Macro Month in Review/Preview August into September 2013

Written By: DragonFly Capital

Last month in this space my Monthly Macro Review/Preview had the monthly outlook suggesting that Gold and Copper would continue to consolidate with a bias lower while Crude Oil continued to advance, as it watched Natural Gas look for a bottom in its move lower. The US Dollar continued to consolidate in a tightening range while US Treasuries looked to continue lower. The Shanghai Composite and Emerging Markets looked to continue to move lower as well, while the German DAX looked for strength to break consolidation higher. Volatility looked to remain low keeping the bias for equities higher. The Equity Index ETF’s SPY, IWM and QQQ were all looking better to the upside, with the SPY and IWM slightly overbought. How does an additional month impact the longer term picture? Let’s look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

Metals

Gold, $ GC_F
gold pitchfork

Gold rebounded off of the Hagopian Trigger line from the rising Pitchfork in August. The rise touched the 50 month Simple Moving average (SMA) and pulled back slightly. The 61.8% retracement of the move higher from 2008 has been confirmed as a bottom. This is also about 38.% of the longer move higher from 2001. The Lower Median Line seems to be attracting it higher with the Relative Strength Index (RSI) moving higher as well. This is not even at the mid line yet though so calling a new long term bullish trend is premature, and the Moving Average Convergence Divergence indicator (MACD) is continuing lower. It will take a break down below the prior support at 1180-1240 to continue the down trend. This would also break through the Hagopian Trigger line giving a new short signal. Support below that is found at 1080 and 980. The next major resistance is at 1500 and 1550, where the neutral trend broke down from. Continued Bounce in the Downtrend.

Copper, $ HG_F
copper

Copper moved slightly higher in August along the rising Lower Median Line of the bullish Andrew’s Pitchfork (green). The RSI kinked back higher with the MACD continuing lower but leveling on the histogram. The bounce is confirming the importance of the support area at 3.00. There is support below that at 2.87 and 2.50. Below that would move the price back within the bearish Pitchfork. Resistance higher comes at 3.35 and 3.85 and a move over that is very bullish. Neutral.

Fuel

West Texas Intermediate Crude, $ CL_F
oil pitchfork

Crude Oil gave a buy signal in July moving above the Hagopian Trigger line and confirmed it in August rising further. The RSI also ticked higher and the MACD crossed up and is rising. Signs point higher. It may have some trouble as it approaches the middle of the Median Line and Lower Median Lines from the bullish Andrew’s Pitchfork and resistance at 116. There is no major resistance above that until 147.27. A move over 116 also triggers a Measured Move higher to 158 from the break of the ascending triangle. Support lower is found at 98 and 92 followed by 84 and 80. It would take a move below 80 to turn bearish on Oil. Upward Bias Continues.

Natural Gas, $ NG_F
natgas

Natural Gas continued to find support at the 20+ year rising tend line, printing a hammer in August. If Confirmed it would make for a 3rd consecutive higher low after a third consecutive higher high, building an uptrend. The RSI held at the mid line during this pullback, also a positive sign. But the MACD looks to be leveling and is reversing on the histogram, still supporting a downside move. A reversal higher sees potential resistance at 3.85 and the previous high of 4.44 before the top of the 2010-2011 channel at 4.87. Over that is very bullish. Support lower comes at 3.33 and 2.80 followed by 2.10. Under 2.10 reaffirms the longer term downtrend from the 2008 peak. Consolidation in the Intermediate Uptrend.

Currency & Debt

US Dollar Index, $ DX_F
usd

The US Dollar Index continues to move sideways in a tightening range around the 81.28 level. The RSI is holding near the mid line as well, with a slight bullish bias while the MACD is rising, also supporting the upside. There is resistance at 83.40 and 86.50 followed by 88 and 91.60. Over that would be very bullish and trigger calls for 100 and more. Support lower comes at 81.28 and 78.60 followed by 75 and 73. But none of this matters until it can break out of the range 80 to 85. Continued Consolidation.

