Canadian Money Forum banner

1 - 20 of 540 Posts

·
Registered
Joined
·
2,991 Posts
Discussion Starter #1
Asx and Asian markets are tanking this evening. Same with dow/S&P futures. Same for TSX tomorrow? Might be a time to find a home for spare cash?
 

·
Registered
Joined
·
15,910 Posts
Wake me up when the index falls below its 200 day moving average. For the S&P 500 that would take a 9% drop and for TSX, would take a 6% drop.

IMO nothing looks remotely bearish until then.
 

·
Registered
Joined
·
2,991 Posts
Discussion Starter #3 (Edited)
James is sleeping and doesn't want to be woken, but for those of us with an interest in the markets, tomorrow may be worth watching

At present US market futures are down 1.4-1.9%. These drops and similar ones in Australia and Asia are apparently as a result of spread of virus to Korea, Italy, Iran and elsewhere. As has happened in China, trade, tourism and other economic sectors will now be impacted in more and more countries.

Not something to be ignored. More here:

https://www.cnn.com/2020/02/23/business/stock-futures-coronavirus/index.html
 

·
Registered
Joined
·
3,614 Posts
Sounds like a lot of noise...we need a 20% pull back...maybe this virus can get us there?
 

·
Registered
Joined
·
15,910 Posts
I thought we all had an understanding that the central banks just print money as needed and juice the stock index. I assumed this was a big reason everyone was investing in stocks. This thing doesn't exactly rise on its own...

https://www.cnbc.com/2019/11/07/the-feds-monetary-juice-has-tied-directly-to-the-rise-in-stocks.html
https://www.yardeni.com/pub/peacockfedecbassets.pdf

Notice how the central banks stopped printing in 2018, and the stock market immediately became more volatile. Then the index plunged in 2018; Wall Street and the media then started begging for more money-printing oomph and low interest rates. Which they got!

Again, I thought this was the deal... central banks drive the stock market. The 2009 rally started with central bank manipulation, and the stock market continues to need the central bank. If you have a moment on Monday, pray to the central bank, put out some candles, or whatever style of shrine you prefer.

print-up-stupid.png
 

·
Registered
Joined
·
75 Posts
I thought we all had an understanding that the central banks just print money as needed and juice the stock index. I assumed this was a big reason everyone was investing in stocks. This thing doesn't exactly rise on its own...
The Bond Market is also flashing trouble as the yield curve is flat to inverting. The real melt will start when investors start to flee the bond market. Will negative rates be coming to NA? The 30 year Canada now yields 1.9%. Yikes!
Should We Panic
 

·
Registered
Joined
·
902 Posts
A 10% correction give or take was due at some point. I will be looking to see what stocks hold up if any do, interesting to see that and if my holdings are diversfied enough. Mind you with the upwards trend we have had almost everything may drop today. Gold will likely go up but I not a holder of any gold stocks, never have been.
 

·
Registered
Joined
·
2,991 Posts
Discussion Starter #9
The Bond Market is also flashing trouble as the yield curve is flat to inverting. The real melt will start when investors start to flee the bond market. Will negative rates be coming to NA? The 30 year Canada now yields 1.9%. Yikes!
Should We Panic
Thanks for the link. The part near the end is worth thinking about:
Watch the Bond Market

A 30 year Canadian Gov't Bond now pays 1.39% interest
A 5 year pays you 1.50%

Why would you go that far out on the yield curve when you can make more by going short. The yield curve is flattening out and inverting.

The inflation rate in Canada as of January 2020 is 2.4%
Why would you lock up money and fix it at rates below inflation? Is that safe?
Not if you're retired and seeking income. I do not seek to fix my income in retirement. I want to grow cash flow. Cash flow is king when you stop working. Nothing else matters, except for time and what is your time worth?

Warren Buffett on bonds;

“It is a terrible mistake for investors with long-term horizons - among them pension funds, college endowments and savings-minded individuals - to measure their investment 'risk' by their portfolios ratio of bonds to stocks. Often high-grade bonds in an investment portfolio increase its risk.”

It is the financial industry that wants you to have a 60/40 split of stocks and bonds. Pure unadulterated twaddle born from modern portfolio theory to sell you products.
Markets do go up and down for various reasons. You can't look back at market statistics and learn anything about effect of a future large event. The Corona virus is such an event. Hopefully it will resolve fairly quickly. But it will have an impact on the global economy. How large is still to be seen, especially seeing it is mainly China that will determine that.
 

