To paraphrase Naval: “The internet gave us digital ubiquity. Blockchains now give us digital scarcity.”

Business NFTs – Financial Business Documents As Tokens On Decentralized Networks
Medium

“For example, invoices and purchase orders originate in a digital financial system and are processed in many other systems during the lifecycle of each set of data. As with the digital version of a song the problems of duplication, verification of document authenticity, or tracking of “ownership” (e.g. who should receive the money when an invoice finally gets paid) are very real challenges. We are not even scratching the surface of creating traceable, unique, certifiable derivative documents (the “mixes” of different information) based on today’s documents of the Financial Supply Chain.

– Investor Mike Maples Jr on how crypto will be no different than other forms of investing, with the biggest winners being the most patient.

“Mark my words: Slow Money founders, builders, and investors will be the biggest winners in crypto”

Slow Money Crypto – Mike Maples, Jr. – Medium
Medium

““Slow Money” investors treat the market like it is a weighing machine. They try to make money by owning a part of a great business that will appreciate faster than the broader market over a very long time. Liquidity matters less to such investors because they might hold for decades.

– On how blockchain can create new decentralized businesses through double network effects

“How businesses built around network effects are about to undergo a radical transformation that will impact us all”

The Future Of Network Effects: Tokenization and the End of Extraction
Medium

“Together, these factors suggest that network effects businesses of the future will be organized not as centralized for-profit corporations built on extractionary business models, but rather as decentralized token-based economies with incentive alignment between network owners and participants.

— Cuy Sheffield lays out his vision of how NFTs may develop into a multi-billion dollar market by bringing digital scarcity to e-sportsNFTs

“there is the potential for NFTs to become a multi-billion dollar market in the next few years”

NFTs and the Future of Digital Memorabilia – Hacker Noon
Hacker Noon

“I’m excited about the potential of the intersection of eSports and non-fungible tokens (NFTs) to create a new digital economy of cryptogoods and digital memorabilia that could become one of the first mainstream uses of cryptoassets.

 

Weekly Cycle: Market Outlook for 07.23.2018

Weekly Cycle: Market Outlook for 07.23.2018

Each week, we review the stock market using a specific set of information sources in order to cut through the noise generated by media publishing attention grabbing headlines. Weekly updates give e the opportunity to play trends while not overreacting on a daily basis.

 

The key is not playing the game better, but figuring out the right game to be playing.

– Brett Steenbarger – Where Are Edges To Be Found In The Current Stock Market?

 

Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest.

 Market Performance Update 07.23.2018

Observations:

  • HACK up nearly 30% over last year
  • VWO down over 6% vs 3 months ago
  • MJ down over 12% vs 1 year ago

 

Technical Indicators

Based on data and info from TradingView (Click for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

Technical Indicator scores 07.23.2018

Observations:

  • VFH (Vanguard financials ETF) significantly improved technical indicator scores
  • SPY, VTI continue to hold very positive trading scores
  • MJ continues very negative trend
  • XHB continues with very positive score, similar to last week

 

OldProf’s Risk Analysis

Each week, at the Dash of Insight blog, OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

This week, OldProf writes in Weighing the Week Ahead: A Delicate (and Temporary) Balance

Short-term trading conditions continue at highly favorable levels. Actual volatility remains low. The VIX is once again higher than reality.

Bob sees the economy (still) in the expansion phase, although there are signs of moving to a “boom.” This is the period right before a peak, the technical definition of a recession. While many speculate about what inning this is, we cannot really know. We only know that the game is not over and is unlikely to end in the next year.

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Mark writes in Weekly Market Recap Jul 15, 2018

Generally a calm week for the indexes as most of the action was in individual stocks due to earnings

Next week marks the busiest week of S&P 500 corporations reporting quarterly results, with some 174 set to release earnings.

 

Articles of note

— Rusty Guinn has written extensively on the Three Body Market, and here mentions again how it can lead to longer periods of underperformance and outperformance.

“be prepared for the periods of its underperformance and outperformance to be longer than they have been historically”

It Was You, Charley
Rusty Guinn Epsilon Theory

“But from the more important relative perspective (at least for our exercise), its most significant outperformance against growth tends to come in chunks when the direction of returns to value and growth are changing most dramatically, rather than in more ordinary periods.

— Following up on a recent post on Alibaba, Jae Jun gives more insight as to what makes Chinese tech giant a “no-brainer”

“At the peak in 2016, Alibaba was converting $0.50 of every dollar into FCF.

Last year, it was 43%”

Why Alibaba Is A No-Brainer
Jae Jun The Value Investing Blog of Old School Value

“JD is currently taking the path of Amazon of reinvesting as much as they can. Alibaba on the other hand, has already created an internal bank and can afford to make mistakes without harming their business.
Sure JD has the bling and sexiness next to its name, but I find Alibaba to be a safer bet, with just as much upside.

— New home sales are under pressure yet Bill McBride at Calculated Risk sees reason to believe housing has yet to peak. 

“I think new home sales and single family starts will increase further over the next couple of years”

Has Housing Market Activity Peaked?
Bill McBride Calculated Risk

“Although housing is under pressure from policy (negative impact from tax, immigration and trade policies), I do not think housing has peaked, and I think new home sales and single family starts will increase further over the next couple of years.

— Is JNJ’s positive news a sign of good things to come from pharmaceuticals

“These four stocks are rated Buy and may be good purchases for growth accounts looking for safety and total return going forward.