US Treasuries, $ TLT
tlt

US Treasuries, as measured by the ETF $ TLT, continued their pullback in August but are showing signs of a bottom. The Hammer candle is now the third candle with a long lower shadow in a row with this one piercing the 61.8% retracement of the move higher from 2011. The RSI continues to sink though, and is at 10 year lows, as does the MACD. Resistance is higher at 107 on a reversal with 112 above that. Over 112 will likely get bond bulls jumping in. Support lower is at 102 and then 98 before stronger support at 96.50. and 90. Looking for Signs of a Reversal in the Downtrend.

Foreign Markets

Shanghai Stock Exchange Composite, $ SSEC
ssec

The Shanghai Composite continues along the falling channel showing no signs of wanting to change direction either way. Like a slow decay. The RSI continues to run under the mid line with the MACD flat as a pancake. The 200 month SMA has been giving support and a break below that shows support at 1970 and then 1750 before the previous bottom at 1661. Resistance higher is found at 2200 and 2425 with a move over that turning many bullish. Continued Downtrend.

German DAX Composite, $ DAX
dax

The German DAX continued its high consolidation in August holding at the triple top. A move over 8600 can continue on to the Potential Reversal Zone (PRZ) of the Deep Crab Harmonic at 11,000. There is a smaller Deep Crab within the right triangle of the bigger one that has a PRZ at 9200 as well. The RSI has been working lower slowly during the consolidation with the MACD leveling. These suggest more consolidation or a possible pullback first. Support lower comes at 7600 and then 7100. Consolidation in the Uptrend.

iShares MSCI Emerging Markets Index, $ EEM
eem

Emerging Markets, as measure by the ETF $ EEM, continued the meander sideways that has been going on for 4 years. Boring. The RSI is now running lower but holding over 40 with a MACD that is flat near zero. Also boring. There is support at 38 and 35.25 with a move under that likely leading to some excitement to the downside. Resistance is at 44 and 50.70 with a move over that very bullish. For now though….. Continued Consolidation.

US Equity Markets

VIX, $ VIX
vix

The Volatility Index remained low for August but is starting to show some interesting characteristics. The range is expanding and many will conclude it will lead to a move higher, if only because it has been so low and does not have much room left below. This could be, but the SMA are continuing to point lower. Over 16.45 it now has resistance at 19 and about 24. The period from 1995 to 1999 reminds us that it can rise along with the S&P 500 so it is not necessarily an indication of a market sell off. Support below 16.45 comes at 13.50 and 12 before 10. Continued Low Volatility.

SPY, $ SPY
spy

The SPY printed a bearish Dark Cloud Cover candlestick for August, if confirmed in September. The close brought the price back to the mid line between the Upper Median and Median Lines of the bullish Andrew’s Pitchfork. Certainly some consolidation would be welcome to long term bulls. The RSI is holding strong in the high 60′s with a MACD that is rising. These support a continued bull case higher. There is support lower at 157.52 and 153.20 followed by 144 (A Fibonacci number). There is no resistance over 170.97 but a Measured Move to 190. Consolidation in the Uptrend.

IWM, $ IWM
iwm

The IWM continued to creep higher in August before pulling back in its own Dark Cloud Cover. The price has been moving up along the Lower Median Line of the rising Pitchfork. The RSI is strong in the mid sixties after a slight pullback from being technically overbought, with a MACD that continues to rise. These support the bull case higher. On a pullback there is support at 94.50 and 86.50 the neckline of the Inverse Head and Shoulders. Resistance higher is found only at 105.63 the high of the month, and there is a price objective of at least 138 from that Inverse Head and Shoulders. Continued Uptrend.

QQQ, $ QQQ
qqq

The QQQ continues the creep higher along the Median Line of the bullish Pitchfork. The Bollinger bands are running right along with it and the RSI is strong if not verging on being technically overbought. The MACD is running very flat and has been for about 3 years. There is resistance higher at 82 and then 102.50. Support lower comes at 71 and 61.60. Continued Uptrend.

