Whenever you have a divergence in implied volatility (inverted on scale) versus price, it can signal a top/bottom.
Generally speaking the longer lasting the divergence the more important the top/bottom.
Institutional investors have been offloading a significant amount of stock – the greatest amount since 2008.
Retail clients are buying in.
Below chart indicates why boat arrivals are such a big election issues.
The costs are increasing while the deficit increases.
Below is the updated chart of our model portfolio (blue) performance against the ASX 200 (brown) over the last 18-months.
Our portfolio has continued to outperform the market long-term as we focus on the intrinsic value of the underlying companies.
The below chart shows the gold price (Red) charted against the AUD compared to the USD.
You can see the correlation between the two.
It was reported in the paper this week that the banks have collected records fees from their clients.
Bank customers are reported to have paid $11.3 billion in fees after a 4.2% increase.
Business carried the brunt of the costs increases while household benefited from a slight fall in fees.
The average household now pays $8.94 per week in bank fees.
Being a shareholder in all of the major banks I can assure you that the dividends I have received along with capital growth far outweigh the fees I have paid.
You will not see me bashing banks.
I will be buying more shares in them.
The Australian Taxation Office is to step up scrutiny of property investments by self-managed super funds amid suspicions that strict lending laws are being breached.
Stuart Forsyth, assistant tax commissioner, said more than one in five contraventions identified by auditors’ involved funds lending to their members.
Note that the micro caps are trending down in the below chart.
This is a good indicator that we are still in a Bear market.
Below is a chart of the Japan’s market which is down 13%.
Last week was budget week, the below link will take you to a page which shows government revenue and government expenditure.
What is interesting is that revenue continues to grow, the problem is that the expenses are out stripping revenue.
Apply this problem to your own finances, what is the solution?
Below are some interest ratios for the market.
The indicators are showing that investors are currently taking more risk for their yield.
This could lead to loss of capital.
The below chart indicates that although the share prices continue to move up, the volume of shares being traded is reducing.
This is a indication that the market is due for a pull back.
How far we cannot say, but it is a good indication to hold off buying for now.
Barron's cover story is an on the whole bullish report on "The Millenials" - young adults sometimes called Generation Y and defined as people from ages 18 to 37 - who already account for an annual $1.3 trillion of consumer spending or 21% of the total.
Gold price had its largest fall in the past 30 years.
The question is why?
No one really knows needless to say that Friday week ago when the US market opened 15% of the annual world mine supply was dumped (400 tones) on the market.
Not the normal way this type of transaction would be conducted.
We also note that the bond yields are dropping, indicating a move into the bond market.
Gold is often considered to be a lead indicator for both inflation and deflation. That is if investors expect inflation they will buy into gold to protect themselves and the opposite for deflation.
As a rough guide gold will move 18-24 months prior to the market.
The speculation now is that we could be in for a period of deflation and could expect to see a pull back in the market in the coming years.
Given the size of this drop I will wait and see before making any assumptions.
Below is a quote from the Age Newspaper.
This is something we have known for some time and is the reason why we are not bullish on the market. For the market to continue to rally, wide-spread support is needed.
"90% of market rally over past 12-months driven by just 10 stocks" - The Age
A report by Glenda Kwek in "The Age" today says while the S&P/ASX200 has risen by 14.9% or 643.85 points since April 10 2012 on the back of a global Search for yield that has attracted local and international investors to the Australian market, 90% of that rally has been driven by just ten stocks, led by the CBA, which has lifted by $1.23 to $67.30 over the past year.
The other nine include BHP, WBC, ANZ, RIO, WOW, QBE, WPL, CSL and MQG.
Bitcoin (sign: BTC) is a decentralized digital currency based on an open-source, peer-to-peer internet protocol. It was introduced by a pseudonymous developer named Satoshi Nakamoto in 2009.
Bitcoins can be exchanged through a computer or smartphone locally or internationally without an intermediate financial institution. In trade, one bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal points.
Bitcoin is not managed like typical currencies: it has no central bank or central organization. Instead, it relies on an internet-based peer-to-peer network. The money supply is automated and given to servers or "bitcoin miners" that confirm bitcoin transactions as they add them to a decentralized and archived transaction log approximately every 10 minutes.
This week the media have been speculating about the budget, which they tend to do this time of year.
The big issue is an expectation that the Government will attack superannuation as a means to raise tax to cover the major deficit, which we are all now expecting.
On the 01/07/2012 if you earned over $300,000 taxable income your contribution tax inside of super went up from 15% to 30%.
It is now being speculated that this limit will fall from $300,000 to $180,000. This will have a major impact for the Super balances for people in this income class.
It is estimated that the average worker earning over $180,000 per annum will have around $80,000 less in superannuation because of this tax.
On the 01/07/2013 the Super Guarantee amount will increase from 9% to 9.25%.
If the above changes come in people earning $180,000 will receive $450 more in super from their employer but the government will take extra tax of $2,500.
The bulk of the current rally has been on the back of the banking sector, now that the rally is starting to pull back I expect that the banks will be the one who struggle to provide growth and expect in the short term will pull back and investors take profits.
The chart below compares the banks to the mining sector.
As highlighted over the past 12-months the mining stocks have pulled back (Blue) while the banks have recorded outstand gains (Red).
The gap between the two sectors is concerning, as such we expect to see a pull back in the banking sector.
Right now the collective view on Gold is at an all time low indicating that the Gold price is about to fall.
While in the US the enthusiasm about the market is at an all time high.
Which investment should you be buying?
Gold and the ASX 200 have an inverse relationship as one falls the other rises.
If you are not chasing yield and looking for capital growth, Gold is starting to look like the place to be.