Slope Highlights 2014 (Part 3 of 3)

Here is the third and final part of my retrospective with links to what I believe are the best posts of 2014 at Slope of Hope: Technical Tools Tale – my “pre-Prophet” job experience was at a little startup in Los Altos called Technical Tools, which included a stint with a famed market wizard. Mojave’s Story – I have three […]
Slope of Hope

Happy New Year!

Written By: DragonFly Capital

From my family to yours, have a very Happy, Healthy and Prosperous New Year!


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Happy New Year to my readers!

Happy New Year to my readers!

Here’s a picture from plague-ridden Boston of our healthy 1-year-old and a stocked fridge. Hoping for more of the same in 2015…


And so that this blog doesn’t become indistinguishable from my Facebook feed…. let’s talk about what we’re (realistically) hoping to see in the aviation, technology, and economics world during 2015.

I’ll start off…

  • the long-delayed Icon A5 amphibious seaplane delivered to customers (see my review from 2010).
  • an announcement (but not a delivery) of the BendixKing AeroVue retrofit flight deck for the Pilatus PC-12 (currently King Air only)
  • that the flight recorder from MH 370 will be found (I predicted to friends that it would be found in January 2015 so I hope that it will be found very soon indeed)
  • a little progress toward the ground-based copilot idea that I wrote about in September 2008. (Could have been useful for preventing a lot of the aviation accidents that occurred in 2014, actually, which might motivate action (oddly enough probably to add a third pilot to the two-pilot airline crew rather than my idea of supplementing the single-pilot private flight).)
  • sufficient progress on OLED that there will be a consumer-priced 4K OLED television announced by the end of 2015, which I think will pave the way for a 4K OLED desktop computer monitor (in the meantime maybe this LG 31″ IPS LCD monitor that my friend Gary loves is the best option).
  • despite the fall in oil prices, continued gradual progress in electric cars, solar power, and wind power (due to investments made years ago coming to fruition)
  • a further reduction in the percentage of the U.S. labor market where wages are set by a market. Employers will increasingly either be hiring people they wouldn’t otherwise have hired (due to government-established quotas) or they will be paying some of their workers more than a market-clearing wage (due to government-established minimum wages or anti-discrimination orders, e.g., people who call in sick a lot will get paid the same as people who never call in sick due to new requirements around sick leave). This should result in a fall in the percentage of Americans who are working, as companies substitute capital for labor, but the effect will be masked for a few years by the fall in commodity prices. (Why this prediction? It is based on the 2014 election. Voters don’t seem to care what percentage of Americans are working, but are very concerned that every American who does work gets a package of wages and benefits that seem subjectively fair.)

Philip Greenspun’s Weblog

Why are soft serve ice cream machines so expensive?


I want to serve gourmet Latin American food at an upcoming party. By “gourmet” of course I mean Sonoran hot dogs and Toblerone McFlurry (as served in Argentina) .



To make the McFlurry I need soft serve ice cream. The only thing that I could find for home use was a Cuisinart that seems like an old Donvier with a motor to do the turning and a nozzle. I had hoped for a scaled-down version of what one sees in cafeterias. I poked around and discovered that those cost $ 6000. The question is why? How do they work? talks about freezing, whipping, pressure, etc., which sounds complex but if the Japanese could design breadmakers to cost $ 200 why aren’t soft serve machines more affordable?

Philip Greenspun’s Weblog

Live Tonight 9 PM EST – My Top 10 Winning and Losing Trades of 2014

UPDATE- Broadcast has ended, view the video here!Tonight at 9 PM EST on my channel, StockJunkie, I will be going through all my biggest winners and losers of 2014.
Original post: Live Tonight 9 PM EST – My Top 10 Winning and Losing Trades of 2014

Read the full article at

Read the full article at

Stock Trading To Go

Dec 23 GDP Surge Breakout and Trending Stock Scan Update

Santa just stuffed our stocking earlier with a 5.0% US GDP growth, sending stocks gapping higher this morning.

So far, price has held the gain and trades at a fresh new all-time high.

Be sure to see this morning’s “Big Picture Update” for a comparison of what that looks like on the Monthly Frame.

Let’s update our chart, note the message from Breadth, and focus on strong (and weak) stocks to trade:

There’s not much to say about the typical holiday action – ultimately the chart above is what is “supposed” to happen given the classic “Santa Claus” or end-of-December historical bullish period.

The upward drift, short-squeeze, bullish influx, whatever you wish to describe it continues to drive equity prices higher and profits into the accounts of those simply trading long (bullishly with the trend and historical seasonality.

What is Sector Breadth revealing about today’s session? Let’s discover together:

All sectors are showing strength today EXCEPT Health Care which is seeing a sharp decline in breadth.

With all sectors strong, there’s not much of a message other than “Money Flow is Strong.”

We have potential bullish trend continuation plays in the following stocks:

Avis Budget (CAR), Express Scripts (ESRX), Ralph Lauren (RL), and Prudential (PRU).

Potential downtrending candidates exist in stocks showing relative weakness today:

Novartis (NVS), Zulily (ZU), DexCom (DXCM), and Novo-Nordisk (NVO).

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Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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Top Trade Ideas for the Week of December 29, 2014: The Rest

Written By: DragonFly Capital

Here are the Rest of the Top 10:

Fifth Third, Ticker: $ FITB

Fifth Third, $ FITB, bounced off of a bottom in October and is back at resistance. The latest move takes it over the 200 day SMA and a push higher could change the consolidation to an uptrend. The RSI and MACD both support more upside.

Flextronics, Ticker: $ FLEX

Flextronics, $ FLEX, is at resistance since June after a pullback to the break out range from earlier this year. The RSI is in the bullish range and rising and the MACD is crossing up, a buy signal.

Mylan, Ticker: $ MYL

Mylan, $ MYL, moved higher out of a bottom and consolidation in October to a new high to end November. After a pullback it is moving higher again and now consolidating with a MACD about to cross up and a RSI pushing on the bullish zone.

Panera Bread, Ticker: $ PNRA

Panera Bread, $ PNRA, has built a Cup and Handle since April, and is now triggering over the lip of the cup. The RSI is supporting a continuation higher as is the rising MACD.

Timken, Ticker: $ TKR

Timken, $ TKR, pulled back hard from a top this summer to a low in October. The rebound reached prior support before falling and is now back at that level from a higher low. The MACD is rising and the RSI on the edge of a move into the bullish zone as it pushed higher.

