Green Book June 2014
The Transports’ relative strength vis a vis the Dow Industrials has gone vertical in the past two months, suggesting—per our analysis in the March Green Book—one shouldn’t attempt to pick a final high during the next several months.
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Featured Articles
Transports Still Leading - Market Top Not Imminent
While stock market action YTD has not been quite as “uniform,” the hallmarks of an imminent bull market top are simply not present. The bullish portents apply to intermediate term results, however, they cannot rule out any short-term setbacks (which can appear with no tip-off from breadth or leadership measures).
Strength In Transportation: A Deeper Dive
Bull markets rarely come to an end prior to the Transports exhibiting weakness. Their outperformance continues this year, returning an impressive +9.9% through June 4th, almost doubling the S&P 500’s +5.2%. We examine the underlying Transport groups and assess which areas are providing the strength to help sustain the Transportation Index’s leadership.
The Volatility “Sweet Spot”
Daily stock market volatility has levitated at levels a bit higher than the VIX—in a zone that has historically been “optimal” for short-term performance.
“Old Tech” Profiting From Explosion Of “New Tech” Content?
We identify the “Old Tech” players that will likely reap the benefits from the ever-growing volume of data being generated, stored, and transmitted on line.
10-Year Yield: Back in 250-280 Range
In the very short term, excessive bearish positions have been reversed so there is less downside pressure on interest rates. Over the intermediate term, incredibly low yields in the Euro-zone help cap the U.S. yield.
Risk Aversion Index - New Higher Risk Signal
Surprising strength in the Yen, a drop in commodities, and slightly wider credit spreads pushed up the index. An increase in risk aversion becomes more likely at the current extremely low level. Caution is warranted.
Sector Short Interest Ratios Reviewed
We look at Short Interest Ratios within the S&P 1500 sectors for clues on future market prospects. The Materials sector is one where it has paid to monitor what short sellers are doing (or not doing).
Table of Contents
Stock Market
- Story-Telling Time
- Transports Still Leading - Market Top Not Imminent
- The Volatility “Sweet Spot”
- “Overbought” Can Be Good Or Bad
- The Tech Wreck That Wasn’t
- QE: The Third Time Is The Charm
- Running The Math On Mega Caps
- Commodities: Not A New Bull
- Just When You’d Stopped Worrying...
- Dividend Paying Strategies—Which Is Best?
Of Special Interest
Macro Monitor
- 10-Year Yield: Back in 250-280 Range
- Credit Conditions Still Good But Less-Easy Than Pre-Taper
- Risk Aversion Index - New Higher Risk Signal
- US Bond Market
Equity Strategies
Quant
Market Internals
Portfolios
- Core & Global Asset Allocation Portfolios’ Net Equity Exposure Unchanged At 65%
- Domestic & Global Long-Only Portfolios Beat Benchmarks In May; Both Outperforming YTD
- 100% Short Portfolios: Domestic Version, AdvantHedge, Beat Benchmark In May
Major Trend
Estimating the Downside
At Random
Transports Still Leading - Market Top Not Imminent
While stock market action YTD has not been quite as “uniform,” the hallmarks of an imminent bull market top are simply not present. The bullish portents apply to intermediate term results, however, they cannot rule out any short-term setbacks (which can appear with no tip-off from breadth or leadership measures).
Strength In Transportation: A Deeper Dive
Bull markets rarely come to an end prior to the Transports exhibiting weakness. Their outperformance continues this year, returning an impressive +9.9% through June 4th, almost doubling the S&P 500’s +5.2%. We examine the underlying Transport groups and assess which areas are providing the strength to help sustain the Transportation Index’s leadership.
The Volatility “Sweet Spot”
Daily stock market volatility has levitated at levels a bit higher than the VIX—in a zone that has historically been “optimal” for short-term performance.
“Old Tech” Profiting From Explosion Of “New Tech” Content?
We identify the “Old Tech” players that will likely reap the benefits from the ever-growing volume of data being generated, stored, and transmitted on line.
10-Year Yield: Back in 250-280 Range
In the very short term, excessive bearish positions have been reversed so there is less downside pressure on interest rates. Over the intermediate term, incredibly low yields in the Euro-zone help cap the U.S. yield.
Risk Aversion Index - New Higher Risk Signal
Surprising strength in the Yen, a drop in commodities, and slightly wider credit spreads pushed up the index. An increase in risk aversion becomes more likely at the current extremely low level. Caution is warranted.
Sector Short Interest Ratios Reviewed
We look at Short Interest Ratios within the S&P 1500 sectors for clues on future market prospects. The Materials sector is one where it has paid to monitor what short sellers are doing (or not doing).
Stock Market
- Story-Telling Time
- Transports Still Leading - Market Top Not Imminent
- The Volatility “Sweet Spot”
- “Overbought” Can Be Good Or Bad
- The Tech Wreck That Wasn’t
- QE: The Third Time Is The Charm
- Running The Math On Mega Caps
- Commodities: Not A New Bull
- Just When You’d Stopped Worrying...
- Dividend Paying Strategies—Which Is Best?
Of Special Interest
Macro Monitor
- 10-Year Yield: Back in 250-280 Range
- Credit Conditions Still Good But Less-Easy Than Pre-Taper
- Risk Aversion Index - New Higher Risk Signal
- US Bond Market
Equity Strategies
Quant
Market Internals
Portfolios
- Core & Global Asset Allocation Portfolios’ Net Equity Exposure Unchanged At 65%
- Domestic & Global Long-Only Portfolios Beat Benchmarks In May; Both Outperforming YTD
- 100% Short Portfolios: Domestic Version, AdvantHedge, Beat Benchmark In May