Top Analyst Bullish on Big Pharmaceutical Stocks Before Q2 Earnings
247wallst.com

“John Boris from SunTrust sees the relatively good print from Johnson & Johnson Inc. (NYSE: JNJ), which featured a positive currency tailwind, as a good signal for the group as a whole.

— Urban Carmel at The Fat Pitch remains bullish in the long term (~9-12 months), though is less certain in the short-term (coming weeks)

“The short term is less clear. SPX has gained 3 weeks in a row; most often, these streaks are followed by a higher high”

Weekly Market Summary
Urban Carmel The Fat Pitch

“US equities have gained every month since April, and are up over 3% so far in July. Our long term view remains that SPX will make a new all-time high in the months ahead. That is now just 2.5% away.

— A new tax law allows capital gains to be invested in “opportunity zones” with taxes reduced & deferred. And all new investment grows tax free, similar to a Roth IRA but without any contribution limits. 

An Unlikely Group Of Billionaires And Politicians Has Created The Most Unbelievable Tax Break Ever
Steven Bertoni Forbes

“The heart of this new law: Opportunity Zones, or “O-zones,” low-income areas designated by each state. Investors will soon be able to plow recently realized capital gains into projects or companies based there, slowly erase the tax obligations on a portion of those gains and, more significantly, have those proceeds grow tax-free. There are almost no limits. No limits on how much you can put in, how much tax you can avoid and, for most of the country, the types of taxes you can avoid, whether federal, state or local. No limits on how long those proceeds compound tax-free. And precious few limits on what types of investments you can make.

— Is it time for a turnaround in emerging markets?

“emerging markets equities have lagged…most of the last decade” “region is now “cheap” and it might be ready to outperform”

Emerging Markets Might Be Ready To Outperform
Urban Carmel The Fat Pitch

“Emerging markets equities have lagged in 2018 and throughout most of the last decade. Recent fund outflows have been extreme. Fund managers are underweight the region. Their currencies and commodities are not liked. The region is now “cheap” and it might be ready to outperform.

— Most economic signals remain positive

“Overall, much of the economic and company news seems highly positive.”

Hard To Find Much Bad News
David Templeton, CFA The Blog of HORAN Capital Advisors

“One could surmise this good news might be all priced into equity prices, but the current overall economic and business strength does not seem to be suggestive of an economic downturn any time soon. Certainly the issues around tariffs and trade, and their ‘potential’ negative impact, are worth maintaining a close watch on.

 

Crypto Market Update for 07.16.2018

Crypto Market Update 07.16.2018

Our weekly crypto market update uses a standard set of information sources in an effort to get a less biased opinion of the market. 

 

CRYPTO INDEX PERFORMANCE

The Bletchley Indexes “offer the most thoughtful and consistent approach to index construction” according to CoinMetrics. 

Original “top X” indexes were launched in June 2017, followed by a market-wide index in December 2017 and sector specific indexes in February 2018. In total, there are 13 Bletchley indexes, with charts over various timetables available for each on their site.

Below is an alternate view of the performance based on the downloadable data made available by Bletchley. This view is intended to give a side-by-side snapshot of a handful of indexes.

Observations

  • B10/USD down over 5% in last week and down over 65% over last 6 months
  • BTOTAL/USD Even index down nearly 10% in last week
  • Platform, App, and Currency index all negative vs USD in past 7/30/90 days

 

Global Crypto Charts

For a quick look at the global markets from another perspective, Coinlib.io provides simple charts with a lot of info, including Bitcoin marketshare, a visualization of the top 20 currencies by volume and market cap, and more.

Total Market Cap of Cryptocurrencies: $262.05 billion  ( down from $272.05 billion 1 week ago)

Market Share of Top Cryptocurrencies

Bitcoin’s market share sits at 41%, up from a recent low of 34% in early May. Looking longer-term, Bitcoin continues a long-term declining trend, with new currencies such as EOS and BCH taking some of that market share.

Market share of top 20 cryptocurrencies

The top 20 currencies (by market cap) currently make up roughly 88% of the total crypto market share.

TradingView Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

  • Little change in trading signals for BTC and ETH

 

CRYPTO PERFORMANCE

  • BTC/USD down over 5% over last week
  • ETH/USD fared worse; down over 8%

 

Google Trends

 

Google Trends hasn’t continued slight downward trend over last 90 days.

WooBull Charts

NVT Ratio –  180 – This long-term cycle tracking ratio has move somewhat higher recently. The ratio is very high and suggests BTC is towards the end of long-term cycle.

NVT Signal -This short-term signal has fallen to 118, down from 123 three weeks ago.

In the original post introducing NVT Signal, 150 was indicated as an overbought signal.

Willy Woo also recently published a Tweet thread where he suggested BTC may go to $5500-5700 next.

CoinMetrics Charts

CoinMetrics has provides great charting tools for a number of top cryptocurrencies. Kalvichkin’s NVT is a regular check for checking short term trading signals. 

Kalvichkin’s NVT – Kalvichikin’s NVT has moved sideways recently.

Articles of Note

 

— CoinBase announced they are looking into adding new tokens. This transparent nature should alleviate allegations of insiders benefiting from the foresight of an impending addition to CoinBase’s exchange. 

“Going forward, you should expect that we will make similar announcements about exploring the addition of multiple assets.”