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into the last week of 2014, sees the equity markets looking positive, with a possible major rotation into small caps under way. Elsewhere look for Gold to bounce hold between 1180 and 1200 in its downtrend while Crude Oil builds a base near 55. The US Dollar Index looks to continue higher while US Treasuries are biased lower in the short run, within their uptrend. The Shanghai Composite sits at resistance but with a strong look and could just keep moving up while Emerging Markets are biased to the upside in their downtrend. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the moves higher. Their charts look solid as the SPY sits at all-time highs and the QQQ at 14 year highs. The IWM may be breaking a 14 month range to the upside, which could trigger a major rotation into small caps. Use this information as you prepare for the coming week and trad’em well.

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American Economic Association Meeting in Boston


The American Economic Association is holding its annual meeting in Boston, January 3-5, 2015. The event is very reasonably priced for non-members and is packed with interesting speakers. One of the good things about economics is that many papers are understandable by anyone with a good high school math background.

Saturday, January 3

Saturday at 0800 is going to be an exciting time. Gregory Mankiw, the Harvard professor who sometimes steps out into the popular realm (example New York Times article) leads “A Discussion of Thomas Piketty’s Capital in the 21st Century.” (Note that a 10:15 paper, by two Swedish economists looking at “socio-economic mobility across three generations in Sweden in the period 1813-2010″ found that, for earnings, there was “no association at all between grandfathers and grandsons” (so Piketty is wrong about dynastic accumulation), but for social status/class there was a “clear association” (leading to genteel poor?).) Simultaneously in the Hynes Center, Room 201, Maya Rossin-Slater and Miriam Wust present “Parental Responses to Child Support Obligations: Causal Evidence from Administrative Data” (full text). This is important because child support systems are designed under the presumption that parents’ behavior won’t be affected by writing child support checks to the person who sued them and/or that paying $ 50,000 per year to a plaintiff will improve the quality of parenting delivered every other weekend (embedded in a larger system of custody and divorce law that assumes people won’t follow economic incentives that are held out). Here’s how we summarized the paper in our forthcoming book:

[the authors] found that what a mother might have gained financially from child support, the child lost in terms of reduced contact with and effort from the father: “mothers, who have substantial say in custody decisions [in Denmark], have the opposite incentive to refuse to share custody and instead receive the higher payment [for child support, compared to shared custody]. … fathers may treat financial transfers as substitutes for other forms of non-pecuniary investments and contact with children, which would also lead to a negative relationship between child support obligations and father-child co-residence.” The economists found that “an increase in the father’s obligation may lead to less attachment to his existing children and more time available to invest in new offspring.” (See the “Divorce Litigation” chapter for our interviewees’ perspective on how the main opposed interests in a divorce lawsuit are the plaintiff parent and the children, not the plaintiff and adult defendant.) The researchers also found that fathers who were ordered to pay more child support were more likely to have new children, thus diluting the time and energy available to prior children, and that fathers who were ordered to pay more child support reduced their working hours due to “market distortions generated by the ‘tax-like’ nature of child support mandates.” Mothers who received more child support cash for existing children were motivated to have additional children, either with or without a live-in partner: “mothers receiving higher child support payments for current children may expect higher transfers for future children if they separate again.” Note that this research was done with data from Denmark, where child support is tax-deductible and capped at $ 8,000 per year. The effects that they observed would presumably be larger in the U.S. where child support payments are not tax-deductible and can be $ 25-100,000 per year.

The authors also question an additional building-block assumption of the U.S. child support system. The government assumes that a typical woman who has custody of a child and cannot meet all of her own expenses from child support revenue will, rather than work, turn to the various taxpayer-funded welfare programs offered to women with children. Thus a dollar of child support extracted from a custody lawsuit loser is a tax dollar of welfare saved. Rossin-Slater and Wust say that it isn’t so simple: “Our results suggest that although child support mandates may shift some of the cost of single-mother household support from welfare programs to the non-custodial fathers, they also pass part of this cost on to other government programs such as disability insurance and early retirement.” (i.e., fathers in Denmark will retire or declare themselves disabled in order to cut their child support obligation from $ 8,000 per year back to the “basic/minimum” $ 2,000 per year)

If you’re a shareholder in a public company that underperforms the S&P 500 and want to know why most of what would have been your dividend money nonetheless goes to an apparently mediocre CEO, there is a “CEO Incentives and Compensation” session at 10:15 am.

Many sessions seem to be aimed at trying to understand the Collapse of 2008 and predict the next one. Also at 10:15 am on Saturday is a session looking into why the ratings agencies turned out to be worthless. “Did Government Regulations Lower Credit Rating Quality?” by Behr, Kisgen, and Taillard, concludes that “defaults and other negative credit events are more likely for firms given the same rating if the rating was assigned after the [1974] SEC action
compared to before. … the market power derived from the SEC led to ratings inflation.” Did Jack Nicholson’s sponsorship of a child in About Schmidt (awesome movie, though very different from the novel; disclosure: my cousin Harry produced it) make a difference? At 10:15 session “Developing Hope: The Impact of International Child Sponsorship on Self-Esteem and Aspirations” says “yes” (on average). History buffs will skip all of these 10:15 sessions and head to the Boston Marriott Copley for a session on “The Economy of Ancient Israel.” The “dismal science” does not shy away from looking at war. At 10:15 session on “conflict and development” includes a paper by David Yanagizawa-Drott that villages that suffered the most violence in the Rwandan genocide had the highest living standards six years later: “These results are consistent with the Malthusian hypothesis that mass killings can raise living standards by reducing the population size and redistributing productive assets from the deceased to the remaining population.” At “Health Insurance Reform” session confirms the world’s most stuffed-with-cash health care system is not going to suffer any lean years due to government tweaks. A “Competitive Bidding in Medicare” paper concludes that there is little actual competition among America’s health insurers. A session on “The Minimum Wage, Family Income and Poverty” reveals that economists have no idea whether or not a higher minimum wage reduces poverty.

