The Market Perspective

Hedge A Bear Fund

Thursday Dec 31 2020

Hedge is a bear fund, ie it goes up when the market goes down. I put a parabolic stop and reverse indicator on this. HDGE is trading at  3.05 and needs to cross 3.10 to get a buy signal. Given greater overall lack of breadth we should be a buy signal i early January.

Another Perspective on the Over bought Condition

Thursday Dec 31 2020

Only 31% of S & P stocks have a rising PMO. so 31 % are holding up the other 69%. this is further evidence of what our summation index and MAs % show, that the leaers are a smaller and smaller percent of this market.

Rollover Gathering Steam

Thursday Dec 31 2020

NASD begins rolling over

NYSE

 

We have noted the NYSE has been ahead of the NASD in terms of topping, the acceleration is getting underway.

Bullish percent of stocks t NYSE is topping and rolling over.

Dividend Fund

OBV at top rolling over, as is price of DIV and at bottom PMO. This ETF is a good proxy stock for the market.

Oil Demand Has Peaked

Thursday Dec 31 2020

Big Oil, the Party’s Over

BP Predicts Peak Oil has been seen

Japan to mandate all electric cars by 2030

Big Oil Records $145 B Write Down

By BP revised its earlier outlook for a longer demand period for crude oil products. But the update this year suggests that peak demand occurred in 2019-2020. The world-wide reduction in travel due to Covid 19 drove prices negative for some time. And slack demand now has cappe the price of WTIC at $50.

As always the usual suspects are adding to the industry woes. Russia, Iran, and African countries have little to sell other than oil. Over-supply exists world-wide including the US. The best evidence of that is the number of rigs drilling for oil in the US at the close of 2020 is a mere 267. This is the lowest number since 2005. That was the year fracking really kicked off resulting in US Energy Independence for the first time in modern history.

Japanese politicians have declared the country will have all electric cars by 2030. The Toyota Motor Corporation replied that even by then, the electric grid of Jan would not support such a widespread demand. Undaunted, the politicians told Toyota to plan on it anyway.

The cost of removing Trump will be high to the anti-Trump crowd. The same arrogance is occurring in the US. President Joe Biden, having won, now proclaims oil companies pollute, though they are apparently in compliance with current EPA regulations. Expect a ban on fracking on Federal Lands.   As Texas entered the Union as a former nation, the only Federal Lands in Texas are National Parks.   Expect Energy nominee Jennifer Granholm and Gina McCarthy at EPA to regulate most frackers out of business.

The biggest vehicle sales are large pickups, parking lots are festooned with them.   They won’t fit in a normal garage with a foot-print about the size of efficiency apartments circa 1965.  Electric car sales are less than 2% of American vehicle sales.   Will voters revolt over this cram down of cars they won’t buy now? An early warning emerged from California where Democrats lost four House seats in the last election .

California and New York continue to lose population to Texas and Florida. House sails in Austin, Tx are now closing on an hourly basis to well healed former Californians. Will these transplants, loathing Democrat policy, continue to vote for what they rejected by moving?

The stock market ends the year on a new high. But the broader market is sounding at least a correction. The McClellan Summation Index for the NASD and NYSE is rolling over. The number of stocks above various moving averages has started a slow decline.   We cannot know if this is just a correction or a longer term event.   Keep reading this column for updates on just that.

Indicators Rolling to the Downside

Wed Dec 30, 2020

NASD Summation index

Flattening index, RSI peaking

NYSE

NYSE

RSI top dropping PMO at bottom down, index dropping

150 day MA

This indicator shows the broader market is running out of buyers, RSI already down to  50%.

Small Cap Sell Off

Tuesday Dec 29

 

The news said the lack of stimulus sank stocks today. Readers of this  blog know better

We have patiently listed numerous signs of a top forming

record option trading up  40% + over last year

new trading deals in art and collectible cars

TSLA 1,000 P/E

Merger maina, the Tiffany deal finally goes thru

summation index peaking in NASD and NYSE

okay end of year, and the GA senate race looms

stay tuned

Summation Update

Tuesday Dec 29 2020

NASD

The actual index is about where it was at the peak in June. RSI at top is also at the same level.

NYSE

 

As we have noted the last few posts, the NYSE is further along  than the NASD. RSI has already retreated below 70. PMO is falling at bottom. The actual index is turning down, one can see it, okay not big time but it is no longer advancing.