Coinbase is Exploring Cardano, Basic Attention Token, Stellar Lumens, Zcash, and 0x
Coinbase The Coinbase Blog

“Today we are announcing that we’re exploring the addition of the following assets to Coinbase:Cardano (ADA)Basic Attention Token (BAT)Stellar Lumens (XLM)Zcash (ZEC)0x (ZRX)1

– A discussion of the trading conditions and trends around BTC results in a general bearish sentiment. 

“Despite declining daily transactions, NVT has begun to decrease, suggesting more on-chain value is being transmitted”

Bitcoin Price Analysis – Bearish in the interim
Bravenewcoin

“Using a 30-day Kalichkin network value to transactions (NVT) ratio, BTC remains in the upper-third of its historical NVT value. NVT has not been this high since January 2015 but has begun to turn downward recently, which suggests increasing on-chain network usage based on the dollar amount being transacted. Additionally, inflection points in the NVT ratio can correlate with extreme highs or lows in price.2

— Major League Baseball is launching a cryptokitties-like non-fungible token. Rather than digital baseball cards, these will be tied to specific in-game moments. 

“Lucid Sight, a blockchain gaming company, is launching MLB Crypto Baseball, through a licensing deal with MLB”

MLB launching MLB Crypto Baseball game
Daniel RobertsSenior Writer finance.yahoo.com

“In MLB Crypto Baseball, users will pay in ether to buy digital avatars tied to specific moments in recent games. They can then sell the items, or in some cases, earn rewards and stickers. The game is a decentralized app, or “dApp.”3

— Kyle Samani of MultiCoin Capital discusses the Web 3 stack, including current status of various levels and what still needs to be built for blockchain/Dapps to gain serious traction. 

“The dapp revolution will happen shortly after the Web3 stack achieves some level of usability, stability, and feature-completeness”

The Web3 Stack – Multicoin Capital
by Kyle Samani Multicoin Capital

“Interestingly, almost no one in crypto talks about decentralizing application hosting. This is particularly curious because this layer is centralized in basically every dapp today. It’s centralized either because the web server hosting the app is centralized, or because there’s a single download link to download the app and install it on the client device, pushing the ecosystem back towards the walled-garden model, which is by definition centralized. In an ideal world, the application host would be both decentralized and delivered just in time, a la modern web applications.4

— Augur, which allows anyone to bet on anything without a middleman, launched last week. It’s a project we’re watching closely. 

“What distinguishes Augur from a traditional betting market is that no single party sits in the middle, meaning that users are likely to pay lower prices.”

Augur Is Live: Decentralized Prediction Market Launches After 2-Year Beta
CoinDesk David Floyd

“Now, the Forecast Foundation, the not-for-profit behind Augur’s development, has announced the launch of the long-awaited platform, which was accompanied by the release of the final version of the Augur application as open-source software.
The years-long delay in reaching this point may have been frustrating for token holders, but it has allowed the Augur team to aggressively vet their code through internal audits and a generous bug bounty program. Notably, Augur offered $200,000 for bugs that qualified as “critical” (though the team hasn’t announced any rewards larger than $5,000).5

 

  1. https://blog.coinbase.com/coinbase-is-exploring-cardano-basic-attention-token-stellar-zcash-and-0x-9e44f0eb823f
  2. https://bravenewcoin.com/news/bitcoin-price-analysis-bearish-in-the-interim/
  3. https://finance.yahoo.com/news/exclusive-major-league-baseball-going-crypto-134033104.html
  4. https://multicoin.capital/2018/07/10/the-web3-stack/
  5. https://www.coindesk.com/augur-is-live-decentralized-prediction-market-launches-after-2-year-beta/

Weekly Cycle: Market Outlook for 07.16.2018

Weekly Cycle: Market Outlook for 07.16.2018

Each week, we review the stock market using a specific set of information sources in order to cut through the noise generated by media publishing attention grabbing headlines. Weekly updates give e the opportunity to play trends while not overreacting on a daily basis.

 

“Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day-if you live long enough-like most people, you will get out of life what you deserve.”

― Charles Munger, Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger

 

Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest.

 

Observations:

  • VNQ (Vanguard REIT index) up over 8% over last 90 days
  • SPY up slightly oer last week
  • MJ down over 7% vs last year
  • VWO (emerging markets) down over 8% over last 90 days

 

Technical Indicators

Based on data and info from TradingView (Click for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

 

Observations:

  • SPY remains bullish, BOND remains bearish
  • MJ is down significantly from a week ago
  • XHB has surged in the last week
  • HACK very positive after 2 weeks of somewhat weaker scores

 

OldProf’s Risk Analysis

Each week, at the Dash of Insight blog, OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

This week, OldProf writes in Weighing the Week Ahead: Anything Goes!

“Short-term trading conditions continue at highly favorable levels. Actual volatility remains low.”

“I continue to find that anyone with a reasonable approach to economics and any sort of analytical track record shares this basic thesis. Despite this, the people getting air time and page views are those whose recession forecasts are of the “kick the can” variety. They are now focused on 2020. How have their two-year forecasts done in the past?1

 

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Mark writes in Weekly Market Recap Jul 15, 2018

“TRADE WARS ™!!!! certainly seems like a “sell the rumor, buy the news” event.”

“Short term: Very choppy on the S&P 500 of late but a new “higher high” (a high higher than the previous high – in this case early June) was hit.  NASDAQ same story but now all time highs.2

 

Articles of note

— A macro data update from Fat Pitch blog shows continuing positivity around the economy. 

