Reply Hazy, Ask Again Later

posted Feb 9, 2015, 2:05 PM by Katie Shook   [ updated Feb 9, 2015, 2:05 PM ]

February 9, 2015

If you’re hoping for some kind of definitive “the market is going here” statement, you can stop reading now.  This week is another relatively light economic data week, so analysts will have that much more geopolitical news and ‘reports beneath the reports’ stories to shake things up.  We may see things like the JOLTS report take on unusual influence absent other material news releases this week.  Other than jobs and retail sales on Thursday, the calendar is pretty light.  This should keep Europe and oil in the spotlight.

What I’m expecting to see is a lot of volatility and a continued range-bound market.  What I’m not expecting is a catalyst that drives the SPX above 2100… at least not yet.  Last week’s move went right up to the resistance area and failed on Friday.  Overnight futures were down.  And the talk of a Grexit is lighting up my inbox (apparently it’s interesting, if not relevant).  So I’m looking for manufactured news this week and volatility to follow.

The database has strengthened significantly over the past few weeks.  At one point we were in the low 30% range for total long positions in the system.  Today that figure is just over 67%.  That’s a pretty good indicator the overall health of the market is improving.  Overall there haven’t been any major warning signs indicating the markets should cough up 20% of their value.  The issue has been that there’s not a significant justification for continued multiple expansion either.  Thus the stalemate of late.

The technical set-up for the week is little changed.  Look for a negative open today, with 2050 being the first area of consolidation.  Resistance for the week should be about 2079, with support running at the 100-day moving average around 2013 or so.  So somewhere in the 2020-2080 range should about do it.

Weekly Estimated Range

Weekly Estimated Range 2-9-15

Support and Resistance

Support and Resistance 2-9-15

Buyers Beware

posted Feb 2, 2015, 10:06 AM by Katie Shook

February 2, 2015

The key number of the week is 2064-2068 on the SPX.  It seems this has become the new resistance area.  Every time buyers look to get a foothold things get knocked back down.  Frankly, there just aren’t than many buyers out there it seems.  Lots and lots of question marks.  I expect the 200-dma to get tested this week (at 1975 today).  And there’s a growing probability that we could see a more significant correction into the mid-1800’s if we don’t see support at the 200-dma.

This graphic basically tells the story:

Support and Resistance

We’re sitting on a support level right now around 1991.  But a failure there is going to send us headed towards the next green bar around 1950-60.  A failure there and we’ll likely re-test 1900.  Based on the way the trading and momentum patterns are setting up, it appears there’s a better than 50% chance we’ll test 1900 this month.

This week is particularly light in terms of economic data.  There will be more to come from earnings season.  And certainly oil will be in the spotlight.  But the bigger picture may be European QE.  Should assets start flowing back to their stock markets (which wouldn’t be surprising given how unattractive their yields are now) we could see the bid in our own markets lighten up a bit.  Absent our own QE, this could finally give the markets their excuse to do the 10% (or more) pullback analysts have been looking for.

The bigger question is, could we have a 2008-style market pull-back?  So far, that doesn’t look likely.  The Fed would probably step in again before that.  And the economy, on the back of lower fuel prices, should be able to continue growing.  Just don’t expect a sprint on this one.  Taking a look at the banking system, we’re still not healthy.  Lower rates may have improved balance sheets, but higher lending standards have prevented most of the money from being lent into circulation.  Until this equation changes, I wouldn’t look for anything too spectacular.

And let’s not even talk about Washington…  we can expect nothing there.  At least gridlock means things shouldn’t change too radically.

Key Numbers for the week:

Support:  2000/1991/1975

Resistance:  2018/2043/2068

Weekly Estimated Range:

Weekly Estimated Range 2-2-15

IMPORTANT DISCLOSURE INFORMATION Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial Services), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial Services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. Littlejohn Financial Services is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial Services' current written disclosure statement discussing our advisory services and fees is available for review upon request.

Will we Finally Print 2100 this Week?

posted Jan 26, 2015, 10:08 AM by Katie Shook

Answer:  probably.

The topic of the week is likely to be Greece.  The election results are in and the anti-austerity party won the day.  So we get to try 2011 all over again — only this time we’ll add a splash of QE to make it interesting.