Are those crazy Super Bowl ad rates justified? A paper in a 12:30 pm Digital Media Economics session concludes “yes” by looking at movie ticket sales (for movies advertised during the Super Bowl) in the cities in which Super Bowl teams are based and therefore in which more fans are watching. Why is the U.S. a more tolerant society today than it was in the 1970s? A paper by Berggren and Nilsson in the 12:30 “Economic Freedom and Minority Groups” session suggests that it might be due to the deregulation started by Gerald Ford and the tax rate reductions started by Ronald Reagan: “We suggest, as one explanation, that a greater scope for voluntary transactions and private usage of incomes and wealth creates more meetings that increase understanding for people different than oneself – or at least for the value of letting people different than oneself have their say.”

At 2:30 there is a session on “Explaining the Energy Paradox.” Why do Americans buy fuel-inefficient cars and houses? Why has not American residential developer carved out a niche in German-style double-wall houses that can be heated or cooled for almost nothing? Why did the Federal Weatherization Assistance Program not work? (“overly optimistic engineering estimates of returns to the energy efficiency investments,” say the economists; translation: Americans are stupid). “Investor Behavior,” at the same time, explores the 2012 8X increase in the value of shares of DI Corp. “because the company’s chairman and CEO is [South Korean rapper] PSY‘s father.” (translation: investors worldwide are stupid; related: MIT Gangnum Style) A 2:30 session on “Redistributive Taxation” includes “Income Inequality Influences Perceptions of Legitimate Income Differences” by Harvard’s Kris-Stella Trump. She finds that people think the system under which they live is a good one: “When income differences are (perceived to be) high, the public thinks of larger income inequality as legitimate.” She calls this “system justification motivation.” [We found this to be true when interviewing divorce litigators in different states. Generally a litigator in State X thought that State X’s system was fair and just and so did a litigator in State Y, despite the fact that State’s X and Y had completely different outcomes for the same fact patterns.] Larry Summers talks about “Secular Stagnation” in a 2:30 pm session as well. “Do Vehicle Crash Tests Save Lives? Impacts on Market Decisions and Accident Mortality” by Damien Sheehan-Connor of Wesleyan says that Americans bought safer cars in response to Insurance Institute for Highway Safety tests and manufacturers designed safer cars in response to the testing (translation: Americans are not stupid). Why do venture capital firms underperform the S&P 500? Three Harvard researchers in “The Cost of Friendship” ” find that venture capitalists who share the same ethnic, educational, or career background are more likely to syndicate with each other. This homophily reduces the probability of investment success, and the detrimental effect is most prominent for early-stage investments..” Why do hedge funds underperform the S&P 500? “Recovering Managerial Risk Taking from Daily Hedge Fund Returns: Incentives at Work?” by Kolokolova and Mattes finds that “During earlier months of a year, poorly performing funds reduce their risk. The risk reduction is stronger for funds with higher management fees, shorter notice period prior to redemption, and recently deteriorating performance, which is consistent with a managerial aversion to early fund liquidation and loss of future management fees. Towards the end of a year, poorly performing funds gamble for resurrections by increasing risk.” Why does money invested in private equity (even with geniuses such as Mitt Romney at the helm!) tend to underperform the S&P 500? Korteweg and Sorensen say that “Based on past performance alone, an investor needs to observe an excessive number of funds to identify the PE firms with top-quartile expected returns, implying low investable persistence.”

The 2:30 slot includes a “Puerto Rico and Cuba” session that would no doubt be enlivened by a panel discussion about the recent political changes. The papers already scheduled show that Puerto Rico’s government policies starting around 1940 have led to the county becoming impoverished from an income point of view: “After seven decades of government sponsored development efforts, a benign macro environment compared to the rest of Latin America, and massive transfers from the mainland, GNI per capita remains at Uruguayan or Argentinian levels.” On the other hand, presumably due to federal welfare programs, consumption per capita is quite high: “Puerto Rico has succeeded in ensuring a standard of living for its citizens largely divorced from the productivity of its workers.” For actual divorce issues, there is a 2:30 pm “Structural Models of Family Interactions” session that looks at “Welfare Effects of Divorce Legalization” in Chile and “Deadbeat Dads” (trying to answer the question of why women would get pregnant with low-wage fathers). “Unemployment Insurance and Disability Insurance in the Great Recession” calls into question the assumption that Americans go on SSDI when their unemployment insurance runs out: “Only 28% of SSDI awardees had any labor force attachment in the prior calendar year, and of those only 4% received UI income.”

Is it all about the Benjamins? A 2:30 session “Well-Being: Measurement and Policies” suggest that maybe we can move “Beyond GDP”. Weina Zhou’s study of Chinese youths “sent down” for hard manual labor actually ended up doing better as 40-55-year-old adults and “these findings are robust against a variety of family backgrounds.” (time to plant some daffodil bulbs!) A “Cycling to School” paper finds that giving girls bicycles was “much more cost effective at increasing girls’ secondary school enrollment [in India] than comparable conditional cash transfer programs in South Asia.”


Sunday morning at 0800 we can learn that Americans are awesome malingerers: “increasing [worker’s compensation] benefit generosity by 10 percent leads to 2 to 4 percent increase in injury duration.” Planning to mortgage the house to send the kids to a private school full of Tiger-Mommed achievers? “Top of the Class: The Importance of Ordinal Rank” by Murphy and Weinhardt suggests that this is a bad idea. Kids who score at the top of their primary school class develop more confidence and do better in secondary school. Planning to stay at home or hire a top-shelf nanny so that your toddler won’t have to be parked in day care? “Early and Bright? Child Care for Toddlers and Early Cognitive Skills” by Drange and Havnes found that Norwegians randomly assigned to start day care at 15 months rather than 19 actually ended up doing better at age seven. Planning to give your children a lot of dinner-time lectures about different career options, backed up by BLS data? “Educational Choice and Information on Labor Market Prospects: A Randomized Field Experiment” (Pekkarinen et al.) did this in 97 randomly chosen high schools in Finland. There was no effect on the students’ decisions to enroll in higher education programs. An entire 8:00 am session is devoted to “Effects of the Minimum Wage Policy in China” and Fang and Lin conclude that “minimum wage changes had led to significant adverse effects on employment in the Eastern and Central regions of China, and had resulted in disemployment for females, young adults, and low-skilled workers.” Did King Bush II’s TARP program (a.k.a. “take all of the money and give it to the Wall Street banks”) benefit anyone outside of Manhattan? Berger and Roman of University of South Carolina conclude that it did (preview paper).