“The macro data from the past month continues to mostly point to positive growth”

July Macro Update: The Economy Is Fine. Trade War Rhetoric Is The Main Risk

“In summary, the major macro data so far suggest positive but modest growth. This is consistent with corporate sales growth.  SPX sales growth in 2018 is expected to only be about 6-7% (nominal).

With the rise in earnings and the moderation in share prices, valuations are now back to their 25 year average. The consensus expects earnings to grow about 18% in 2018 and 10% in 2019. Equity appreciation can therefore be driven by both corporate growth as well as valuation expansion (chart from JPM).3

— More positive signs for the economy in general

“Currently new home sales (and housing starts) are up solidly year-over-year, and this suggests there is no recession in sight”

Investment and Recessions
Bill McBride Calculated Risk

“Currently new home sales (and housing starts) are up solidly year-over-year, and this suggests there is no recession in sight4

—  Many seem to think Chinese Tech industry is largely a copy of the American tech industry. Here’s an in-depth look at how it differs.

“Chinese tech isn’t an imitation of its American counterpart. It’s a completely different universe.”

Letter from Shenzhen
Logic Magazine

“Shenzhen is a city built on exceptions. David explains that when the Chinese government decided to experiment with capitalism in the 1980s, it didn’t want to expose existing major cities like Beijing or Shanghai to the risk of failure. Instead, the government chose Shenzhen, a tiny cluster of fishing villages, even building up a wall in some parts to demarcate the boundary between socialism and capitalism.
Since the beginnings of the experiment, Shenzhen has exhibited all kinds of hockey-stick-shaped growth that people in Silicon Valley talk about in hushed tones of exaltation. The population has skyrocketed from 30,000 to almost 12 million, the cost of living has gone up, innovation is surging, and the time it takes to create, design, or build a new product decreases day by day.5

— Here’s a bit of background on two Chinese tech giants; Tencent and Alibaba. 

“In 5 years, technology services will make up 65 percent of Ant Financial’s revenue, compared with ~34 percent in 2017”

Alibaba versus Tencent: who will win? – Chris Skinner’s blog
Chris Skinner’s blog

“Alibaba and Tencent. Both have market capitalizations that hover around half a trillion U.S. dollars. Both command sectors of the rapidly growing Chinese digital landscape: Tencent owns the leading gaming and messaging platform, while Alibaba rules e-commerce. Both are aggressive investors inside and outside China. Each is the pride of their not-quite-first-tier hometowns: Alibaba of the ancient city of Hangzhou near Shanghai and Tencent of shiny-new Shenzhen across the border from Hong Kong. Finally, both touch an astounding percentage of the world’s most populous country: Alibaba’s various online marketplaces count 552 million active customers; Tencent’s WeChat messaging service recently surpassed 1 billion accounts …6

— Vitaliy Katsenelson on Softbank’s Masayoshi Son and the outlook for Softbank. 

“You can think of [Softbank] as buying a stock at a roughly 50% discount to the market value of its assets or as a way to buy Alibaba at less than half its current price”

What Would You Get if You Crossed Warren Buffett, Richard Branson and Steve Jobs? (Updated)
Vitaliy Katsenelson Vitaliy Katsenelson Contrarian Edge

“Like Apple co-founder Jobs, Son is blessed with clairvoyance. He saw the internet as an transformative force well before that fact became common knowledge. In 1995 he invested in a then-tiny company, Yahoo!, earning six times his investment. But he didn’t stop there; he created a joint venture with Yahoo! by forming Yahoo! Japan, putting about $70 million into a company that today is worth around $8 billion. (Yahoo! Japan is a publicly traded company listed in Japan.)7

— Sticking with Softbank, here’s an article from the NYTimes Dealbook on how underpriced SFBY is compared to the underlying assets. 

“SoftBank’s stake in Alibaba alone is now worth nearly $132 billion, or 40 percent more than SoftBank’s market cap.”

Investing in SoftBank Is Becoming a Bet on Its Founder’s Deal-Making Prowess
www.nytimes.com

“If those deals go through, what would be left of the company is essentially a gigantic, publicly traded venture capital firm. Its holdings would include:■ A 27 percent stake in Alibaba Group, the Chinese internet behemoth■ A 43 percent stake in Yahoo Japan■ A stake in ARM, the British designer of computer chips■ An investment in its nearly $100 billion Vision Fund, the much-ballyhooed tech investment vehicle that owns stakes in Uber and much more8

— On the Irreverent Investor, Michael Batnick presents a simple momentum strategy idea that has outperformed the S&P 500 index. 

a simple momentum investing strategy “outperformed the S&P 500 with significantly lower drawdown”

Simple Momentum

“Here are the rules: If the S&P 500 outperformed 5-year U.S. treasury notes over the previous twelve months, invest 100% of this portfolio in the S&P 500 in the following month. If the 5-year U.S. treasury notes outperformed the S&P 500 over the previous twelve months, invest 100% of this portfolio in bonds in the following month. That’s it. Pretty simple.9

— Mike Williams takes a rational look at the prospects of trade wars and believes it’s bluster than will go the way of countless other scares. 

“And the reality break here is that China has few attractive options other than making trade fairer.”