This should continue to keep the US looking attractive for the time being.  Sooner or later the dollar will be too strong.  In the short-term though, the most attractive ‘scenario’ is domestic.  Scenario is the operative term here, since there are still a bunch of issues we’re sorting out in our economy — be they political or economic — the long-term middle class squeeze is a bad thing.  But in the short term, the rest of the world looks even yuckier.

Futures dropped suddenly across the pond on Sunday.  They've since stabilized and erased most of the negative.  I’d look for the markets to temporarily drop as trader test various support and resistance levels today.  Look for a bias to the positive this week, with 2005 being the big support area, and 2100 being the big resistance area.  We are likely to continue in this range through the week.

ScreenHunter_06 Jan. 26 06.18

IMPORTANT DISCLOSURE INFORMATION Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial Services), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial Services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. Littlejohn Financial Services is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial Services' current written disclosure statement discussing our advisory services and fees is available for review upon request.

Currency Froth

posted Jan 20, 2015, 10:43 AM by Katie Shook

Tuesday January 20, 2015

There’s been a lot of froth in this market as the SPX retreated to re-test the longer-term 1991 support level.  Already the 2000 level has been taken out.  And, despite last Friday’s rally going into the long weekend, there’s not been much in the way of momentum reversal.  With the Swiss un-pegging the Franc from the Euro the currency wars are officially out of the shadows.

There’s likely to a be a bunch of analysts insisting the world markets and economies will be collapsing any day now.  Irony says they’ll be wrong — at least for a season.  But it’s tough for me to disagree with the idea that global markets aren't at all healthy right now.  Why is everyone in such a hurry to weaken their currency?  And will stocks be short-term, intermediate-term, or long-term winners in this game?

I don’t know…

Here are the key levels I’m watching this week:  up-side resistance at the 50-day moving average (2046), intermediate support at 1991, and more serious support at 1974/1967 (around the 200-dma).  As the price of oil goes, so goes this market (for now)

ScreenHunter_02 Jan. 20 06.19

IMPORTANT DISCLOSURE INFORMATION Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial Services), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial Services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. Littlejohn Financial Services is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial Services' current written disclosure statement discussing our advisory services and fees is available for review upon request.

Technical Warnings

posted Jan 14, 2015, 9:49 AM by Katie Shook   [ updated Jan 14, 2015, 9:50 AM ]

The overnight move in the futures has been a dramatic move to the downside over the past six hours or so.  In fact, we may take out the intra-day low set on January 6th and break below the 100-dma.  A close below 2007 on the SPX would indicate a likely test of the 200-dma at 1964.  If the market does decline we may see another buying opportunity.  With yields continuing to decline we are likely seeing a mispricing of risk…  again.  One thing’s for sure — volatility is back.

Weekly Estimated Range

ScreenHunter_01 Jan. 14 06.24

IMPORTANT DISCLOSURE INFORMATION Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial Services), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial Services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. Littlejohn Financial Services is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial Services' current written disclosure statement discussing our advisory services and fees is available for review upon request.

Conflicting Signals

posted Jan 12, 2015, 10:41 AM by Katie Shook   [ updated Jan 12, 2015, 10:41 AM ]

It appears we have ourselves a mixed bag of data.  On the one hand, the BF Optimism Index is positive.  On the other hand, the BF Trading Signals for the S&P500 and NASDAQ Composite have sells, while the DJIA has a hold.  System-wide we have long signals at 45.62%.  And yes, oil is apparently continuing it’s slide — now somewhere in the $46/barrel range.

What to do, what to do?

Over the weekend the futures opened with very little fanfare.  This is a good sign.  It’s often the case that the futures move clearly in one direction or another after having been closed over Friday Afternoon, Saturday, and a portion of Sunday.  The move is typically in response to a shift in expectation based on the weekend news cycle.  This past weekend we saw very little in the way of new news.  So not much changed.

Of course, while we have a relatively light week of economic data, we do have the start of earnings season again today.  So the markets should begin digesting the numbers and forward guidance.  This is where those mixed signals come in.  It seems a lot of market participants are pretty nervous right now if you were to look at the trading signals as your indicator.  However, the optimism index (which defuses a bunch of fundamental data into a single number) remains pretty solid.

