Here comes a test of overhead resistance from May 1st - also earlier this morning. The first try failed but the SPX is coming back for a 2nd test.

Given the equipment you're running, that's no mean feat.

The market remains rangebound. As we touched the upper BB this morning selling commenced immediately. When I'm trading I watch the general market as well as the various stocks I'm trading. While each stock will react somewhat differently, they all swim in the same sea

Not at all. The purpose of this board is to offer as much financial information and education as possible.

If you were in bonds last year you may have felt like you went through the Great Depression. Actually it was much worse. The worst year for bonds in almost 100 years. The quadrant chart above from Black Rock shows that bonds seldom exhibit a negative return and as the previous Barron's article outlined, bonds should exhibit a nice return over the next several years.

Is it time to return to a 60/40 stock/bond portfolio? From Barron's:

A Fed Pause Could Be an ‘Almost Generational’ Opportunity for Bond Investors

Bonds are having a moment. With the Federal Reserve expected to be at the end of its interest-rate hiking cycle, investors are reassessing the fixed-income market—and looking to high-quality bonds with intermediate maturities as the best bet for stable income.

Investment-grade corporate bonds are now yielding around 5%, up from about 2.8% two years ago. Such plump yields cushion bonds against the possibility of negative total returns if the pundits are wrong and the Fed keeps tightening.

In fact, bond pros think the total return potential for bonds this year exceeds that of stocks. For fixed-income investors, that would be a welcome change from last year, when U.S. bonds lost a dismal 13% on a total return basis.

“Now that we’ve gone through the dark tunnel, we’re seeing the end—and it’s sunny outside,” says Benoit Anne, lead strategist of the investment solutions group at MFS Investment Management. “The stars have aligned now for fixed income to do quite well in the period ahead.”

In June, the Fed is expected to pause—meaning hold rates steady, after raising them at each meeting since March of last year. The bond market may be pricing in 2023 rate cuts that might not materialize, says Kristy Akullian, senior iShares strategist at BlackRock. Instead, investors could see a more typical pause playbook, with the Fed holding rates steady at least through the end of the year.

Since 1990, the Fed paused an average of 10 months between the last rate hike and the first cut of each cycle, according to a BlackRock analysis. Every time, the bond market initially rallied, then experienced volatility as the cut approached.

This climate offers an “almost generational” opportunity in fixed income, Akullian says. The potential for total return is greater now than it will be as the Fed starts to loosen. Rate cuts will boost bond prices and decrease yields, eating away at future total returns.

The sweet spot on the yield curve is between about three and seven years, unlike last year, when the short end of the curve was more attractive, Akullian says. “It’s not a bad thing to own some duration right now,” says Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions. Shorter-maturity yields are best when inflation is hot and rates are rising rapidly.

Investors piling into three-month Treasury bills at around 5.2% should remember that’s an annualized yield, Janasiewicz says. To achieve it, you’d need to reinvest your T-bill at the same rate three more times as it matures. Given that rates may fall in the next year, he agrees with Akullian that three- to seven-year maturities are the strongest choice.

Exchange-traded funds like iShares Core U.S. Aggregate BondAGG –0.35% (ticker: AGG) offer exposure to high-quality U.S. bonds in the belly of the yield curve. The average yield to maturity is 4.33%. That fund includes Treasuries; for corporate-only exposure, the iShares iBoxx$ Investment Grade Corporate BondLQD –0.36% ETF (LQD) now yields 5.03%.

With junk bonds offering rates of 8% or so, it might be tempting to venture into high-yield territory. But with a possible recession—and the resulting rise in defaults—they’re risky.

As bonds outperform, cash loses some of its luster. Historical data show that cash exposures return less on average than core bond and short-term bond exposures when the Fed stops tightening, BlackRock found. From 1990 to early 2023, core bond exposures performed 4% better than cash equivalents on average when the Fed held or dropped rates, while high-quality short-term bonds performed 1.9% better than cash.

“The overweight to cash was the big story of last year,” Anne says. “But everything comes to an end.”

The original article posted by semi_infinite was from the New York Times and not Michael Bloomberg. The article discussed an ongoing issue in the Gulf with abandoned oil wells. It is an article about properly capping mainly off shore oil wells. Since no one, to my knowledge, is pumping oil from deep under Gulf water with a 'green windmill', I think it's highly unlikely they will "face the same problem in a few years". It's not that there aren't problems but the problems are quite different.

You are also correct. This is a core tenet of Bollinger Bands.

We've now had 32 market days of extraordinary calm and that includes the regional banking issues. An SPX move upward to close at more than 26 points above today's close would indicate a possible break in this quietude.

That seems correct. It will have to be a bipartisan agreement that excludes the election deniers. They clearly don't care about democracy.

I know, the otter has that one staked out...:)

Nice, and Schwab owns TDA now so it should be easy for anyone with a Schwab account to use these tools or maybe move some cash over to a TDA account if they're not integrated.

I'll be fishing.

You're welcome Nick. You'll need to keep making money because I understand the government is going to need a loan in June..:)

Sounds like a good solution.