Like Water Off a Black Swan’s Back
Mike Williams Alan Steel

“The bluff and bluster will go the way of Brexit, Chinese Yuan devaluation fears (Acts I, II, II, IV, V, VI and VII), Ebola outbreaks, the outrage at the Border (I mean the Janet Reno version – not the current remake), and everything else that was previously going to throw the globe into the pits of hell.
10

 

 

 

 

 

  1. https://dashofinsight.com/weighing-the-week-ahead-inflation-on-the-horizon/
  2. https://www.stocktrader.com/2018/07/15/weekly-market-recap-jul-15-2018/
  3. http://fat-pitch.blogspot.com/2018/07/july-macro-update-economy-is-fine-trade.html
  4. http://www.calculatedriskblog.com/2018/07/investment-and-recessions.html
  5. https://logicmag.io/04-letter-from-shenzhen/
  6. https://thefinanser.com/2018/06/alibaba-versus-tencent-will-win.html/
  7. https://contrarianedge.com/2018/07/09/what-would-you-get-if-you-crossed-warren-buffett-richard-branson-and-steve-jobs-updated/
  8. https://www.nytimes.com/2018/07/13/business/dealbook/softbank-valuation-masa-son.html
  9. http://theirrelevantinvestor.com/2018/07/09/simple-momentum/
  10. https://www.alansteel.com/media-centre/letter-from-america/2018/07/like-water-off-a-black-swan-s-back/

Crypto Market Update for 07.09.2018

Crypto Market Update 07.09.2018

Our weekly crypto market update uses a standard set of information sources in an effort to get a less biased opinion of the market. 

 

“The whole idea is anyone, anywhere should be able to trade value with anyone, anywhere else—trust them immediately—and do it directly.”

Getting Back to Blockchain Basics
Jeremy Epstein Never Stop Marketing

 

 

Crypto Indexes

The Bletchley Indexes “offer the most thoughtful and consistent approach to index construction” according to CoinMetrics. 

Original “top X” indexes were launched in June 2017, followed by a market-wide index in December 2017 and sector specific indexes in February 2018. In total, there are 13 Bletchley indexes, with charts over various timetables available for each on their site.

Below is an alternate view of the performance based on the downloadable data made available by Bletchley. This view is intended to give a side-by-side snapshot of a handful of indexes.

Observations

  • B10 vs USD up over 7% over last 90 days, down 65% since January
  • EVEN Indexes continue to show greater volatility – and greater returns
  • Plaform index up over 1% over last 90 days vs BTC and USD

 

Global Crypto Charts

For a quick look at the global markets from another perspective, Coinlib.io provides simple charts with a lot of info, including Bitcoin marketshare, a visualization of the top 20 currencies by volume and market cap, and more.

Total Market Cap of Cryptocurrencies: $272.05 billion ( down from $288.56 billion 3 weeks ago)

Market Share of Top Cryptocurrencies

Bitcoin’s market share has risen to 42%, up from a recent low of 34% in early May. Looking longer-term, Bitcoin continues a long-term declining trend, with new currencies such as EOS and BCH taking some of that market share.

Market share of top 20 cryptocurrencies

The top 20 currencies (by market cap) currently make up roughly 88% of the total crypto market share.

TradingView Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

  • BTC and ETH remain with weak trading signals

 

CRYPTO PERFORMANCE

  • ETH up 20% vs BTC and 18% vs USD over last 3 months
  • USDT token has remained relatively stable

 

Google Trends

 

Google Trends hasn’t continued slight downward trend over last 90 days.

WooBull Charts

NVT Ratio –  170 – This long-term cycle tracking ratio has moved sideways recently. The ratio is very high and suggests BTC is towards the end of long-term cycle.

NVT Signal -This short-term signal has fallen to 123, up from 115 three weeks ago.

In the original post introducing NVT Signal, 150 was indicated as an overbought signal.

Willy Woo also recently published a Tweet thread where he suggested BTC may go to $5500-5700 next.

CoinMetrics Charts

CoinMetrics has provides great charting tools for a number of top cryptocurrencies. Kalvichkin’s NVT is a regular check for checking short term trading signals. 

Kalvichkin’s NVT – Similar to NVT Signal, Kalvichikin’s NVT has moved sideways recently.

Articles of Note

Crypto investor Ari Paul on the decline in valuations of ICO-funded projects. 

“These things play out in slow motion, because both investors and projects are reluctant to realize mark-downs”

Early stage valuations fall to earth
Ari Paul The Cryptocurrency Investor

“These things play out in slow motion, because both investors and projects are reluctant to realize mark-downs, and the lack of a liquid exchange price means they can fool themselves.  1

— Mike Maples Jr on how crypto can help create better “commons” to benefit all via governance tokens to overcome the traditional problem of overuse via individual self-interest. 

“As long as we discover new ways to create value, new types of businesses will emerge”

Crypto Commons – Mike Maples, Jr. – Medium
Medium

“The “Tragedy of the Commons” was coined by Garrett Hardin in 1968 as a critique of the commons. It describes how individuals, acting independently according to their self-interest, can accidentally destroy a shared resource.A real-world example is the Grand Banks Fisheries off the coast of Newfoundland, Canada. For centuries, explorers and fishermen marveled at this region’s endless supply of codfish. In the 1960s and 1970s, fishing technology improved and allowed much larger catches. By the 1990s, cod populations were so depleted that the Grand Banks Fisheries failed. It was too late for traditional governance in the form of regulation or private markets; the cod stocks were damaged irreparably.2

– CryptoKitties sounds ridiculous to many – and extremely interesting to a small number of people. That’s often how big things start and non-fungible tokens have a lot of potential. 