The monthly outlook suggests the upside for Gold will continue while Copper consolidates. The uptrend in Crude Oil looks to continue while Natural Gas tries to reverse higher off of support. The US Dollar Index is still consolidating while US Treasuries may try to reverse the downtrend. The Shanghai Composite looks to continue to move lower as Emerging Markets continue to bore moving sideways and the German DAX looks higher, but may continue to consolidate first. Volatility is expanding but remains at low levels supporting upside in the equity markets. The Equity Index ETF’s SPY, IWM and QQQ are all set up to continue higher in the coming months from their price action. As noted on the individual charts there is room for some short term downside without breaking the upward bias, with the SPY looking the weakest. Use this information to understand the long term trends in Equities and their influencers as you prepare for the coming months.

The post Macro Month in Review/Preview August into September 2013 appeared first on Dragonfly Capital.

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Child support litigation in Israel

An Israeli reader who saw my posting on divorce and child support laws in Denmark sent me an article from Israel.

The facts of the case were the following:

  • a divorced father earned 13,000 shekels (approximately $ 3600) per month and lived in a rental apartment
  • a divorced mother earned 18,000 shekels (approximately $ 5000) per month and owned a house
  • “the children spend more than half of their time with the father,” said the judge

Israeli law has a built-in gender bias, with divorced fathers who lose custody responsible for 100 percent of the cost of their children and 75 percent of the cost where the kids’ time is divided between parents. A divorced mother with a job, however, may have to pay a share of “extras” such as vacations for children.

With these facts, the mother sought to have approximately 100% of the father’s after-tax salary transferred to her as child support (“she had sued for over 13,000 shekels a month”). The judge concluded that the mother was entitled to just 2% of what she was seeking (300 shekels per month; roughly $ 83) and that it wasn’t worth ordering that this small amount of money be paid from one former spouse to the other.

Israeli readers: How does it work over there? What typically happens when middle/upper income couples with kids split up? Can a parent make a substantial profit on child support payments? Would you have been surprised if this mother had succeeded in collecting 100% of her ex-husband’s income?

Philip Greenspun’s Weblog

Learn Options Trading with these 2 Great Books

Over the years I have read and reviewed many books on the market covering a variety of topics. When it comes to learning options trading specifically, there are two great books that I always recommend when talking to friends and family.

Yet, among the several dozen options trading articles here on the site, I realized I have never written a blog post on the books I enjoyed so much as a beginner and still reference today.

The Options Playbook, 2nd Edition

$ 25.41 – Amazon.com

options playbook

This book is written by Brian Overby, the options guru from online broker TradeKing. What I love about this book is the opening few sections, which break down the basics of options in everyday terms, using loads of images to break through the over complex mumbo-jumbo.

After introducing the basics of buying and selling, greeks, strategy, risk, etc. the rest of the book is dedicated to breaking down 40 different options strategies. What I enjoy most about this section of the book is the format. Each “play” is visualized with a giant graphic alongside a breakdown of the setup, who should run it (extremely important as experience really does matter), several tips, and finally strategy details.

Fantastic for beginners, I highly recommend this book for those looking for a solid surface level intro to options. The only gripe is that it is only available in a spiral hard cover format, no paperback version or kindle version.

The Rookie’s Guide to Options, 2nd Edition

$ 22.23 – Amazon.com

rookies guide options

The book is written by a long time friend of mine, Mark Wolfinger, who wrote most of the options education articles for StockTradingToGo.

The Rookie’s Guide to Options is longer and more in depth than The Options Playbook. Furthermore, the format is much more text heavy versus the visually friendly Options Playbook. Lastly, the book includes Quizzes at the end of each chapter which serve as a nice recap as you progress.

Mark is a 23 year veteran of the CBOE (Chicago Board of Exchange) and has a very conservative approach to trading options. As such, Mark reflects this in his book, spending extensive time on conservative strategies such as covered calls, collars, and the like.