·
Registered
Joined
·
2,991 Posts
Discussion Starter #10 (Edited)
TSX down 340 at open :(

The Dow plunged as much as 997 points, or 3.4%, when US markets opened on Monday. The S&P 500 fell 3.1%, and the Nasdaq lost 3.9%. The VIX, a measure of market volatility, shot up 40%.

OK, going for bike ride. Que sera sera.
 

·
Registered
Joined
·
917 Posts
Perfect. Most below their 200MDA. Dow down 5% from 2 weeks ago. EAFE down 6%. Sitting on loads of cash after a property sale and time to start deploying some.

Does anyone think this will carry over into tomorrow?
 

·
Registered
Joined
·
15,910 Posts
Perfect. Most below their 200MDA. Dow down 5% from 2 weeks ago. EAFE down 6%. Sitting on loads of cash after a property sale and time to start deploying some.
I still see most things above their 200 day moving averages. Charts:

TSX way above trendline: http://schrts.co/ctGiedbb
S&P 500 way above trendline: http://schrts.co/IKYjbVRF
MSCI EAFE has fallen to the 200 day: http://schrts.co/QcwqBsAq

The TSX and S&P 500 could fall several percent more without even breaking the pattern of the current bullish trend. I have no idea what will happen in the coming days, but this just does not seem like a serious decline at the moment.
 

·
Registered
Joined
·
917 Posts
I still see most things above their 200 day moving averages. Charts:

TSX way above trendline: http://schrts.co/ctGiedbb
S&P 500 way above trendline: http://schrts.co/IKYjbVRF
MSCI EAFE has fallen to the 200 day: http://schrts.co/QcwqBsAq

The TSX and S&P 500 could fall several percent more without even breaking the pattern of the current bullish trend. I have no idea what will happen in the coming days, but this just does not seem like a serious decline at the moment.
I misread some general charts in the globe by accident ( had period at 3M vs 1 year) but was just looking at some ETFS mainly. CDN - FQC, EAFE - DQI and EM - ZEM all below the 200MDA.
 

·
Registered
Joined
·
2,991 Posts
Discussion Starter #17 (Edited)
James doesn't see this as a serious decline? Dow down 1000 points?????
Still bogged down looking at moving averages??
Those are historical and have no meaning when unforeseen events take place.
Maybe read this: https://www.investopedia.com/articles/trading/11/pitfalls-moving-averages.asp

A few news clips (Just after noon EST Feb 4th)

South Korea's Kospi (KOSPI) index closed down nearly 3.9%, its worst day since October 2018, after coronavirus cases in the country surged past 800.

Italy's main index finished down 5.4%, after the number of cases there topped 200 — including five deaths — and authorities started shutting down public buildings, schools and sports events in parts of the country.

Some of the world's biggest economies are on the brink of recession

European exchanges ended the day in sharply in the red, with the United Kingdom's FTSE 100 (UKX) closing down 3.3%.

Germany's DAX (DAX) has shed 4%

French CAC 40 (CAC40) also fell nearly 4%.

The Dow has now lost more than 1,400 points in the span of the three trading days. That sharp drop wiped out the Dow’s gains for the year — leaving the index slightly negative for 2020.
 

·
Registered
Joined
·
15,910 Posts
James doesn't see this as a serious decline? Dow down 1000 points?????
Admittedly these are big single day moves. S&P 500 is down 3.3%. TSX however is doing much better. XIU is only down 1.7% which is a bad day, but not a horrendous day.

So yeah... bad day. But Canada is handling it better than nearly everywhere else in the world.

Also look at the VIX. It's only at 25 which is not 'off the charts' fear by any means. The normal VIX range for decades has been 10 to 30 or so and VIX has not gone above that.

During the financial crisis, VIX went up to 80 and during the worst selloffs in recent years, it's usually been as high as 35. We're not there yet.

Here's the VIX "fear gauge" since 2010. The current reading is high, but still within normal. Not a stock market panic (yet)
http://schrts.co/ymevUZCZ
 

·
Registered
Joined
·
321 Posts
1,000 DOW points ain't what it used to be. A drop of 1,000 used to be earth-shattering. Today it's "only" 3.5%. It's a big drop for one day, yes, but I wouldn't classify this as "markets tanking" just yet. Maybe tomorrow. ;)
 
1 - 20 of 540 Posts
Top