At 10:15 one can learn about “Lying, Beliefs and Psychological Games.” A paper by Smeets, et al., “Lying, Guilt, and Shame” (preview) concludes that avoiding shame is a much more powerful motivator for truth-telling than avoiding guilt. This is consistent with our interviews with divorce litigators, who reported that custody and child support plaintiffs were comfortable lying in order to win their lawsuits because they were doing it “for the benefit of the children.” (see this story on Meri Jane Woods, for example, convicted of downloading child pornography and yet unashamed because “I only wanted to protect my children [by cementing a previous custody victory]“). A 10:15 paper in the “Traffic” section confirms a theory that I have published here from time to time (example from 1.5 years ago) that people with money will abandon the suburbs due to the U.S.’s descent into Third World levels of traffic congestion. “Traffic Congestion and Gentrification” (Martin and Nicholson) says that there is “a connection between gentrification pressure and increased traffic congestion levels within [metropolitan areas].” “Divergence of Fortune: The Unequal Effects of Economic Liberalization in India” (Kali and Sarkar) notes that states within India that had a lot of natural resources also had a lot of “state planning” and have ended up falling far behind other states due to “red-tape, bureaucracy and unionization.” Does government intervention work better in the U.S.? “Do Commercial Health Care Prices Influence Medicare Spending?” (Romley and two others from USC) suggests not: “We instrument for commercial prices and hospital concentration using population-based instruments and find that a market-level commercial price index that is 10% below its average is associated with Medicare spending that is 3.7% above its average (p < 0.01). These results suggest that providers may respond to low commercial prices by shifting service volume out of the commercial sector into Medicare.”

Sunday at 10:15 is also a time for feminist economics. Heidi Hartmann notes that “Women were at the heart of the Marxist analysis of capitalism … From Wages for Housework to women as serfs/peasants in a feudal mode of production to women as the reserve army of the unemployed, theorists had a lot to say about women’s economic roles in a capitalist society. … The feminist contribution was to explicate both the household and labor market components of women’s work in an advanced capitalist society that is also patriarchal, and to also explore the role of the state in regulating women’s labor power, as well as ameliorating some of the worst abuses of women.” Julie Matthaei of Wellesley College talks about “women’s unpaid reproductive work.” This seems like an odd subject given that Wellesley is an extremely prosperous suburb of Boston. A woman who had sex with two typical middle-aged male Wellesley residents could get paid more after-tax cash for her “reproductive work” than could a Wellesley College professor for teaching (e.g., a $ 250,000/year child support defendant would yield an annual cash revenue of $ 40,000 per year for 23 years (single child) under the Massachusetts Guidelines; glassdoor says that a Wellesley College assistant prof would earn about $ 80,000 per year pre-tax).

At 12:30 Andres Vargas of Purdue presents “Effect of Universal-Free School Breakfast on the Prevalence of Double-Dipping and Obesity among Adolescents: A Time Use Perspective” and notes “Preliminary results indicate a significant positive association between the availability universal-free breakfast programs and the prevalence of double-dipping [eating two breakfasts, the first at home] among adolescents.” That’s followed by “Breaking Bad: Are Meth Labs Justified in Dry Counties?” by three University of Louisville researchers. They found that meth labs are more common in dry countries and “[Kentucky] could reduce the number of meth lab seizures by 17 to 30 percent per year if all counties were wet.” Up against these papers is a session on “The Economics of the Internet” that starts with a paper on how social media such as Facebook encourage people to read news “with more emotional content and articles that show an individual’s perspective” (i.e., Americans will flee further from the boring statistics and vote their hearts to a larger extent). Glenn and Sara Ellison from MIT prove that the Internet works by showing that online prices for used books are higher than offline prices, indicating a better match between buyers and sellers online.

What if we all hunker down in our air-conditioned houses all summer using the efficient Internet? A Sunday at 2:30 pm session on climate change includes “Temperatures and Growth: a Panel Analysis of the U.S.” and the three economists note that “i) rising Summer temperatures depress growth, and ii) rising Fall temperatures increase economic growth. However, Summer temperatures are expected to increase at a faster pace relative to that of Fall temperatures. … , in net, rising temperatures can decrease the growth rate of US GDP by as much as one third, thus resulting in large welfare losses.” Burke of Stanford and Emerick of UC-Berkeley follow up with “Adaptation to Climate Change: Evidence from United States Agriculture” and depressingly note that “Longer-run adaptations appear to have mitigated less than half — and more likely none — of the large negative short-run impacts of extreme heat on productivity. Limited recent adaptation implies substantial losses under future climate change in the absence of countervailing investments.”

A competing session at 2:30 titled “Entrepreneurial Finance” includes a paper on “non-practicing entities” that file patent lawsuits: “Patent Trolls” by Cohen, et al. The paper notes that “NPEs typically target firms that are busy with other (non-IP related) lawsuits or that have high probability of settlement. Lastly, we show that NPE litigation behavior has a negative real impact on the future innovation of targeted firms.” As NPE litigation is roughly half of patent litigation in the U.S., it pays for a lot of luxury SUV purchases. The same-time “Corruption of Social Provisioning under Capitalism” session explores that phenomenon. First, it is worth nothing that this is one of many sessions and papers that use the term “social provisioning” as the assumed goal of an economic system, i.e., providing each human being in a society with the stuff that he or she needs. This is an alternative to the classical economics perspective of “resource allocation” or “market allocation of resources” that doesn’t fit developed societies today (since an American or European who does not work is allocated more than nothing). On the subject of how we ended up with a country full of paved roads and monster SUVs, Mary Wrenn from Cambridge UK offers “Envy in Neoliberalism: Revisiting Veblen’s Invidious Distinction” and notes that “Pre-capitalist societies attempted to suppress envy; familial and community relations held the emotion of envy in check through social sanctions. Capitalism, however, encourages envy. … According to advocates of neoliberalism, inequality serves an important social function – it is the great motivator, without which, individuals would not have incentive to improve. Inequality and by extension envy, are thus heralded as the prime catalysts of economic activity. As well, this research examines the role of schadenfreude and the shaming of the poor.”

What if every American had a good education? Would there still be crime? A 2:30 pm paper, “The Effect of Degree Attainment on Crime: Evidence from a Randomized Social Experiment,” says “We examine the effect of educational attainment on criminal behavior using the random assignment into Job Corps (JC) – the country’s largest education and vocational training program for disadvantaged youth… Our results indicate that the attainment of a degree is estimated to reduce arrest rates by at most 11.8 percentage points.”


