Sentiment Analysis

Why Contrarian Investing Still Works

Being a contrarian investor is a lot harder than it sounds. It means doing the opposite of the crowd. It means having the stomach and stamina to buy assets or investments that are unloved, misunderstood, and trading at bargain prices. Highly respected investors who made their fortunes by being contrarians include David Dreman, Sir John …

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How to Hedge in a Rising Market

Hedging, for some investors, sounds complicated. In reality, it’s not because it’s all about reducing investment risk. Who can’t understand that? Sometimes stock prices go up, sometimes they go down. That’s how financial markets work. But over the past 8 years, stock prices have enjoyed consecutive yearly gains by making one all-time high after another. How can …

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Is Sector Performance Following History?

It’s been said the more things change, the more they stay the same. And right now, the performance of stock market industry sectors is behaving right in line with that view. During the first quarter, the total U.S. stock market (NYSEARCA:VTI) rose almost 6% in value. Driving the stock market’s strong start has been bullish momentum …

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Risk and Volatility: Know the Difference

On financial networks and in finance classrooms around the globe, stock market volatility is routinely mis-classified as “risk.”  Unfortunately, this erroneous view causes people to make investment mistakes. Elroy Dimson, a London Business School professor once wrote, that risk “means more things can happen than will happen.” It’s an eloquent way for describing risk, which …

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Utilities, Anyone?

With 2016 officially half over, the celebratory nature of the stock market is being masked by another telling trend: Defensive sectors are outperforming higher risk areas. Formerly hot groups drenched with elevated risk like solar energy (NYSEARCA:TAN) and biotechnology stocks (NasdaqGS:IBB) have fallen out of favor and are down more than 20%, putting them into bear …

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Being a Contrarian Investor Still Pays Off

Contrarian investing takes gumption. Not only are you buying assets that are hated by most investors, but you’re doing it at prices that are depressed. It’s a scary proposition for many people and because it requires such nerves of steel, most don’t do it. Add it to the checklist of reasons why contrarian investing – whether it’s done as a long-term investment or short-term …

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4 Moments When “Stay the Course” is the Wrong Investment Advice

The worst January start for U.S. stocks since 2009 should get your attention. If you’ve been hiding underneath a rock or hibernating in a cave-like dwelling, it’s time to come out. “A little sunlight is the best disinfectant,” as Judge Brandeis might say. Most global stock yardsticks from China (NYSEARCA:ASHS) to Japan (NYSEARCA:EWJ) and even the United …

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Rising Stock Market Volatility, A Sign of the Times

Stock market volatility ain’t what it used to be. And unlike recent years, the VIX, a benchmark of volatility in S&P 500 stocks, (NYSEARCA:VOO) has been consistently up in 2016. The chart below illustrates how market conditions and stock market volatility or VIX (ChicagoOptions:^VIX) have dramatically changed over the past 52-weeks. (Audio) Stress-Test Your Investments Now + It’s Not a Bear …

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How to Profit from Rising Volatility

Stock market volatility is often wrongly portrayed by the mainstream media as an enemy. In reality, it’s not. First, prudent investors use volatility (ChicagoOptions:^VIX) as an effective tool to measure the stock market’s psychology. Why? Because excessive bullishness or bearishness in market prices is instantaneously reflected in the VIX. And therein lies the opportunity! At ETFguide, we use VIX readings in conjunction …

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Is a Liquidity Crunch in the Solar Sector Ahead?

Stocks in the solar and alternative energy space are getting crushed. Will it lead to a liquidity crunch? Since the beginning of the year, the Guggenheim Solar ETF (NYSEARCA:TAN) has lost a stunning 21.80% in value compared to a +0.20% gain for the SPDR S&P 500 ETF (NYSEARCA:SPY).  And while a 21.8% loss is most …

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The Stock Market’s Small Cap Problem

The extraordinary performance of U.S. stocks over the past six years has been like the 1960s Boston Celtics: Dominant and unbeatable. But is the tide changing? From 2009 to present the SPDR S&P 500 ETF (NYSEARCA:SPY) has gained almost +135%, while the SPDR S&P MidCap 400 ETF (NYSEARCA:MDY) surged +149.72% and the iShares S&P SmallCap 600 (NYSEARCA:IJR) jumped …

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Ocean Waves

Is Elevated Volatility on Modest Losses Normal?

