Tagged: Dow Jones

The Flood

The word of the week was “flood.”

Here in Colorado, Denver had a coup d’état by weather patterns from Portland, Oregon for a week but our streets never ran in torrents. Where the Rocky Mountain watershed empties to the flood plain from the Mesozoic Era, occupied by present-day Boulder, Loveland and Greeley and small towns like Evans and Lyons hugging the banks of normally docile tributaries, the week past reshaped history and landscape. It will take months to recover.

In the markets too there was and remains a flood that surfaces with rising intensity from its subterranean aquifers to toss debris into market machinery. It’s the spreading vastness of complex market data.

SIDEBAR: If you’re in St. Louis Friday, join us at the NIRI luncheon Sept 20 for a rollicking session on the equity market – how it works and why it fails at times.

Data is the fuel powering market activity. Globally, trading in multiple asset classes turns on computerized models that depend on uninterrupted streams of reliable data. This gargantuan global data cross-pollination affects trading in your shares. After all, there are two million global indexes, as the WSJ’s Jason Zweig noted in a poignant view last weekend on modern equities. (more…)

Fade the Move

Have you seen that car commercial with the bearded guy?

The car chimes when you should check the tires. To drive the point home, as it were, we viewers see our bearded fellow getting hired and, as the new boss extends a hand, going overboard with the handshake – until he hears the chime. Then he’s readying with cologne for a date and when he’s about to squirt a supply netherward, the chime stops him. He’s going in for a goodnight kiss with overmuch gusto. Chime.

The chime says fade the move.

Fading the move would be a great name for a rock band. It’s a currency-trading term that means “when your dough moves sharply, be ready for a shift back and re-weight accordingly.”

It caught my eye Tuesday early when faulty Spanish bond data caused a sharp shudder in the euro, which dropped like a stone, juicing the dollar. Adam Cole, currency analyst at RBC quoted in a Marketwatch blog, said that absent a better explanation, “We would suggest fading the move.”

Fading the move abounds in your stock. You announce a big contract win that should add something to multiples of forward cash flow, and in your trading data, speculators are fading the move.

Why? How’d the euro – a global currency second only to the dollar! – juke on jived Spanish bond data? Machines. (more…)

Eternal Motion

“What happened to our stock?”

It remains the question that haunts the dreams of IR professionals. Well, that and whether it’s better to use “via” or “through” in the call script.

Looking back through July Sentiment Indicators for clients, which reflect how passive and active investment, speculative trading, and technical signals affect price, it’s a startling picture. Only two – total! – for the entire month thus far were at any point “green across the board,” meaning each behavior tipped green, rather than yellow or red, signaling the best forward view.

Think about that. If our client base is a reasonable proxy for the market, why is 95% of it something less than “all good”? Surely more than a smattering sport solid fundamentals. In a random group of 100 public companies, are but one, two or five able to earn the best marks?

Say it’s true. Among the companies comprising the national market system (now only about 3,600), say a handful meet criteria every investor, every risk manager, wants. Apply that thinking to a market where index and ETF products number into the thousands – more than the stocks available from which to construct these exchange-traded-funds and the indexes they mimic.

Let’s zoom in our microscope. The Dow Jones US Consumer Services Index aims to track performance of the consumer services sector using 196 components with a mean market capitalization of $9.4 billion. All manner of ETFs are pegged to it, ranging from the ProShares Ultrashort Consumer Services ETF, to IYC, the iShares Dow Jones Consumer Services ETF. (more…)