Monday, January 5 starts off with an 8:00 am session on the auto industry. “Accelerator or Brake? Microeconomic Estimates of the ‘Cash for Clunkers’ and Aggregate Demand” (Melzer, et al) calculates that the $ 3 billion “cash for clunkers” program of summer 2009 was an almost complete waste of tax dollars, with no effect on the total number or fuel efficiency of cars purchased. “Food Choices, Novelty Consumption and Health: Evidence from the East German Transition to Capitalism” (Ziebarth and Dragone) confirms a pet theory of mine, i.e., that Americans eat more because there are so many different kinds of food here (e.g., 2004 posting): “the larger consumption of previously unknown or unavailable products may increase BMI and lead to persistent obesity. … The empirical evidence shows that, shortly after the fall of communism, East Germans changed their eating habits, gained weight, became more obese and less healthy. The change in eating habits and weight is still detectable a decade after capitalism increased food choices and welfare.” Speaking of food… “The Effect of SNAP Take-up on Shopping Behavior: Evidence from a Retailer Loyalty Panel” (Hastings and Shapiro) found that people who got food stamps stopped using coupons: “We find that following the start of SNAP benefits, households use significantly fewer coupons in their shopping. The effect is not driven by the composition or quantity of items purchased and is present only for SNAP-eligible items. We interpret the findings in terms of moral hazard and mental accounting in shopping effort.”

Also at 8:00 am is “Dumb and Dumber: The Trading Activity of Institutions vs. Retail Investors” (unclear if Jonathan Gruber was involved in crafting this session title). Peress and Schmidt report that day traders slow down their trading, and therefore do better, when there are sensational news stories keeping them “glued to the TV.” Jacobs and Hillert found that “stocks with names early in alphabet have about 5% to 15% higher trading activity and liquidity.” Devault, Sias, and Starks find that “institutional investors are the sentiment traders [more so than supposedly dumber individual investors] whose demand shocks drive prices from value.” The wrap-up is “Institutional Investors and Stock Return Anomalies” by Edelen, et al,: “trading against institutions significantly improves expected returns from anomaly strategies.”

An 8:00 session paper, “Leadership and the Single Woman Penalty: A Role Expectations Account of Early Career Barriers to Promotion for Female MBAs” (Merluzzi and Phillips) says “We contend that single non-mother status is inconsistent with the role expectations of both the leadership typically associated with men (agentic) and also women (communal) – resulting in a promotion penalty toward single women being considered for leadership positions. … we find single women the most disadvantaged group, particularly those with exceptional quantitative and analytical abilities.” So a single career woman who goes into a bar in Wisconsin and then spends the night with a dermatologist may be actually to earn more from the resulting baby than the $ 3 million in tax-free child support (over 18 years); getting out of “single non-mother status” and into “heroic single-mother status” could improve her chances of promotion to managerial jobs. (Note that child support in Wisconsin depends only on the custody lawsuit loser’s income; a woman who collects child support could get a job paying $ 10 million per year and her entitlement to support would not be impaired.)

At 10:15 on Monday there is another session on climate. “Adapting to Climate Change” (Barreca, et al.) says that the good news is that if you have an air-conditioned home you won’t die from a heat wave (the bad news is that fossil fuels will likely be burned to run that air-conditioner, thus making future heat waves more common). If breaking all of the windows on a city block and then paying people to re-glaze them is a guaranteed way to grow the GDP, isn’t an earthquake that breaks all of the windows in a city even better? “The Causal Effects of Environmental Catastrophe on Economic Growth” (Hsiang and Jina) says, unfortunately no: “The data reject long-standing hypotheses that disasters stimulate growth via “creative destruction” or that short-run losses disappear following migrations or transfers of wealth. Instead, we find robust evidence that national incomes decline, relative to their pre-disaster trend, and do not recover within twenty years.” How is the government helping? “Federal Crop Insurance and the Disincentives to Adapt to Extreme Heat” (Annan and Schlenker) says that “the federal crop insurance program gives farmers a disincentive from engaging in all possible adaptation strategies to cope with extreme heat thereby exacerbating potential losses.”

If you’re not depressed enough by Earth turning into Venus, the 10:15 slot also includes a session on how a lot of humans currently at work will be replaced by machines, including robots. According to the Harvard, MIT, and University of Chicago eggheads, the result will be more unemployment and income inequality. Laws requiring higher minimum wages should accelerate this trend because when wages for low-skill workers are high “automation increases [and] reduces the labor share [of national income].” A parallel session titled “Housing” shows that if you invite four economists over for dinner you’ll hear five opinions. “The Effect of Underwater Mortgages on Unemployment” (Schultz and Mumford) says “We find that underwater homeowners are twice as likely to move and are no more likely to experience a period of unemployment. We find no evidence to support the claim that the house lock from underwater mortgages caused an increase in structural unemployment.” while “Debt Overhang and Housing Demand – Evidence from United States Housing Markets” (Gupta) says “I find strong evidence supporting the hypothesis that debt overhang constrains the moving decisions of homeowners hence labor mobility…”

Was No Child Left Behind a complete waste of time and effort? “Performance Standards and Employee Effort: Evidence from Teacher Absences” (Gershenson) says that, at least in scrutinized schools, it reduced teacher “mental health days”: “teacher absences fell by about 10 to 15% and the probability of a teacher being absent 15 or more times in a given school year fell by about 30% in schools subject to increased accountability pressure in the second year of NCLB. The reductions in teacher absences in treated schools were primarily driven by within-teacher increases in effort and were particularly large among more effective teachers.” Why are such a small percentage of working-age Americans working? “Manufacturing Decline, Housing Booms, and Non-Employment” (Charles and two colleagues from University of Chicago) says that it is because of the decline of U.S. manufacturing, but people didn’t notice in the 2000s because of the (temporary) housing boom.

Have Americans made a sensible long-term choice in deciding to allocate most national wealth to the construction of McMansions filled with imported flat-screen (now OLED!) TVs? Two Turkish economists give their answer in “Collateral Damage: How Mortgage Loans Decrease U.S. Savings”:

mortgage payments have a substantial negative impact on both personal and private saving rates in the US.

We also find partial but robust crowding out effect of public saving rate on the two saving rates.

Why should we be concerned about a low saving rate? The primary reason is that a low saving
rate constraints the amount of investment that the economy can undertake.