“may be at the cusp of a new wave of billion dollar companies that expand beyond the niche of digital collectibles.”

In Defense of CryptoKitties
Richard Chen The Control – Medium

“Working on things that could be dismissed as “toys” often produces good startup ideas. As Paul Graham explains in his essay “How to Get Startup Ideas”:3

Speaking of NFTs, VC Fred Wilson wrote about a cryptokitty charity auction.

“a lineage of CryptoKittens ‘hatched’ to both raise funds and be ambassadors for causes and to be bought, sold, and bred within the game”

Honu – A CryptoKitty Charity Auction
Fred Wilson AVC

“It’s a first step in a broader project he is developing with Bill Tai to bring together incentivized communities through unique cryptoassets into a larger framework for non-profit projects everywhere.4

— Bitcoin investor Willy Woo on the difference in forecasting and predicting. He uses past information to forecast, similar to a meteorologist, rather than saying something will happen before the event. 

“This is the masses losing objectivity and just getting emotional, which is exactly what we as traders wanna drop”

Overheard in a chatroom: Forecasting vs predicting
Willy Woo Woobull

“Most people have too much bias, it’s like they are “willing the price” in a direction they want, then drawing the chart. And noob traders are the most subjective, they try to predict and not forecast.
To this point, everytime I tweet a bear call, the noob troll armies attack, they don’t wanna hear it. Vinny Lingham’s bearish tweets [during the Bitcoin scaling debate] last year had the same issue, the trolling got so bad he ceased making price calls. This is the masses losing objectivity and just getting emotional, which is exactly what we as traders wanna drop.5

— Coinbase has strategically been slow to add new tokens, as they believe it the best way to bring crypto to the masses. There’s discussion of increasing the number of assets available in the future. 

“Coinbase is moving toward an algorithm-fueled decision process for adding more tokens”

Coinbase CTO: Business in the Front, Party in the Back
Gerelyn Terzo Hacked: Hacking Finance

“Coinbase CTO Balaji Srinivasan painted a different picture, saying the exchange is more like a mullet for its business6

 

  1. https://thecryptocurrencyinvestor.com/2018/06/22/early-stage-valuations-fall-to-earth/
  2. https://medium.com/@m2jr/crypto-commons-da602fb98138
  3. https://thecontrol.co/in-defense-of-cryptokitties-16dd2e447d9e?source=rss—-ce012282ea98—4
  4. https://avc.com/2018/07/honu-a-cryptokitty-charity-auction/
  5. https://woobull.com/forecasting-vs-predicting/
  6. https://hacked.com/coinbase-cto-business-in-the-front-party-in-the-back/

Weekly Cycle: Market Outlook for 07.09.2018

Weekly Cycle: Market Outlook for 07.09.2018

Each week, we review the stock market using a specific set of information sources in order to cut through the noise generated by media publishing attention grabbing headlines. Weekly updates give e the opportunity to play trends while not overreacting on a daily basis.

 

“Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”

~Howard H. Aiken
via Why Share?
Howard Lindzon

 

 

 

Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest.

 

Observations:

  • VNQ (Vanguard REIT index) up over 10% over last 90 days
  • SPY down just over 1% since 1 month ago
  • China tech (CQQQ) down over 8% last 90 days (trade war fears, possible buying opportunity)
  • Emerging markets ( VWO BKF) down 10% and 8% over last 3 months.
  • Cannabis (MJ) up 8% over last 90 days

 

Technical Indicators

Based on data and info from TradingView (Click for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

Observations:

  • VIX signals are down significantly
  • SPY considerable stronger
  • VNQ and QQQ much stronger than 1 week ago

 

OldProf’s Risk Analysis

Each week, at the Dash of Insight blog, OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

This week, OldProf writes in Weighing the Week Ahead: Inflation on the Horizon?

“Short-term trading conditions continue at highly favorable levels. Actual volatility declined dramatically in the four-day week.”

“Homebuilders. Barron’s especially likes Toll Brothers (TOL), suffering from an “excessive decline” leaving the stock “significantly undervalued.” The company has been performing well despite the highly-publicized headwinds of higher interest rates and increased costs. [Jeff – I agree but have chosen two of their competitors.]1

 

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Mark writes in Weekly Market Recap Jul 08, 2018

“Currently the action for short term traders is choppy and tricky. Those with a long term view still are in cruise control”

“Long term: Still very positive for the “buy and never sell” crowd.2

 

Articles of note

— Today’s tech stocks (FAANG) are not nearly as overvalued as the biggest tech stocks of the dotcom bubble

FAANG “currently trading at 37x earnings and 5.5x sales. The four in the late 90s were trading at 100x earnings and 26x sales.”

The Ghost of Tech Stocks Past

” These four stocks would collectively fall 77%. Other stocks got hit much harder.

Nortel was worth $283 billion. It went bankrupt.
Lucent was worth 285 billion. It merged with Alcatel in 2006, which currently has an $11 billion market cap.
America Online  was worth $220 billion at its peak before it merged with Time Warner. They were bought by Verizon for $4.4 billion.
Yahoo was worth $125 billion. It was also recently bought by Verizon, for $4.5 billion.3

Speaking of FAANG stocks, Domino’s has beat all of them since 2010, and there are a handful of businesses in much more traditional industries that have grown by as much as 5500% since 2010

“since 2010 it is Domino’s that beats Netflix and the rest of FAANG since 2010:”

Who Has The Best Business Model?
Howard Lindzon Howard Lindzon

“If you are looking for the best stocks since 2010 it is actually paint protection film, manufactured housing and commercial dry cleaning equipment that have made their investors the most money4

— Is there a problem brewing with passive, blind index investing? Here the case is made that the largest companies are being overvalued and that indexes are bending criteria to include the biggest tech stocks. 