Summation Index versus the actual NYSE Market

The surprise this year was that the pandemic only had a negative effect from February to March. Then everyone stayed home and started speculating. That has taken the markets to new highs witih 25% of the move due to Apple alone.

Indeed yesterday Monday the markets were spurred with cruise lines advancing. And so sector rotation has helped keep the overall indexes high.

Ten Year Perspective

the index is  200 points shy of previous highs. That supports the idea we have an advance into 2021.

150 DA MA

This indicator has begun falling.  The Summation Index is a cumulative advance decline measure. Here we have more a spot measure. Stocks don't get much higher than  90% over their 150 day MA. Again the heavy weighting of a few tech stocks has given a skewed picture of what is really going on.

Manias Beget More Manias

Monday Dec 28 2020

Now one can invest in art holding for several years to cash in on the art mania

https://www.masterworks.io/about/how-it-works

 

a similar investment srategy is under way for collectible exotic cars.

https://www.forbes.com/sites/donnafuscaldo/2019/01/16/the-app-that-lets-you-buys-shares-of-luxury-cars-just-opened-a-store/

 

these would have been great ideas in 2003 and late 2009 but not now. 

An article on page B 1 today notes margin Debt Reaches a Record - $722  billioin. 

One fellow bought  $23,000 in call options on Tesla and made $2 Million. He has now turned the options in to Tesla shares and  SOLD HIS HOME TO BUY MORE TESLA SHARES!

29 million option contracts changed hands EACH DAY    this year, an increase of 48% from  2019.

Mary Roberts hit big with Tesla and is open to borrowinig money to buy more TSLA. Clearly Mary has not experienced a margin call.  She concludes this is what rich people do.

Not at this point in the market. This is all a reminder of the famous story of a  shoe shine boy giving a wealth investor a stock tip in the late 1920s. The investor realized that was a clue the market was topping and sold out.

The S & P is up  66% from its low and there is widespread FOMO Fear of Missing out.

 

Socionomics - what Will Dennis be Watching in 2021?

Monday Dec 28 2020

 

Matt Lampert at the Socionomics Institute asked what I would be watching as a socionomist in  2021.

 

My answer was commercial real estate. We have lived in North San Antonio for  ten years. There are spaces in small retail strip centers that have been vacant that entire time. Now more small strip malls are being built. While  front page article in the WSJ today says Pandemic Changes Seen as Lasting, I just drove by a new office complex going up, even as more decide to work from home!

 

https://www.yahoo.com/finance/news/after-christmas-your-mall-might-vanish-but-it-may-also-be-reborn-185017223.html

After a brutal year for most malls — capped off by a weak holiday shopping season thanks to the deadly COVID-19 pandemic — many that have struggled financially for years may finally vanish in 2021 as their tenants close up shop.

“Bankruptcies and store closings will accelerate again,” veteran retail executive Jan Rogers Kniffen said in a new missive to clients this week.

Of the roughly 1,100 malls left in America, Kniffen believes only 278 are viable in the post pandemic world where online shopping will reign even more supreme. These would be the best of the best malls — or “A” malls as experts call them — that are in densely populated areas and target higher income shoppers.

 

TAMUSA Student Wins Scholarship for Best Socionomics Paper of 2020

Christmas Day 2020

Dennis and Peter,

 

Warm greetings to you this holiday season. As the year draws to a close, it is my pleasure to announce the winner of the 2020 Socionomics Foundation Scholarship Competition.

 

For the past four years, the Foundation has awarded a $1,000 prize to the student who writes what the Foundation determines to be the best socionomics paper. 44 students entered this year, and the competition was fierce. Your students can be proud of their submissions, as several papers merited serious consideration for the prize.

 

This year, the scholarship goes to Amanda Camarillo of Texas A&M University-San Antonio for her paper, “Disney Theme Parks Ride the Bull but Fear the Bear,” a fascinating case study which used the socionomic perspective to perform a comparative analysis on the successes of Disneyland and Disney California Adventure Park. It’s a paper with vast utility for those in the theme park business, as well as those in the broader family entertainment industry.

 

Dennis, would you be able to help us get in touch with Amanda so that we can disperse the funds for the prize?

 

Thank you to you and your students for participating in this contest over the years—and a special thank you for your students’ participation in 2020 during what has been a most unique year for educators and students alike.  

 

Finally, good news: the Foundation Board has voted to hold the scholarship contest for a fifth consecutive year in 2021. We would be honored to receive submission from your students next year.

 

Sincerely,

Matt

 

Matt Lampert

Board Member

Socionomics Foundation