With options being so complex, Mark’s focus is longevity and capital conservation, not getting rich quick, and that is a critical foundation for any new investor, not too mention veterans.

The Rookie’s Guide to Options 350+ pages will take time to read as it is detailed and in depth, however I highly recommend it to all new investors who want to take options seriously and desire to be successful over the long haul.

Other Valuable Resources

The best broker for trading options – See section “Options Trading” within the StockBrokers.com 2013 Broker Review

Iron Condors – Read the Bullsh*t Free Guide to Iron Condors

Online reference for options strategies – See this interactive site from TD Ameritrade.

Options articles – Bookmark our options education homepage

Original post: Learn Options Trading with these 2 Great Books


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Cleveland’s Best Linkfest!

Written By: DragonFly Capital

Charts/Markets/Business/Economy You Might Not See Otherwise

oil inflation adjusted

Gasoline prices rise faster than middle-class wages cleveland.com

With Huge War Chests, Activist Investors Tackle Big Companies Dealbook

Ohio State OKs $ 100M for ventures The Columbus Dispatch

Investing: Don’t let fear flatten your portfolio USAToday

Harley-Davidson marks 110th anniversary with upscale features The Columbus Dispatch

GameStop Expo offers preview of next-generation games Ohio

Fledgling distillery industry says state regs keep their spirits in check cleveland.com

Who knew Bank of America was even in Ohio? Ohio

8-27-2013 9-09-32 PM

Cleveland Flair

The Bi-Centennial is on! Get out to Put-in-Bay to celebrate and watch a reenactment of the Battle of Lake Erie. There are a slew of events to keep you occupied.

On your way there stop at the 55th Milan Melon Festival for a refreshing treat and lots of entertainment.

Or do a 180 degree turn and head out to Buffalo,NY for the National Buffalo Wing Festival.

Down in Troy, the Gentlemen of the Road has a stopover and Saturday it features one of only 3 US engagements by Mumford and Sons. Worth the haul out there.

Closer to home at the Cuyahoga County Fairgrounds, the 2013 Cleveland Oktoberfest, takes place all weekend.

or checkout the 99th Annual St. Rocco Festival on Fulton Road,

The Orchestra gets into Pixar in Concert out at Blossom Saturday and Sunday

But ZZ Top plays Jacobs Pavilion Sunday if you prefer a Sharp Dressed Man

Dragonfly Facts

Because the sets of wings operate independently, dragonflies can hover in one place for up to a minute.

The post Cleveland’s Best Linkfest! appeared first on Dragonfly Capital.

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The Nasdaq Out-Performance May be Slowing

Written By: DragonFly Capital

A couple of weeks ago the Nasdaq took over leadership for certain among the indexes. I made the case in Is There A New Index Leader? at the time. Running the clock forward a couple of weeks sees that the this out-performance may be coming to an end. If you look at the ratio chart of the Nasdaq to the Dow Jones Industrial Average, using there ETF doppelgangers $ QQQ and $ DIA, you can see that the ratio leveled out this week. The Relative Strength Index (RSI) of the ratio has been overbought and worked that off, so it may be ready for another leg higher. But the Moving Average

qqq-dia

Convergence Divergence indicator (MACD) is level on the signal line at a very high level with a histogram that is pulling back. This suggest more pullback is in the cards. Not a sign of panic yet, but if you have been playing the Nasdaq against the Dow it may be time to take some profits. Maybe buy some burgers, dogs and beer and celebrate this weekend.

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Dragonfly Capital Views Anniversary Celebration

For a limited time the Opportunity to join the Dragonfly Capital Views Premium Membership on an Annual basis is available for only $ 600.

This is 20% off of the standard annual subscription price and nearly 45% off of a rolling monthly membership! Don’t miss this limited opportunity to join or upgrade! Sign up here.

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How to measure the microwave heating of milk in a plastic cup?

