Look at the previous post on the ETF: BUZZ
Update on XLY, XLP vs SPY
January 13, 2023 by
What a difference a few days make.
Prices as of the close on Thursday, January 12, 2023.
Another Stock Market Indicator
January 10, 2023 by
In the past, I have illustrated a few ratios that have measured investor sentiment on future stock market direction.
In this post, I will add another, the relative strength between the consumer discretionary sector (XLY ) and consumer staples(XLP).
Historically when the consumer discretionary sector (XLY) outperforms the discretionary sector(XLP), the overall market (SPY) has been bullish.
The relative strength swap doe not always indicates a change, but the trade-off is always worth noticing.
The following is the relative strength of XLY vs XLP with the SPY as of the close of Monday, January 9, 2023.
As illustrated, XLP is still doing better than XLY.
TACK ETF looks like a winner.
December 22, 2022 by
In the current issue (December 2022) of Technical Analysis of Stocks and Commodities, there is an interview with Katie Stockton, a founder,
and managing partner of Fairlead Strategies LLC.
Fairchild, which uses technical analysis as its main focus, has developed a sector-focused actively managed ETF; Fairchild Tactactical Sector (TACK) which started trading at $25.00 on March 22, 2022.
The universe of ETFs for TACK includes the 11 Select Sector SPDRs as well as SPDR Gold (GLD) and SPTL and SPTS, the long and short-term SPDR ETFs.
The fund, according to the article, holds from five to eight positions in the portfolio at any one time.
The fund rebalances, that is, adjusts on a monthly basis. It uses monthly data only.
I assume it uses some sort of relative strength algorithm.
The relative performance to the overall market ETF SPY has been very nice.
The following chart shows that from the funds’ inception to the close yesterday, December 21, 2022.
TACK, from its inception of $25.00 to the close of December 21, 2022, of $23.70 has lost approximately 5.48%, while the SPY on that date was at 446.53 and at the close of December 21, 2022, was at 363.23, a loss of approximately 18.65% Excellent relative performance of plus 13.17% over the approximately eight-month period.
There are numerous ways to trade this rising star ETF. A pair’s trade or outright long when it has high relative strength with positive momentum.
ASML may have been a better investment for Berkshire?
November 17, 2022 by
ASML manufactures equipment to make semiconductors. Taiwan Semiconductors is a customer.
The following shows the relative strength of TSM versus ASML.
TSM is stronger when the vertical line is GREEN. ASML is stronger when the vertical line is RED.
It may make an excellent pairs trade. The correlation is very high.
Prices are pre-opening on November 17, 2022.
Berkshire Hathaway and Taiwan Semiconductor Manufacturing
November 17, 2022 by
Yesterday WSJ (Nov 16, 2022) noted in its latest filings that Berkshire Hathaway, which in the past had avoided technology, had purchased 60 million shares of TSMC valued at roughly $4.1 billion which is one of Berkshire’s top 10 holdings.
The following graph shows TSM’s price history over the past few months.
Volume is at the bottom.
Prices are as of 8:30 on November 17, 2022
Hedge against bond market decline
September 27, 2022 by
During the 1998 stock market decline of 21%, I was a managing partner of two convertible arbitrage hedge funds. It should have been a home run for the convertible arbitrage community, but there was also a decline in the fixed income market that happened at the same time.
The long side in the convertible arbitrage position is supposed to decline at a much slower rate than the short side equity decline. That is where the profit comes from. In 1998, as in today’s market, that is not happening. I was not alone. There was a flight from quality, as that was the most liquid part of the market.
This problem led most of the convertible arbitrage community to try and figure out a way to hedge the long side against fixed income decline at the same time as equity declines.
The futures market offered a partial solution, but many of us did not use it because of various reasons. The main reason was that outside counsel advised us that if we were to use futures we had to register as a commodity pool operator with the CFTC, and we were unwilling to put ourselves in another regulatory situation.
TODAY THERE IS A BETTER WAY:
“The Simplify Interest Rate Hedge ETF (PFIX) seeks to hedge interest rate movements arising from rising long-term interest rates and to benefit from market stress when fixed income volatility increases.
For more information, go to the Simplify website.
The following graph portrays PFIX in relation to SPY, the ETF of the S&P 500. Close as of the close of Tuesday, September 27, 2022.
The swap from SPY to PFIX is at the Green vertical lines.