When technicals are mixed and fundamentals are strong, it’s difficult to argue against the fundamentals.  The market is not telling a story that says the bull is dead… at least not yet.  In fact, with the exception of energy and materials, the other major S&P sectors appear to be stabilizing.

If earnings season comes in okay, it’s tough for me to break from the crowd on this one.  History and data both indicate that things could continue to grind higher.  And, in fact, irony and paradox indicate we could see interest rates in the US plunge even further (as the rest of the world panics and shifts more money to the US).

This market has already surprised me in terms of its ability to defy my expectations.  While we know a day will come when things pull back and re-set, it does not yet appear to be that day.  I will be eyeing $40 support for oil (a breach of this level could be troubling in the short-term), forward guidance during earnings season, and commentary from the ECB regarding stimulus.  My guess is it will be stimulus from Europe that gives the markets the next shot in the arm.  And as long as forward guidance is cautious but not pessimistic we will see this thing grind higher.  I suspect another week or two of volatility before the overall earnings trend is discerned, at which point we could settle right back into the pattern of lower volatility, lower volume, and a climb up that wall of worry.

Weekly Estimated Range

Weekly Estimated Range 1-12-15

IMPORTANT DISCLOSURE INFORMATION Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial Services), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial Services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. Littlejohn Financial Services is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial Services' current written disclosure statement discussing our advisory services and fees is available for review upon request.

Happy New Year

posted Jan 5, 2015, 11:34 AM by Katie Shook

It’s 2015.  What’s on the horizon?

Of course, none of us really knows.  We do have some themes to pay attention to though.  As the US gets back on track, one theme will be (surprise) the Fed and how it reacts in a world where currencies are being de-stabilized.  Another theme will likely be Europe and the future of the Euro, with talk of a Greek or German exit from the Euro, and some of the structural and legal challenges to European QE.  And yet another theme will be global consumption and commodity pricing (specifically oil), spearheaded by China but heavily influenced by Russia and the middle east.  Clearly there are more than enough issues out there that 2015 may more likely resemble a 2011 than a repeat of 2014 (even if the long-term bull market is still intact right now).

When I take a look at the technical patterns of this market — the macro themes — the range of returns appear somewhere between +14/-10%.  That’s about 1380 on the high side, or 1875 on the low side for the SPX.  The US, relative to the rest of the world, looks to be the more attractive marketplace.  Additionally, interest rates look unlikely to rise significantly over the next year.

What this translates to (in all likelihood) is a market that climbs higher over the year but does so with a lot of uncertainty and volatility.  I’m also not ready to rule out political dumb-foolery as a derailer of the domestic markets.  The primary driver at home will probably remain the fact that there are few other areas in the global market where one can find sufficient yield to stay away from the stock market.  The biggest risk, unfortunately, remains a politically motivated machine that is willing to draw lines in the sand and hurt the economy to prove a point.

As of the writing of this post, the market has opened down about one percent and oil stocks, again, are taking a beating as oil is down around $55 a barrel.  I haven’t even looked at it, but I’ll bet the VIX has spiked again.  The SPX is sitting at it’s 50-day moving average.  We’ll see if support remains between here and the 100-dma (at just over 2000).  If this market plays out like I suspect it may, we’ll see the short-term reaction to declining oil as a bad thing.  But sooner or later the markets will figure out that declining fuel prices act like a stimulus for an economy built 70% on the consumer.  As long as jobs numbers hold up okay, lower oil prices should — on an intermediate to longer-term basis — be a good thing (unless you’re a fan of alternative fuels that is).

Happy New Year.  May 2015 bring prosperity and profitability.

Weekly Estimated Range

ScreenHunter_04 Jan. 05 06.18

IMPORTANT DISCLOSURE INFORMATION Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial Services), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial Services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. Littlejohn Financial Services is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial Services' current written disclosure statement discussing our advisory services and fees is available for review upon request.

2100 or Bust?

posted Dec 29, 2014, 10:26 AM by Katie Shook

The Santa Rally is on.  We’re at all-time highs on the SPX.  Can we find the 20 points needed to push us over the top?  I’m guessing so.