… government policies designed to encourage mortgage borrowing, such as tax deductibility of mortgage interest payments, will have an impact on future economic growth through their impact on saving rate.

Who pays when the McMansions aren’t worth as much as originally hoped? “Distributional Costs of the Housing-Price Bust” (Bansak and Starr) says “housing busts amplify effects of downturn on less-advantaged groups.” (i.e., poorer people get hit the hardest). [Pair this one up with “The Sprawling Benefits of Housing Tax Policy” (Hanson and Hawley) at 1:00 pm: “We document that the benefits [of federal tax subsidies for housing] are concentrated in the suburbs of metropolitan areas and that they are unevenly distributed to higher income households within metropolitan areas.” That paper is followed by Kyle Mangun’s “The Global Effects of Housing Policy” which documents the energy savings from “removing the federal tax subsidy for housing. The primary channel is reducing the amount of housing consumed per person, and the secondary channel is in reallocating population from inefficient to more efficient locations.”]

“Availability of Family-Friendly Work Practices and Implicit Wage Costs: New Evidence from Canada” (Fakih) says that workers pay for family-friendly employment (e.g., including on-site day care) by accepting lower cash wages and that unionization does not affect the extent to which a company will have family-friendly practices. Translation: there is no free lunch.

Much of the conference concerns the wars between workers and employers and between poor voters and wealthy targets of taxation. Monday’s 1 pm “Economic History” session is mostly about shooting wars. Researchers looking at health data from Germany and China independently conclude that being an infant during a shooting war is bad for long-term health. The same session includes “Seven Centuries of Economic Growth and Decline” (Fouquet), which isn’t as exciting as the title suggests, though it tends to confirm Gregory Clark’s Farewell to Alms in that the industrial revolution was not the only engine (so to speak) of sustained economic growth.

The French government managed to get more people to start companies. Did it grow the economy? “Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France” (Hombert, et al) suggests that it did not: “there are large crowd-out effects: Employment in incumbent firms decreases by a similar magnitude as the number of new jobs created in start-ups.” What kind of a crazy person would start a company anyway, when wonderful career opportunities exist in the professionals and in established firms? The answer is “people with bipolar disorder” according to “Mental Health and Entrepreneurship” (Dahl and Moser): “individuals with bipolar disorder are substantially more likely to become entrepreneurs.”

Are doctors with their Hippocratic Oath immune to financial incentives? “Financial Conflicts of Interest in Medicine” (Engelberg, et al) says they are still homo economicus underneath the white coat: “Using data from twelve drug companies, more than 300,000 physicians and nearly one billion prescriptions, we find that when a drug company pays a doctor he is more likely to prescribe that company’s drug. A payment from a pharmaceutical company corresponds to, on average, an additional 29 Medicare prescriptions per year, and this number rises to nearly 100 prescriptions if the payment is at least $ 1,000.” [Related: my review of Bad Pharma.]

“… you stand on the street today and spit, you’re gonna hit a college man,” said Joe Keller in All My Sons. If the U.S. is so replete with college graduates why aren’t we growing faster? “The Labor Market Returns to Colleges and Majors: Evidence from Chile” (Hastings) says “We show that most of the gains from higher education accrue to students attending highly selective institutions. The average gain from attending low-selectivity degrees, including private universities and technical and professional degrees are on average near zero, with many low selectivity degrees offering poor investment returns relative to no college.”

Piketty and other enthusiasts for new and higher taxes may want to head over to the 1:00 pm “Tax Compliance” session to see how many people will sit still to pay these. “Should I Stay or Should I Go? Tax-Induced Mobility and the Taxable Income Elasticity in Switzerland” (Martinez) says that both “top income” and middle-income Swiss moved from high-tax cantons to low-tax cantons and that “Switzerland, with its pronounced federal institutional setting and strong tax competition, serves as an ideal natural laboratory to study such tax related questions and to thereby learn more about tax induced mobility responses…” A study of Mexicans, “Local Public Goods and Property Tax Compliance: Evidence from Residential Street Pavement,” (Navarro and Quintana-Domeque) found that people were more likely to pay property tax when they could “observe public goods being delivered.”

Carolina Castilla of Colgate University went to India to conduct a “trust game” among married couples and reports her results at 1:00 pm in “Trust, Reciprocity and Trustworthiness between Spouses: Evidence from a Field Experiment in India”: “In these households, women are less trusting and less trustworthy than men because they receive more money and send less in return.”

As I noted in “Unions and Airlines”, lending money to a unionized airline is probably a bad idea (which is maybe why the industry has ended up with most of the expensive hardware owned by leasing companies?). This is confirmed with more rigor by “The Elephant in the Room: The Impact of Labor Obligations on Credit Risk” (Favilukis and Lin).

“Environment and Health,” at 1:00 pm in the Sheraton Boston’s Hampton Room, has a paper concluding that when nuclear power plants have been shut down and replaced by coal-fired plants, infants suffered from lower birth weight in those areas. I personally love Daylight Savings Time, but “Spring Forward at Your Own Risk: Daylight Saving Time and Fatal Vehicle Crashes” (Smith) says that DST “does not save energy and .. imposes high social costs on Americans, specifically, an increase in fatal automobile crashes.”

The last session described is in some ways the most future-oriented: “Returns to Child and Education Interventions”. It opens with “Returns to Schooling around the World” (Patrinos and Montenegro). “Demystifying the East Asian Education Tigers” says that Asian children do better on worldwide achievement tests because of “private tutoring and allocation of household time to [education]” not because they have better public school systems. [This is consistent with my write-ups of the Smartest Kids in the World book, e.g., on Korea versus Finland and the U.S.]

I’ll write more after attending the conference but my summary from reading the preliminary papers is that the good news and bad news are the same. The bad news is that humans are motivated by money and will assiduously follow economic incentives, even when the dollars involved are small. But that’s also the good news. If you want to fix a problem you just have to change the incentives so that people aren’t making money when they exacerbate the problem.


The program shows that Marxism is alive and well within the field of Economics, albeit renamed “Marxian.” Ismael Hossein-Zadeh of Drake University, for example, notes that “the Marxian theory of subsistence or near-poverty wages provides a more cogent account of how or why such poverty levels of wages, as well as a generalized predominance of misery, can go hand-in-hand with high levels of profits and concentrated wealth than the Keynesian perceptions, which view high levels of employment and wages as necessary conditions for an expansionary economic cycle.”