“consequence is an ocean of money flowing into the largest companies for reasons that could be unrelated to their merits as investments”

The Hidden Index Bubble
Isaac Pino, CPA The Motley Fool

“For investors, this raises questions about whether there’s a bubble within index investing. So far, valuation metrics like price-to-earnings ratios have not gone completely haywire, as they did in 1999 during the dot-com bubble. Back then, the cyclically adjusted price-to-earnings (CAPE) ratio was nearing 45 at the time of that bubble’s collapse; it’s at 33 today.
But that time frame provides some context. In 1998, just before the dot-com bubble, the largest stocks were thriving. The 10 largest companies in the U.S. market were up 38.5% that year. Then the market turned and took everyone with it — shareholders in small and large companies alike.5

— A good read on the excessive number of bear calls and how the noise makes it difficult to know when to take action. 

‘Turning to Amazon, again we have over 100 different ETFs that have overweighted the stock”

Same Old Greed In A Shiny New Wrapper
The Felder Report

“It’s the very same sort of insatiable greed on the part of Wall Street serving the insatiable greed on the part of investors that has driven every speculative mania throughout history. Only this time it comes in a brand new, shiny wrapper that people can use to call themselves “passive investors.”6

“For all the time spent worrying about this risk, the overwhelming majority of short term traders…haven’t found a way to avoid it”

The Money Gods’ Price For Achieving High Returns

“Briefly, stay long when SPX is above the 10-mma at month end, move to cash when below. There are still drawdowns of more than 15-20% (e.g., 1987, 1990, 1998) and the strategy can underperform in a grinding bull market, but the long term track record is excellent.7

— Canada’s Shopify scored a big win in British Columbia. Presumably, this is a large growing market given Canada’s recent law changes allowing recreational cannabis nationwide. 

“Shopify has been named as the sole vendor to provide ecommerce services for cannabis sales across…British Columbia ”

Shopify to run ecommerce cannabis sales within BC
Business Chief Canada

“The Liquor Distribution Branch (LDB), set to become BC’s only public retailer of cannabis products, stated that Shopify was selected ahead of a number of other bidders due to its proven track record of offering reliable delivery services.8

— A look at the best business model, which typically results in giving away a great product cheaply (or freely) to the majority of customers, while providing the opportunities for best customers to spend. QVC and Amazon are cited as examples. 

“A key to shared-value transactions is that you then use a portion of the spend from your best customers to indirectly fund products for your average users”

Who Has The Best Business Model (And It’s Not Google Or Facebook)
Medium

“What if instead you had a business model that could maximize revenue from your best customers, and then share that value across all your customers, while not annoying users in the process? Sounds good right? Not only does such a model exist, but it’s being used by many companies to great success. I’ll call this strategy shared-value transactions.9

 

 

 

 

  1. https://dashofinsight.com/weighing-the-week-ahead-inflation-on-the-horizon/
  2. https://www.stocktrader.com/2018/07/08/weekly-market-recap-jul-08-2018/
  3. http://theirrelevantinvestor.com/2018/06/30/the-ghost-of-tech-stocks-past/
  4. http://howardlindzon.com/who-has-the-best-business-model/
  5. https://www.fool.com/investing/2018/06/24/the-hidden-index-bubble.aspx
  6. https://thefelderreport.com/2018/06/27/same-old-greed-in-a-shiny-new-wrapper/
  7. http://fat-pitch.blogspot.com/2018/06/the-money-gods-price-of-achieving-high.html
  8. https://canada.businesschief.com/marketing/2728/Shopify-to-run-ecommerce-cannabis-sales-within-BC
  9. https://medium.com/@efeng/who-has-the-best-business-model-and-its-not-google-or-facebook-ca36f967bbd1

Weekly Cycle: Market Outlook for 07.02.2018

Weekly Cycle: Market Outlook for 07.02.2018

Each week, we review the stock market using a specific set of information sources in order to cut through the noise generated by media publishing attention grabbing headlines. Weekly updates give e the opportunity to play trends while not overreacting on a daily basis.

 

“The goal is not necessarily to “beat the market” but to manage risk and help investors survive severe market downturns.”

“In my mind, to turn trend-following into a strategy that works in the real world you have to figure out how to:

Keep turnover relatively low for cost and tax purposes.
Know how it generally works over a number of different market environments.
Make it rules-based to take emotions out of the equation.
Keep it liquid so you don’t ruin the diversification benefits.
Keep it simple because people have a hard time following and understanding complex approaches.1

My Evolution on Asset Allocation
Posted June 26, 2018 by Ben Carlson awealthofcommonsense.com

 

 

Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest. 

Observations:

  • SPY slightly down over last week and last month
  • CQQQ down 9% over last month
  • Emerging markets [VWO & BKF] down over 8% over last month

 

Technical Indicators

Based on data and info from TradingView (Click for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

Observations:

  • Most indexes show weakened indicators
  • VNQ (housing REIT) shows significant improvement
  • Tech [QQQ CQQQ HACK] much weaker

 

OldProf’s Risk Analysis

Each week, at the Dash of Insight blog, OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

This week, OldProf writes in Weighing the Week Ahead: Is it Time to Worry About 2020?