Here’s one for the chemistry, chemical engineering, and mechanical engineering graduate students out there…

What’s a good way to measure the uniformity of heating of milk in a plastic cup in a microwave oven?

Explanation: I have watched a new mother pour milk into a plastic cup with measurements on the side to determine the quantity, then pour that cold milk into a ceramic coffee mug to be heated in the microwave for 30 seconds, then pour the warm milk into a plastic sippy cup to be served to a toddler (3 items to wash). I have observed day care workers perform the same task by heating the milk in the plastic server cup (1 item to wash).

When I have inquired of mothers dirtying either 2 or 3 dishes in serving a cup of milk what their reasoning was, the answer was “It is bad to microwave food or drink in plastic.” Why? “Hot or warm liquid will pull dangerous chemicals out of the plastic.” What about the fact that they were going to then take the warm liquid and immediately dump it into the plastic? If the temperature was a problem, wouldn’t the warm milk hitting the sippy cup leach out whatever dangerous chemicals were in there just about as badly as if the milk had become warm in the microwave? Blank stare in response.

An acquaintance who works for Harvard University managing engineers building scientific experiments opined that the mothers were likely right. “The milk right up against the cup might get super hot while it is in the microwave while the milk in the center remains cold.” I pointed out that this didn’t make a lot of sense given the relatively long wavelengths of microwave cooking energy compared to the size of a sippy cup (Wikipedia says standard frequencies for microwave ovens are .9 to 2.45 GHz, resulting in wavelengths of about 5-12 inches). And wouldn’t convection and conduction within the liquid also make the heating pretty uniform? Hot spots seemed more likely when microwaving solid foods. We put some milk into a sippy cup and tried an on-the-spot experiment. Using sophisticated temperature probes (i.e., our fingers) we couldn’t discern any differences between the edge and center temperatures.

How would one construct an experiment to do this in an actual microwave oven and measure the edge and center temperatures continuously as the milk is heated? (we stuck our fingers in only once the milk was done) There are plenty of infrared temperature probes, I think, that don’t require contact with the item being measured, but I don’t know how well they would operate if stuffed into an operating microwave oven.

Philip Greenspun’s Weblog

Stale Bagels Einstein

Written By: DragonFly Capital

While creating last weeks watch list over the weekend there were a few choices in the retail space. One of them that did not make the cut was Einstein Noah Restaurant Group, $ BAGL. Come on, restaurant group? Really? Well in any regard the chart looked pretty good Saturday. I have put all of the price action since the weekend into the blue box so that you can see easily. The set up this weekend showed a strong Relative Strength Index (RSI) and a Moving Average Convergence Divergence indicator (MACD) that was improving. The price was sitting at a double top and a push through would trigger a Measured Move higher to just short of 19. It is not widely traded with only about 100, 000 shares trading hands on a good day, but hey I was not going to buy that much anyway. I’m not Bill Ackman you know. All it would take was a push through the resistance at 17.15 to set up what could be a 10% return. But look what has happened since then. No trigger Monday

bagl

and Tuesday triggers but cannot hold, and with a long upper shadow. Topping Tails comes to mind. Wednesday sees another probe higher fail with a long upper shadow and now Topping Tails has turned into Tweezers Top. You do not have to be as smart as Einstein at that point to drop it from the long break out watch list and look for a move lower. Exactly what happened Thursday. The lesson to learn here is that you should not cheat your entry. If you want to play a breakout you can certainly enter early and keep a tight stop. You had the potential to get stopped out twice in this name. And while waiting for a confirmation of the breakout costs you something in the return if you are right, the number of times you are stopped will likely cost you more if you add them to your performance than what waiting did.

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Dragonfly Capital Views Anniversary Celebration

For a limited time the Opportunity to join the Dragonfly Capital Views Premium Membership on an Annual basis is available for only $ 600.

This is 20% off of the standard annual subscription price and nearly 45% off of a rolling monthly membership! Don’t miss this limited opportunity to join or upgrade! Sign up here.