Note that there is also a continuing education program right after the conference. The “Health Economics” session is headline by Professor Jonathan Gruber of MIT, most famous for talking about the “stupidity of the American voter” in not understanding how much of their hard-earned wages would be transferred into the pockets of the health care industry by the Obamacare system.

Philip Greenspun’s Weblog

AirAsia 8501

New England Cable News wants to interview me regarding AirAsia 8501, which motivated me to search Google News to find out what is known about this missing Airbus A320. So far the most significant piece of information is that the pilots were seeking a deviation from their planned route to avoid clouds at 32,000′. In latitudes closer to the Equator there is more energy pumped into the atmosphere by the sun and therefore thunderstorms are more intense and cumulonimbus clouds that generate thunderstorms extend higher in the atmosphere, e.g., to as high as 60,000′. Airliners typically fly no higher than 40,000′ and therefore must divert around, rather than fly over, the most severe thunderstorms. By far the best Web page on this incident that I could find was the Wikipedia page, showing thunderstorms and the flight path on the same map. Also see the video at CNN, which says that the T-storms during that particular flight were forecast to extend up to 52,000′.

What’s bad about flying into a thunderstorm? Turbulence can be severe, exceeding the 2.5G load factor for which airliners are designed (light planes must tolerate up to 3.8Gs by regulation, but heavier airplanes have more inertia and are therefore less likely to experience heavy G loads in turbulence). Lightning can damage the electrical system, without which a modern airplane simply cannot be controlled (you need the electrics to run the hydraulic pumps that actually move the ailerons, elevators, and rudder against the heavy airloads; the Airbus A320 is also a fly-by-wire system that gets rid of the traditional mechanical connections from pilot yoke out to the hydraulic controls near the flight controls (truly light airplanes don’t have hydraulics; there are simply cables or pushrods out to the flight controls and pilot muscle power is used to move them, though sometimes with the help of trim tabs that are powered by air rushing over the flying plane)). Hail can slam into the airplane and damage windshields, wing leading edges, etc. (most hail-damaged airplanes remain flyable, however) Thunderstorms can also generate airframe icing, which, if severe, may exceed an airplane’s anti-ice/de-ice capabilities. An airplane covered in ice cannot climb and cannot fly at slower airspeeds without entering an aerodynamic stall. (De-icing on a heavy turbojet-powered airplane such as the Airbus A320 is generally accomplished with compressed (“bleed”) air from the engines fed into metal tubes on the leading edges of the wings, tail, and engine cowlings.)

How does a pilot avoid dangerous weather like this? It is relatively easy flying over heavily settled regions such as North America and Europe where ground-based RADAR can see the rain and that turns into a map (example). If the airplane has a datalink of some sort, a slightly delayed version of the map can appear on a multi-function display along with the airplane’s planned course. There are some limitations of such maps, starting with the fact that the map is two-dimensional and there is no fine-grained information on cloud or thunderstorm tops. I have been at 20,000′ in clear New York air flying over a line of solid red and yellow (heavy rain) but the same flight in Texas over the same map image might have resulted in being in clouds/turbulence/rain/ice/etc. Airliners also have on-board weather RADAR that can look ahead and see if there is rain in a cloud, but these images require a lot of experience to interpret. Someone who flies at low altitudes around the Caribbean and Florida would be great at this. A modern jet pilot usually isn’t because, most of the time, jets climb out of the bad stuff so quickly. If you’re out in the middle of the ocean and can’t get an accurate map from ground-based stations, you might have to rely on the on-board RADAR (not sure if that was a factor here; the plane was never all that far from land, though I am not sure if Indonesia has invested in as many RADAR stations as we have (air traffic control RADAR is not set up to paint an accurate weather picture)).

So the specifics of the incident remain a mystery but even a modern airliner is no match for a real thunderstorm and there is some evidence that this flight encountered one.

Philip Greenspun’s Weblog

Merry Christmas To All!

Written By: DragonFly Capital

I do not mind saying Merry Christmas to all, even if you reading are not Christian. Everyone should have a happy and merry day. Enjoy your day off from the market with family in whatever traditions or new plans you have. See you all on Friday.

12-24-2014 12-55-08 PM

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Reading List

Here are a couple of books that I have enjoyed reading recently….

Dept. of Speculationis a beautifully crafted novel about a university teacher in New York City whose husband is having an affair. Some samples of the writing:

Advice from Hesiod: Choose from among the girls who live near you and check every detail, so that your bride will not be the neighborhood joke. Nothing is better for man than a good wife, and no horror matches a bad one.

The baby’s eyes were dark, almost black, and when I nursed her in the middle of the night, she’d stare at me with a stunned, shipwrecked look as if my body were the island she’d washed up on.

And that phrase—“sleeping like a baby.” Some blonde said it blithely on the subway the other day. I wanted to lie down next to her and scream for five hours in her ear.

They have finally found a house, a brownstone with four floors and a garden, perfectly maintained, on the loveliest of blocks in the least anxiety producing of school districts, but now she finds that she spends much of her day on one floor looking for something that has actually been left on another floor.

Survival in space is a challenging endeavor. As the history of modern warfare suggests, people have generally proven themselves unable to live and work together peacefully over long periods of time. Especially in isolated or stressful situations, those living in close quarters often erupt into hostility.

The Buddha named his son Rahula, which means “fetter.” The Buddha left his wife when his son was two days old. He would never have attained enlightenment if he’d stayed, scholars say.

The husband sets up their old telescope. There is almost no light pollution here. The wife looks up at the sky. There are more stars than anyone could ever need.

The renowned Margaret Atwood has given us a linked set of short stories: Stone Mattress:

Before she finally cut him off, Gwyneth was in the habit of changing the bottom sheet to signal that at long last she was about to dole him out some thin-lipped, watery, begrudging sex on a pristine surface. Then she’d change the sheet again right afterwards to reinforce the message that he, Sam, was a germ-ridden, stain-creating, flea-bitten waste of her washing machine. She’d given up faking it – no more cardboard moaning – so the act would take place in eerie silence, enclosed in a pink, sickly sweet aura of fabric softener.

