Stocks & Bonds

Follow The Leader: What’s Next For The Nasdaq 100?

If you haven’t noticed, large cap tech stocks have been on fire of late. And there’s no better measure for this sector than the Nasdaq 100 (NDX). Check this out:  Since mid-April, the Nasdaq 100 is outperforming the S&P 500 by almost 2 to 1 and the Dow Jones Industrial Average by almost 3 to 1. And since the equity markets typically only go as far as its leaders take

Why The VIX Could Stay Low For Years

Ah, the VIX.  Everyone’s favorite fear/greed instrument, but in reality it is probably one of the most misunderstood things in all of finance. So many have incorrectly (for years now) said a low VIX is bearish, because it shows everyone is complacent.  This just isn’t true.  The Volatility Index (VIX) is simply a measure of how much traders are willing to pay for various S&P 500 options over the next

10 Reasons Investor Confusion Reigns Supreme In 2014

Considering the way the markets behaved during the first half of the year, it should come as no surprise that there are high levels of investor confusion surrounding the near-term direction (and theme) of the markets. On a day-to-day basis, investor sentiment ranges from a head scratch to a high five to you gotta be kidding me.  Several technical and fundamental indicators have flashed caution to no avail. And this has given way to an

Managing Risk Through Unforeseen Events

The theory of “black swan events” was originally developed by Nassim Taleb to profile unexpected occurrences or rare events that few were able to predict or prepare for.  The recent tragedy of the plane crash along the Ukraine-Russian border that led to a swift global sell off is one such occurrence that caught nearly everyone off guard. And events like these add another element to managing risk. From a regional

What Does The Huge VIX Spike Mean For Stocks?

On Thursday, the S&P 500 dropped 1.18%, ending its streak of days without a 1% move (up or down) at 62 days in a row.  While this streak was significant and worthy of my attention (check out my Tumblr blog), something else occurred that day that caught my eye: the Volatility Index (VIX) spiked. In this piece I want to take a closer look at the VIX and market performance post VIX spikes.

Why The Russell 2000 May Outperform In The Days Ahead

Over the past few days, I’ve been watching the Russell 2000. And more specifically, the Russell 2000 (RUT) to S&P 500 (SPX) performance ratio. It’s no secret that the Russell 2000 and the small caps have been severely underperforming their large cap buddies in the S&P 500 this year. In fact, as of yesterday’s close the S&P 500 was +5.94% vs the Russell 2000 -2.58% YTD. But perhaps the Small Caps were

Will China Be Joining The Great Rotation Anytime Soon?

Russian economist Nikolai Kondratiev identified long-term growth cycles (50+ years) in market economies almost a century ago.  And I believe the economic turbulence over the past several years is part of a global shift into the next Kondratiev Cycle.  For developed nations, this has been a drawn out and painful transition.  One byproduct of the current Kondratiev wave transition is the Great Rotation, a phrase highlighting the transition from long-term bonds

The Reach For Yield: A Monster of the Fed’s Own Design

“The Committee recognizes that low interest rates may provide incentives for some investors to “reach for yield,” and those actions could increase vulnerabilities in the financial system to adverse events. While prices of real estate, equities, and corporate bonds have risen appreciably and valuation metrics have increased, they remain generally in line with historical norms. In some sectors, such as lower-rated corporate debt, valuations appear stretched and issuance has been

Is The SPX Up 5 Months In A Row Bearish?

The S&P 500 (SPX)  is up an incredible 5 months in a row.  That has to be bearish, right?  Most would think a market up ‘a lot’ is probably due to come back down and negatively impact S&P 500 performance thereafter. Makes sense, yes? But as Lee Corso would say, “Not so fast my friends!” First things first, here are the longest monthly winning streaks for the SPX going back

Will Small Caps Continue To Weaken?

Understanding where weakness and strength are coming from is often a critical component in analyzing the stock market. Right now it looks like Small Caps are one of the ugliest pigs in the pin. On its face value, the Russell 2000 iShares ETF (IWM), looks fine:  It’s near its all-time high, in a clear up trend and above its major moving averages. It’s when we look under the hood of the