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Dragonfly Capital Views Performance Through August 2013 Expiry and sign up here

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Options Trading as a Career: How to Find it

What does it take to become a successful options trader?

This is a very complex question, but we will try to give a few brief thoughts on the subject. Most people believe that to be a successful options trader, it simply requires learning one of the many options trading strategies that provide the trader an edge over the market over time. Does this mean that taking a $ 5,000 weekend seminar or weekend course will arm you with all that you need to start making money the day after the course is over? Hardly.

New options traders often fail to see what is truly required after you learn a particular strategy. It’s not as simple as reading about a trade method, then taking a test and getting Read more […]
SMB Capital – Day Trading Blog

Chevron: A Technical Analysis Lesson and a Trade

Written By: DragonFly Capital

The Chevron ($ CVX) chart poses an interesting learning lesson which leads to a trade set up and it deals with the Positive RSI Reversal. A Positive RSI Reversal occurs when the the RSI (Relative Strength Index) makes a new lower low in an uptrend while the stock price does not make a lower low. This technical set up targets a rebound higher in the stock price that makes a new higher high and is equivalent to the last move higher off of the RSI low. Very similar to a Measured Move higher. This has now happened twice n the last 3 months in Chevron. Look at the chart for Chevron below. I have removed everything but the price and RSI from the chart to keep it cleaner. You can see the first time that the rebound made a new

cvx

high but did not move the full 13.27 points of the prior move, but still almost 90% of it. It currently made a new lower low in the RSI August 21st without the price making a new lower low. If this Positive RSI Reversal plays out it would target at least 127.84 and look for a move to 129.11, equivalent to the last move higher. The symmetry of the last two moves also suggests that it should happen in 4-5 weeks from the bottom or between September 25th and October 2nd. Kind of changes your view that you may have missed it, doesn’t it.

____________________________________________________________________________________________________

Dragonfly Capital Views Anniversary Celebration

For a limited time the Opportunity to join the Dragonfly Capital Views Premium Membership on an Annual basis is available for only $ 600.

This is 20% off of the standard annual subscription price and nearly 45% off of a rolling monthly membership! Don’t miss this limited opportunity to join or upgrade! Sign up here.

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through August 2013 Expiry and sign up here

The post Chevron: A Technical Analysis Lesson and a Trade appeared first on Dragonfly Capital.

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Manhattan real estate prices… in Cambridge

I live in a four-unit condo near Harvard Yard (see the epic tale of my purchase back in 1996). The ground floor unit recently went on the market for $ 429,000. Very shortly five bids materialized, all over the asking price. The accepted bid was for $ 480,000.

What was bought? The broker, from perhaps Cambridge’s largest real estate firm, listed the apartment as 1363 square feet in the MLS (realtor.com entry for 5 Irving Terrace). The city lists 5-7 Irving Terrace, Unit 2A as having 713 square feet and being worth $ 349,300 (property database). What is actually inside the unit are two rooms: one bedroom plus a combined kitchen/living room. If you hired someone to refinish the floors they might find 500 square feet. How did the realtor manage to find 1363 square feet for this small one-bedroom? An old version of the condo docs had this apartment combined with another. They were later (20+ years ago) split into two separate condos. Folks who showed up expecting 1363 square feet and found a small one-bedroom were apparently not discouraged, though, based on the number of bids.

If we take the city’s 713 square footage, the place sold for $ 673 per square foot, but in terms of usable interior space I think the total square footage is closer to that of a 500 sf place in a modern building, which gets us to $ 1000/sf, i.e., what people pay for an apartment in Manhattan. The apartment includes a driveway parking spot, which is a plus, but the kitchen and bathroom would need $ 30-50,000 of work to bring them into the modern era.