Irena should have cut him some slack in view of how close they were once, but no, Irena has a heart of asphalt, harder and drier and more sun-baked every year. Money has ruined her. His money, since it’s because of him that Irena and the other two are rich enough to afford those lawyers of theirs. Top-quality lawyers too, as good as his; not that he wants to get into a snarling, snapping, rending contest among lawyers. It’s the client who’s always the cracked-bone hyena’s breakfast: they take bites out of you, they nibble away at you like a sackful of ferrets, of rats, of piranhas, until you’re reduced to a shred, a tendon, a toenail. So he’s had to ante up, decade after decade; since, as they rightfully point out, in a court case he wouldn’t stand a chance.

She’s had enough of men for a while. She’s made an inner memo to renounce flirtations and any consequences that might result from them. She doesn’t need the cash, not any more. She’s not extravagant or greedy, she tells herself: all she ever wanted was to be protected by layer upon layer of kind, soft, insulating money, so that nobody and nothing could get close enough to harm her. Surely she has at last achieved this modest goal.

But old habits die hard, and it’s not long before she’s casting an appraising eye over her fleece-clad fellow-travellers dithering with their wheely bags in the lobby of the first-night airport hotel.

She’d chosen her acceptances with an eye to the medical condition involved, and once married she’d done her best to provide value for money. Each husband had departed not only happy but grateful, if a little sooner than might have been expected. But each had died of natural causes – a lethal recurrence of the heart attack or stroke that had hit him in the first place. All she’d done was give them tacit permission to satisfy every forbidden desire: to eat artery-clogging foods, to drink as much as they liked, to return to their golf games too soon. She’d refrained from commenting on the fact that, strictly speaking, they were being too zealously medicated. She’d wondered about the dosages, she’d say later, but who was she to set her own opinion up against a doctor’s? And if a man happened to forget that he’d already taken his pills for that evening and found them neatly laid out in their usual place and took them again, wasn’t that to be expected? Blood thinners could be so hazardous, in excess. You could bleed into your own brain. Then there was sex: the terminator, the coup de grace. Verna herself had no interest in sex as such, but she knew what was likely to work. “You only live once,” she’d been in the habit of saying, lifting a champagne glass during a candlelit supper and then setting out the Viagra, a revolutionary breakthrough but so troubling to the blood pressure. It was essential to call the paramedics in promptly, though not too promptly. “He was like this when I woke up” was an acceptable thing to say. So was “I heard a strange sound in the bathroom, and then when I went to look …” She has no regrets. She did those men a favour: surely better a swift exit than a lingering decline.

The Advanced Life wing [of a retirement home] is on a more frequent schedule; twice a day, she’s heard. Ambrosia Manor isn’t cheap, and the relatives would not take kindly to ulcerating rashes on their loved ones. They want their money’s worth, or so they’ll claim. What they most likely want in truth is a rapid and blame-free finish for the old fossils. Then they can tidy up and collect the remnants of the net worth – the legacy, the leftovers, the remains – and tell themselves they deserve it.

Note that the title story appeared in New Yorker and the full text is available online.

In my car I’m listening to Cleopatra: A Life, which is great for the context it provides on everyday life in ancient Egypt. The book also provides some contrast to modern media, which tends to portray women as powerless victims (see, for example, this article from today’s New York Times on gender gaps in the tech industry (footnote: the author doesn’t mention that if a woman in the main tech centers of California or Massachusetts wanted to have the spending power of a male tech entrepreneur she would simply need to have sex with three male tech entrepreneurs and then harvest the child support); also see this article about off-campus rape).

This New Yorker article on graphene was interesting. It shows just how long it takes for ideas to go from the lab to the local Walmart and also reminds us that newspapers invert their usual fondness for bad news when it comes to science. We hear about exciting new developments but we don’t hear about the practical problems. If you’re trying to finish writing a book, this one-page piece by Column McCann should be inspirational. “Can AIDS be Cured?” explains how the HIV virus can remain dormant in the human body and why it is so tough to eradicate (maybe a lot of viruses do that also? Lyme disease?).

Finally, if you’re a photographer and a parent check out Shutterfly’s ABC book template (under “Kids”). For about $ 20 (and one night staying up until 2:30 am poking through your photo library looking for images that are the right orientation and content), your toddler can have a custom book. (Feel free to supplement with any of my photos that you can find through my /stock engine.) “M is for Mindy the Crippler“…

Philip Greenspun’s Weblog

Top Trade Ideas for the Week of December 22, 2014: The Rest

Written By: DragonFly Capital

Here are the Rest of the Top 10:

AmerisourceBergen, Ticker: $ ABC

AmerisourceBergen, $ ABC, went through a basing period from late July until mid October before launching higher. Now it is consolidating under new resistance after a small pullback. The RSI is moving back higher in the bullish zone after bouncing off the mid line while the MACD is flattening.

ConAgra, Ticker: $ CAG

ConAgra, $ CAG, reported earnings last week and pulled back intraday to the 50 day SMA. A Hollow Red candle showed a quick rebound and it is now at resistance again. The MACD continues lower but the RSI is trying to rebound, while it has remained in the bullish zone.

Domino’s Pizza, Ticker: $ DPZ

Domino’s Pizza, $ DPZ, broke a long consolidation area higher in October, and has been absorbing the move since the beginning of December. The price is now approaching the top of the new consolidation range with a RSI that is running higher after a bounce, and in the bullish zone and a MACD that is turning back up.

Schlumberger, Ticker: $ SLB

Schlumberger, $ SLB, has been trending lower since July began. The recent ‘V’ bottom in December gives hope for a reversal, as it is back at the gap lower level Friday after printing a bullish Marubozu candle. The RSI is trying to crack the mid line while the MACD has crossed up and is rising.

Weyerhaeuser, Ticker: $ WY

Weyerhaeuser, $ WY, is moving higher is a strong trend since April. The pullback ending last week has reversed and is back at resistance with a rising and bullish RSI and a MACD turning up. The series of higher lows and higher highs continues. The RSI held at the mid line on the pullback, a strong bullish signal.

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into the Holiday shortened week for Christmas, sees the Santa Claus Rally already in full swing for equities. Elsewhere look for Gold to continue to bounce in its downtrend while Crude Oil gains some footing. The US Dollar Index is making another leg higher while US Treasuries also look towards all-time highs. The Shanghai Composite continues its move higher but requires a cautious stance from a momentum perspective while Emerging Markets are reversing higher. Volatility looks to remain subdued again and may fall keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Both the SPY and QQQ look to retest their prior highs and the IWM its all-time high. Use this information as you prepare for the coming week and trad’em well.

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