“Short-term trading conditions continue at highly favorable levels. Actual volatility was higher last week, but still below long-term levels.”

“Short-term trading conditions continue at highly favorable levels. Actual volatility was higher last week, but still below long-term levels. The VIX continues to overstate volatility. The decline in the rate for the ten-year note, coupled with lower stock prices, has made stocks even more attractive by comparison.2

 

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Mark writes in Weekly Market Recap Jun 24, 2018 – StockTrader.com

“This was a second week of consolidation with generally good action in the Russell 2000 and NASDAQ.”

“Short term: The S&P 500 held its breakout level at just over 2740 – watch that number next week.   The NASDAQ remains quite strong.

 

Articles of note

“This report describes 20 flaws, biases, and causes of bad behavior I’ve seen pop up often when people deal with money.”

The Psychology of Money
Collaborative Fund

“People’s lives are a reflection of the experiences they’ve had and the people they’ve met, a lot of which are driven by luck, accident, and chance. The line between bold and reckless is thinner than people think, and you cannot believe in risk without believing in luck, because they are two sides of the same coin. They are both the simple idea that sometimes things happen that influence outcomes more than effort alone can achieve.3

“random chance has a powerful influence and failure of any kind is statistically followed by success.”

The thought father: Nobel Prize-winning psychologist Daniel Kahneman
Evening Standard

“One of the most amusing episodes in the book comes when Kahneman visits a Wall Street investment firm. After analysing their reports, he calculated that the traders, who were highly prized for their ability to “read” the markets, performed no better than they would have done if they made their decisions at random. The bonuses that they received were, therefore, rewards for luck, even though they found ways of interpreting it as skill. “They were really quite angry when I told them that,” he laughs. “But the evidence is unequivocal — there is a great deal more luck than skill involved in the achievements of people getting very rich.”4

“it could finally start to monetize the Groups feature that’s grown to more than 1 billion users”

Facebook tests ‘subscription Groups’ that charge for exclusive content
Josh Constine eCommerce – TechCrunch

“During the test, Facebook won’t be taking a cut, but because the feature bills through iOS and Android, those operating systems get their 30 percent cut of a user’s first year of subscription and 15 percent after that. But if Facebook eventually did ask for a revenue share, it could finally start to monetize the Groups feature that’s grown to more than 1 billion users.5

“a tariff on car imports from Mexico raises the cost of US auto production”

Trade War Costs in a Supply Chain World
Alex Tabarrok Marginal REVOLUTION

“a tariff on car imports from Mexico raises the cost of US auto production6

“Tesla’s capital needs will be even higher…with negative cash flows for the next 8 years, and $22 billion in new capital over that period.”

Twists and Turns in the Tesla Story : A Boring, Boneheaded Update!
Aswath Damodaran Musings on Markets

“Note that the median pre-tax operating  margin for auto companies is only 4.81%, with double digit operating margins putting you at the 80th percentile of all auto companies. It is also worth noting that among the ten largest auto companies, there is not a single one that generates an operating margin higher than 10%; BMW has the highest margin, at 9.89%.7

“Consumption weakness is the biggest risk I’m worried about. ”

Debate: What Will Trigger the Next Recession?
@conorsen Bloomberg.com

“weakness in the corporate credit sector would come about from growing bottlenecks in the economy. Consumption weakness is the biggest risk I’m worried about.8

“China and the world cannot function without Alibaba” $BABA

Alibaba Is A No Brainer
Jae Jun The Value Investing Blog of Old School Value

“Alibaba has built the economy to what it is now and has the backing of the government. It’s an unfair advantage that Alibaba has taken full advantage of. It comes with its own consequences, but the difference with Amazon in USA and Alibaba in China is that, should Alibaba shut down, China will be in chaos.9

“positive news usually does not attract viewers and readers to [media]; therefore receives much less attention”

A Little Perspective And Balance Would Be Useful
David Templeton, CFA The Blog of HORAN Capital Advisors

“as one looks at the economic, company level and consumer data, the positives currently outweigh the negatives at the moment. Unfortunately, positive news usually does not attract viewers and readers to the media publications; therefore receives much less attention from the media.10

 

 

 

  1. http://awealthofcommonsense.com/2018/06/my-evolution-on-asset-allocation-2/
  2. https://dashofinsight.com/weighing-the-week-ahead-is-it-time-to-worry-about-2020/
  3. http://www.collaborativefund.com/blog/the-psychology-of-money/
  4. https://www.standard.co.uk/lifestyle/london-life/the-thought-father-nobel-prize-winning-psychologist-daniel-kahneman-on-luck-9199162.html
  5. https://techcrunch.com/2018/06/20/facebook-subscription-groups/
  6. http://marginalrevolution.com/marginalrevolution/2018/06/trade-war-costs-supply-chain-world.html
  7. http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns-in-tesla-story-boring.html
  8. https://www.bloomberg.com/view/articles/2018-06-29/next-u-s-recession-will-be-triggered-by-something-unexpected
  9. https://www.oldschoolvalue.com/blog/stock-analysis/alibaba-no-brainer/?source=rss
  10. https://disciplinedinvesting.blogspot.com/2018/06/a-little-perspective-and-balance-would.html