The trade would make an interesting momemtum-based pairs trade.
PayPal versus Visa
September 21, 2022 by
I am a subscriber to Seeking Alpha which during the day updates its readers with many blurbs about what the Wall Street research is telling their readers.
This morning, September 21, 2022, I received the following:
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Bank of America has added PayPal Holdings (NASDAQ:PYPL) and removed Visa (NYSE:V) to its US 1 list, which represents the firms best investment ideas from its Buy-rated, U.S.-listed stocks. BofA keeps its buy rating on Visa.
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In Wednesday premarket trading, PayPal (PYPL) has gained 0.6%, and Visa (V) was up 0.2%.
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By contrast, SA’s Quant system, which historically outperforms the market, has a Hold rating on PayPal (PYPL) as well as on Visa (V).
I have charted the relative performance of PYPL vs V over the last few monthe with the results below.
The swap between PYPL and V should have happened on July 22, 2022
SNAP dissapoints everyone.
August 2, 2022 by
SNAP, the provider of Snapchat over the past year has reported negative news after negative news. Now there is some news about its compensation practices which put into question more questions about the future viability of the company.
The attached charts illustrate the stock journey. Prices are as of the close of Monday, August 1, 2022
Early Warning Indicator
June 4, 2022 by
This ‘Shoeshine Boy’ Spots Market Tops |
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By Pete Carmasino, chief market strategist, Chaikin Analytics
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| Just before the 1929 market crash, John F. Kennedy’s father stopped to get his shoes cleaned…But the enthusiastic, young shoeshine boy wanted to offer something more – stock tips.That’s all Joe Kennedy needed to hear. In his mind, nothing could indicate a market top better than unsolicited stock advice from a shoeshine boy.The legend says Joe immediately got out of the market. Then, he “shorted” it and got filthy rich.True or not, this story is an investor favorite for good reason. It sends an important warning about market manias.Put simply… a top is near when the proverbial “shoeshine boys” get in on the action.That’s important to remember right now…You see, whether it was intended or not, global investing giant VanEck created a modern-day shoeshine boy investment. And as you’ll see, it called the most recent market top.Let’s take a closer look… |
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| The VanEck Social Sentiment Fund (BUZZ) launched in March 2021.The idea behind the exchange-traded fund (“ETF”) is easy to understand. It invests in 75 mid- to large-cap stocks based on the amount of hype they’re getting on social media. And it’s based on the Buzz NextGen AI U.S. Sentiment Leaders Index…To be considered for the index, companies need a market cap of at least $5 billion. They also need consistent and diverse mentions on social media over the previous year.From there, any stocks that meet the criteria are ranked. The top 75 go into the index.The idea is to use crowd sentiment to find good companies. Essentially, it becomes a momentum index.In short, the index and related ETF are the collective shoeshine boy…The index’s creators use artificial-intelligence (“AI”) tools to track websites like Twitter and StockTwits. These AI bots decipher between good and bad phrases relating to stocks.But it’s an interesting choice, to say the least…On Twitter, 50% of users don’t have a college degree. I’m willing to bet that a much higher percentage don’t even know investing basics. Plus, 92% of posts come from 10% of users.So there you go… That’s your BUZZ Investment Committee.It’s no surprise that the ETF is effectively a “meme stock” fund. Its largest initial holdings included Twitter (TWTR), DraftKings (DKNG), Meta Platforms (FB), and Tesla (TSLA).Investors couldn’t get enough when BUZZ launched in March 2021. Its assets quickly skyrocketed to more than $500 million.But the good times didn’t last long… Today, the ETF only boasts about $75 million in assets.And more importantly, this proverbial shoeshine boy called the latest market top. Look at how BUZZ sputtered out shortly before the broad market took a nose dive… |
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| The ETF is down roughly 48% from its November 2021 peak. And now, the S&P 500 Index is down around 16% from its all-time high back in January.That tells us the shoeshine boy indicator worked yet again.The moral of the story is simple…A bear market was all but guaranteed when BUZZ launched. But now, this tool directly measures the proverbial shoeshine boy for us.As a result, you’ll want to keep an eye on it.Good investing,Pete Carmasino
The above was written on May 17, 2022, in The Chaikin Analytics Power Feed The following is the current status of BUZZ vs the SPY. It is looking like good news. The momentum ratio is now favorable to BUZZ versus SPY, and BUZZ is on an upswing.
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