This supports my theory that the suburbs will be abandoned by the wealthy (May 2013 posting) due to the horrific traffic congestion in our metropolitan areas. Rush hour getting out of Cambridge through Alewife now extends until about 8 pm, but you can buy your way out of sitting in traffic if you’re willing to spend $ 480,000 on a one-bedroom apartment (plus kitchen/bath renovation costs and, very possibly, your share of a new roof (see below)).

Separately, in case you are ever tempted to trust a realtor…. the broker selling the unit had previously been managing the place for the owner as a rental. He thus became aware of an issue with leaks from the 125-year-old slate roof that might cost more than $ 30,000 to repair and thus result in an assessment to the new owner. The condo’s master insurance carrier had sent a letter refusing to pay for water damage because of “age-related deterioration” of the roof. I asked the realtor if he’d shared the letter, which he’d had in his possession, with the buyer. “No. That’s not my responsibility. It is up to her home inspector to discover any problems.”

[Finally, what do readers know about old slate roofs? At the end of almost every winter there is some ceiling damage from ice and snow melting through the slate/flashing/whatever. There is occasional additional damage from random events, such as a slate being kicked out of place or falling off. We hire a roofer who goes up there, charges us some money, pronounces the leaks fixed, and then departs. We repeat the cycle the next year. An experienced slate roofer (not our regular contractor) told me that the nails on our roof are copper and that they corrode after about 85 years, resulting in the slates being very easy to dislodge. This is why the life of a slate roof is not infinite. He said that the only real fix was to remove the slates, install ice and water shield material, and then reinstall the slates over the ice and water shield with new nails that will last another 85 years. Have any of the readers done this?]

Philip Greenspun’s Weblog

Fuller Craft Museum

If you’re headed to the Cape, don’t forget to stop in the Fuller Craft Museum in Brockton (quick stop off Route 24). They have some great exhibitions right now, including a large collection of glass art from MIT. According to Wikipedia, the museum’s architecture and gardens inspired the Louisiana modern art museum in Denmark.

Reasonably good for kids (we went with a 4-year-old and she was losing interest after about 45 minutes).

Philip Greenspun’s Weblog

STTG Market Recap August 26, 2013

It remains a muddled picture as some of the market’s favorite momentum names continue to act well, as does the NASDAQ index, while other indexes and entire sectors struggle.  Volume remains very light as many people are on vacation. Today we had  positive action til mid afternoon when some commentary from Defense Sect. Kerry on Syria pushed the market into a risk off mode.  Stocks quickly went from moderate gains to losses.   How much of this is just algorithmic trading and how much is actual humans reacting – who knows.

U.S. Secretary of State John Kerry said all nations must stand up for accountability on the use of chemical weapons in Syria.

Ironically a quite bad durable goods order actually helped stocks in the morning as we are back in the “bad news is good news” idea, since bad news means less chance of the Fed backing off from helping the market.   Durable goods orders slumped in July, according to the Commerce Department, recording their biggest drop in nearly a year and snapping three straight months of gains.

The S&P 500 broke over its 50 day moving average and was looking to build on that most of the day; unfortunately that late day reversal caused a failure so this is a chart to be closely watched here.  The bounce of the past few days has helped to work off extreme oversold conditions from the middle of last week so the potential lies for a new leg down.

spx

The NASDAQ is in a different world, and barely lost ground today while still holding its 20 day moving average.  It is a bit strange to see such a disconnect between the two indexes but it happens once or twice a year.

nasdaq

Biotech giant Amgen (AMGN) soared after it said it will acquire cancer drug maker Onyx Pharmaceuticals in a deal worth about $ 10.4 billion, marking the fifth-largest biotech acquisition ever.

amgn

Also hot today and recently have been the 3D printing stocks – Stratasys (SSYS) and 3D Systems (DDD)

ssys ddd

We also saw nice action in the casinos stocks; here is Caesers Entertaiment (CZR) – one of the better charts in the recent malaise of the market.

czr

Again there are niche pockets in the market still working, but the general indexes are giving us mixed signals.

Original post: STTG Market Recap August 26, 2013


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