It’s a slower holiday week.  Volume should be lower (which has been good for this market throughout most of 2014 when this occurred).  Hopefully you’ve all made the nice list!

As you’ve no doubt noticed, the posts are light this week.  I’m putting this chart up mostly so we can say it happened.  For the remainder of the week, the plan is to enjoy family time and hopefully enjoy a final lift in the markets for the year.  If you need to reach our team, we’re still around (in the age of the smart phone it’s tough to actually unplug).  But hopefully you’ve got more important things to deal with.

To you and yours, I wish you a very Happy Holiday Season, Merry Christmas, and the best New Year yet!  

ScreenHunter_03 Dec. 23 07.45

IMPORTANT DISCLOSURE INFORMATION Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial Services), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial Services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. Littlejohn Financial Services is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial Services' current written disclosure statement discussing our advisory services and fees is available for review upon request.

Where is the bottom?

posted Dec 16, 2014, 9:20 AM by Katie Shook

This volatility is a little surprising.  Overnight — after the terrorist attack on a bunch of kids in Pakistan — has set the market on edge.  Futures dropped into the 1960′s briefly before climbing back to the 1980′s.  Either way, we’re testing further declines.  The systemic risk is on the rise and downward momentum (aka panic selling) seems to be picking up.  The question is, will there be another V bottom to this thing?

I don’t know.

The technical picture is still not ruined yet.  We’re above the 200-dma.  The DJIA is still above 17,000 (for now).  The trend isn't ‘broken’ — but this thing has fallen pretty fast.  Already the database has re-sold the SPX — talk about a whip-saw.  I suspect this will hinge on central bankers.  If the market believes rates are going to be forced to stay low for longer, we should see things resume higher.  If rates start changing — a la Russia and some emerging markets — bears may finally get their day.

It’s too early to say this thing is done.  The last week — and the dramatic decline in oil — is threatening to become contagious and muck up the works.  If the SPX falls below 1962 this thing could down-shift quickly.

Where’s our Santa Clause Rally?  So far the market seems to be on the naughty list.

IMPORTANT DISCLOSURE INFORMATION Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial Services), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial Services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. Littlejohn Financial Services is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial Services' current written disclosure statement discussing our advisory services and fees is available for review upon request.

It’s About Oil… for Now

posted Dec 15, 2014, 3:13 PM by Katie Shook

Last week was certainly a sharp drop.  The popular theory is that it’s about oil.  For now, that’s pretty much the case.

Here’s the deal.  Cheap oil, in theory, is a good thing.  So we’d expect this to be good for the stock market.  However, system shocks are not a good thing.  And oil fell fast — like really fast — the downdraft caught a lot of stocks in the wake.  Some of what we saw was probably panic selling.  However, things have been destabilized somewhat.

I received a number of calls about this asking what I thought would happen.  Technically speaking, we’re already at a key level.  2000 on the SPX is a psychological level for this market, but the technical support is down as far as 1946 or so (the 200-dma).  We already camped on the 50/100-dma’s.  It’s possible we’ll see low 1980′s while the market sorts this out.  That’s about half way between the 100 and 200-dma’s.

Over the weekend futures recovered somewhat.  Still, there’s been plenty of volatility.  I expect the bias will be to the up-side this week given how rapidly the markets fell.  The general thesis that the US is still the market of choice right now remains intact.  We’re just dealing with a system shock and spike in uncertainty.

The speed the market declined last week — typically — would be a sign that things were unraveling.  Given how this market has behaved for the past couple of years though — the fact that central banks continue to manipulate currencies — and the fact that lower oil prices, after initial pain, are a good thing — it won’t surprise me if this is a buying opportunity for stocks (especially those not directly associated with oil production or distribution).  It also will not surprise me if volatility this week — which is realistically the last trading week of the year — will be pretty high.

Hang in there.  And remember:  one day (or week) does not a market make!

ScreenHunter_02 Dec. 15 06.05

IMPORTANT DISCLOSURE INFORMATION Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial Services), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial Services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing. Littlejohn Financial Services is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial Services' current written disclosure statement discussing our advisory services and fees is available for review upon request.

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