Stock market volatility creeps up when most investors least expect it. But even more intriguing about the latest upward explosion in equity volatility is that it occurred on small percentage losses in major stock index benchmarks like the S&P 500 (NYSEARCA:SPY) and Russell Small Cap 2000 (NYSEARCA:IWM). (Audio) Portfolio Report Card: Diseccting a $1.2 Million …

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A Seasonal Snapshot of the S&P 500

Although we know market prices always trump seasonality in terms of importance, we shouldn’t completely ignore the significance of historical seasonal trends. Since 1996, the S&P 500 (SNP:^GSPC) has ended higher during the month of January 55% of the time but with a flat return. This particular January appears to be an obvious divergence from this trend. …

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Is the Table for Higher Stock Market Volatility Set?

Rising stock market volatility on the heels of rising stock prices is among the most intriguing market developments over the past few months. And it’s gone little noticed by the mainstream financial media. Our chart below shows how this phenomenon has unfolded. Do you notice how the total U.S. stock market (NYSEARCA:VTI) and the S&P 500 (ChicagoOptions:^GSPC) …

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Roller Coaster Ride 2

Are Momentum Stocks Losing their Momentum?

Are momentum stocks losing their luster? High flying momentum stocks like Tesla Motors (NasdaqGS:TSLA), Twitter (NYSE:TWTR), and GoPro (NasdaqGS:GPRO) have experienced sharp pullbacks over the past few months. Tesla and Twitter have fallen below their 50-day and 200-day moving average while GoPro now trades below its 50-day moving average. What’s next? (Audio)Listen to Ron DeLegge @ The Index Investing …

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Stock ETFs Rake in Assets

Stock ETFs Keep Vacuuming in Assets

Never mind how U.S. stocks are at all-time highs.  People are pouring more money into stock tracking ETFs. The top three ETFs by asset inflows over the past week were the iShares S&P MidCap ETF (NYSEARCA:IJH), iShares S&P 500 ETF (NYSEARCA:IVV), and the PowerShares Nasdaq 100 ETF (NasdaqGM:QQQ).  IJH raked in almost $1 billion while QQQ …

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Ocean Waves

Is Swelling Volatility on Modest Declines Bullish?

It’s been three years since the last significant stock market decline. The 19% slide from April 2011 to October 2011 stoked fear, but still missed the official definition of 20% bear market. This time around, it’s still too early to know whether the modest pullback in the S&P 500 (SNP:^GSPC) that began several months ago …

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The Crowd Votes for Stocks over Cash

What do investors love and what do they hate? Where are they putting their money? Analyzing the money inflow/outflow data for ETFs gives us some clues. In a study of U.S. ETF flows just published by the SPDR ETFs, David B. Mazza, the Head of Research observed: “Equities drove a disproportionate share of September’s inflows with …

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Sleeping Bear

Equity Bearishness Sinks to 20 Year Lows

Is pessimism about the stock market really as high as equity bulls claim? One measure of the stock market’s mood is the Investor’s Intelligence Sentiment Index, which offers us a compact view of how market participants feel toward stocks. The latest II data shows that bearish sentiment or pessimism toward stocks (NYSEARCA:IVV) has now hit …

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Fairytale

The No Market Volatility Fairytale

Has 2014 stock market volatility really gone the way of dodo birds and dinosaurs as claimed? The news du jour is that falling VIX means that stock market volatility (NYSEARCA:SPY) is non-existent. Is it true? Recent headlines give this innuendo. Here’s a tiny sample: VIX Tumbles to 9-month Lows – Zerohedge VIX Volatility Index Falls …

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