Stock Market Analysis: 09/14/09

In addition, they are betting on a neutral or hawkish statement from an FOMC meeting on March 19 from a Fed headed by a new chair with a dovish reputation. It shows that short-term option trader sentiment is at or near a crowded short reading and medium term sentiment to be roughly neutral. In a separate post, Detrick also pointed to the fact that the upcoming week is option expiry week. FDA approval, hit a new 52 week high Monday. The bulls' underlying view is that the unique boutique market just hit a pothole, but it's not going to slide over a cliff. Equity markets have taken a hit mainly on worries over Ukraine/Crimea and China. These conditions were present during the equity market run-up and bulls have shrugged off these kinds of concerns before. The company reconstitutes its shareholders' equity when they are negative, following losses, with the consequence of reducing the cash flow to the equivalent of half of its share capital.

Yes, especially if the share price dips below $12. That is, you share ownership of the company with other investors. While the AAII sentiment surveys are measures of opinion and intention, the AAII Allocation Survey is a measure of investors actually did - this is a case of watching what they do, not just what they say. With the latest Earning Season's reports coming in at above average clip and 10-year interest rates falling, what could investors be so worried about? The chart below of the Citigroup US Surprise Index (in orange) measures whether the latest macro-economic releases have beaten or missed Street expectations. Already have an account? China’s reserves account for about half of that sum. Helping some of the emerging markets weather their storms should be the record amount of non-gold international reserves that they hold. However, some of the more troubled emerging economies also held sizeable record or near-record reserves at the end of last year: Russia ($470bn), Brazil ($356bn), India ($275bn), Turkey ($129bn), South Africa ($45bn), and Argentina ($28bn).

Traders have to decide, in effect, on what kind of bear they encountered last week. The chart below shows the relative performance of the defensive sectors (in black), which consist of consumer staples, utilities and telecom (health care was not included as sector performance has been skewed by the biotechs, which have been on a tear) against the SP 500. The SP 500 performance is shown for reference in purple. By doing this you may save from economic tragedy in case you are confronted by a task decrease or health care unexpected emergency. Not so fast. An examination of longer term indicators suggest that a durable bottom may not be at hand yet. The fast money got into a crowded long position and, when there were no buyers left and the momentum started to roll over, the crowd seized on the excuse of the day (EM crisis, Fed taper, US economic weakness, etc.) to sell.

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