Berkshire exits $4B stake in TSMC over location issue.

https://www.cnn.com/2023/05/16/investing/berkshire-hathaway-taiwan-tsmc-stock-exit-hnk-intl/index.html

Only when they have functional rockets.

I've traded options for almost 25 years as an adjunct income stream to my income portfolio. My goal has always been to add an extra 2% a year. Over time that adds up nicely. For example, if a holding moves up to an area where I think it's a bit over valued I'll sell options on 25-30%. Most of the time the stock will revert to mean and I'll just collect the option money. If it doesn't I'll receive more cash and almost always have another company where I'd like to open a position. Rinse, repeat. Option buyers lose money ~90% of the time. Most of the buyers are market makers so you know they're not actually losing money. When retail investors try to buy options they almost always light their capital on fire.

Nick's methodology is quite different. He is successfully using options as a primary income stream. I'd try it but, it's a lot of work and I'm lazier than Nick..:)

Could you back that up with facts? Thanks.

I haven't used this course but I do use Investopedia on a regular basis and find it quite useful. The course is $200 but sign up for the daily newsletter and you'll get it for $170.

https://academy.investopedia.com/products/options-for-beginners

From your lips to Ms. Market's ears. This was a classic breakdown. After this morning's drop the bulls took over from about 10:15 until just after 12:30. When the bulls attempted a new high at 1:00 the bears took over and there was a slightly lower high. Then the direction was confirmed with a lower high at 2:00 and a test of support at 2:30. When the bulls failed to get a new high at 3:30 the market moved down quickly. Notice the blip up around 3:40 right at support. When that didn't hold it was straight down.

And where did we stop? Right at the two day support line from early yesterday. I'm not suggesting this was tradable as the return would have been $36 on a $10,000 trade. But I've seen this exact pattern hundreds of times on a daily chart. At that scale, these make very good trades returning 10-15% over 2-3 weeks. When I'm trading I always keep a 1-minute, 5 or 10-minute, hourly, daily and weekly chart up on one of my screens and the trading platform on another screen while I do research on my laptop.

Although somewhat expensive for the version that allows custom conditions and automated market scans, to my mind the best platform for serious traders is DeMark Symbolik. Familiarity with TA and light coding basics is required to make the most of it. I used it for several months while it was in beta testing a couple of years ago and gave it up when they couldn't resolve a bug that created havoc with a couple of my favorite and more complex condition sets. When I have more time I'll get back to it now that it's in full release.

Here's a 2:00 update for the SPX 2-day chart. So far, no one will make a move. If it's going to happen today, 3-3:30 is the most likely time for a market maker to either start buying big or stop buying and scare the rest of the herd.

Saw this posted this morning when HD missed earnings by the worst margin in 20 years. Management says; no one is buying. Not just a dumpster fire but a dumpster fire in a flood.

The market hasn't been this sleepy in a couple of years. A few more days like this and we'll be setting a record for lack of volatility. Upper Bollinger band is at 4,184 and the lower band is 4,062. That's an average of under 3%, (two standard deviations), for the last 20 trading days. This was ~9% six weeks ago.

Crickets

And it's getting even sleepier...two day chart below.

Nick, CCI looks good for an income portfolio. I'll have to look at this one much closer.

gfp, I'm only looking at the technical indicators. The real world always intervenes but we can never know what the future holds. Bollinger says the market is uncommonly calm. What we're looking at is JB's 50 years of analysis experience. We can't even say with certainty why this works. It may have been so good for so long that it's written into all the algorithms on Wall Street. I tend to think it's the tail wagging the dog at this point but like all TA it doesn't matter. Most of the folks on Wall Street are maybe half as bright as they think they are. They want to look smart, dump this into their code and now almost everyone is using this trigger and they all look smart when in reality they're just lemmings jumping off a cliff at the same time.

As I've said too many times, TA does not tell me what to buy only when is the most likely time to buy and sell at a profit. TA tells us what Wall Street is doing. With experience it tells us when they're most likely to do it. They are British soldiers marching in columns in a field, we're Native Americans hiding in the forest, waiting to pounce. It's the only advantage we have but it's a damn good one.

Below is a one year chart of the SPX that I've published here previously. For 10 months SPX 3,900 was the mid point for the market. In early April this year the market again moved up and since then has been flat. Not relatively flat, almost completely flat. In the top two panels; PPO and RSI, we see absolutely nothing. In the main panel, the Bollinger Bands and will continue to narrow and begin to move down slightly through the week barring any volatility. In the three panels below we see the VIX falling, accumulation continuing and Bollinger Band width narrowing to a point not seen since December 2021, (not shown on chart).

So what is this telling us? A central thesis of John Bollinger's research is that periods of non-volatility are followed by periods of increased volatility. BBs do not predict market direction, they predict that periods where little volatility is evident will be followed by volatile periods in the market. That is, we can expect either the lower or upper band to be breached and volatility to resume within the next week or two.

Dish Network, (DISH), is a company renting typewriters in the era of computers. A decade ago when internet speeds were measured in megabits per second and not hundreds of megabits per second, DISH and its competitor DirecTV were the kings of high quality media delivery. In 2015 the geniuses in charge at AT&T bought DirecTV for $67B. They would have had more success setting fire to that cash.

Back to DISH. This was a company trading for almost $80 a share when T bought out their competitor. DISH closed on Friday at $6.16 or ~$3.3B in market cap, down over 90% in the last eight years. What got me interested in looking at this longer than the usual corporate funeral procession is that the enterprise value is almost $23B, (all the stuff we got minus all the stuff we owe). It appears DISH is still valuing their $30B investment in wireless spectrum at something close to $30B even though that appears to also be a failed attempt to reform DISH as a VZ, T and TMUS competitor.

So, of course, Wall Street has them as a buy even though they have 2-3 mountains of debt and a very likely over valued group of assets like aging satellites, ground infrastructure, a non-competitive wireless offering and a less than compelling streaming service, (Sling). It appears the market has DISH valued about right but the vultures may be waiting for a BK buyout to ensure most liabilities disappear. Like I did with BBBY, I've got this one on death watch. Traders could read Reddit to find out if this will become the new meme stock before it flames out. After all they are the Game Stop of media delivery.

Notes from Barron's: Icahn Enterprises, (IEP) - yeah, that guy, Carl Icahn, stock is down 36%. People own this stock because it pays a massive dividend. Before the company came under attack by other activist investors it paid a 16% dividend. Now that dividend is 25%.

Let's file this under; if it sounds to good to be true, it's probably not true.

IEP trades at 3.2X net asset value, (NAV). That seems more than a bit high for a company that's not growing. So how can they afford to pay a, now, 25% dividend? Here's the magic trick, Carl owns 84% of the company and he takes his 'dividend' in stock so effectively the dividend is 4%, (25*.16). But that's not all folks. He then sells additional shares to pay the 4% owed to other share holders. To say the least, he's massively diluting the share value.

An analyst just published a paper explaining how Icahn can continue to do this: In brief, Icahn has been using money taken in from new investors to pay out dividends to old investors. Isn't there a name for that type of business..:)

The U.S. Attorney’s Office for the Southern District of New York is also trying to understand how Icahn values his company. Carl has been wrecking companies for 50 years. Maybe he'll finally get taken down.

And the operative phrase...have been.

Surprise comrade; you'll be fighting evil on the front lines in Ukraine.

Peloton, (PTON), is another pandemic meme stock that has fallen on hard times. This stock was valued at $57B in early 2021 when everyone wanted to get in some exercise as far away from other people as possible. Today it hit a fresh new low and is valued at $2.4B. PTON loses $300-400M a quarter. More than 10% of the outstanding shares are shorted.

And in more good news for PTON, they've issued a recall on 2.2MM bikes. It appears the seat posts were fine for the biking fitness crowd that still uses PTON but not so much for the millions of average, McDonald's eating, Americans who took it up during the pandemic.

The demise of PTON is not all that surprising but what I find most interesting here is that some entity or entities have been accumulating shares for over a year. TROW owns ~15% of the company. At the current rate, BK or an acquirer seem like the only options. Who can buy them, fold this into other services and make a profit? PTON is already in a partnership with AMZN.

Like all perceived seers, AI will look a lot smarter than it is as long as people believe it can see the future; simply a self fulfilling prophecy. When it really starts working well, market makers will keep as much of this out of the hands of retail investors as they can - for as long as they can. This is how the market has always worked.

Groupon, (GRPN), is a sad tale that took 12 years to tell. Like the character in the Holy Grail, they're not dead yet. They went public in November of 2011 at $20 a share. Moved up to $26 over the next couple of weeks and then dropped to $15 over the next three trading days. Within a year they were trading for under $3. They never really recovered and in 2020 they did a 1:20 reverse split. If you'd have bought $10k in GRPN stock in 2011 it would be worth $85 today. This $13B company is valued at $110M today. I've no idea why it's valued at anything above zero. It's an online version of BBBY. They provide a service where almost no one finds value.

File this one under I'd rather be lucky than smart. I sold Disney, (DIS), for a small gain in early February, (see my post 2/7), because there was trouble on the board and with the streaming business. Also, still no dividend. The mouse just choked on his cheese this morning and they're down over 15% from that sale price. I'm becoming quite happy with my very boring fixed income investments.

Musk is stepping down as CEO of Twitter and there's talk of Space X going public at a $140B valuation. This would include the launch operations and Starlink. Interesting idea. TSLA shares should have a nice bump up in the morning.

Sounds like an interesting strategy for traders. Do you know if it worked for TSLA when it hit $105 at the beginning of the year? Post a chart if you can.

Yes. I'm not sure what the paper versions cost but I'm sure it's much more. I haven't even read a paper book in a decade. It's so easy to annotate and make notes in e-books. Also I like to post some of the articles I read and it's obviously not possible with paper.

That's it exactly. PPO tends to predict what will happen while MACD too often tends to tell you what has already happened. With RSI, BB, A/D it makes for a useful trading tool.