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2015-05-27 15:21:17

Posted by
Andre Rouillard
New Constructs, LLC
Contributor
Stocks

Why One Investment Style Falls Below the Rest

Check out this week’s Danger Zone interview with Chuck Jaffe of Money Life and MarketWatch.com.
 

This week, ETFs and mutual funds in the Small Cap Blend investment style are in the Danger Zone. The Small Cap Blend style ranks last out of the 12 styles as detailed in our 2Q15 Style Ratings report.

Of the 710 Small Cap Blend ETFs and mutual funds under our coverage, 497, or 70%, earn a Dangerous-or-worse rating. Less than 2% of these funds receive Attractive ratings. Zero ETFs or mutual funds receive our Very Attractive rating.

Poor Portfolio Management

The primary reason for Small Cap Blend funds’ poor ratings is their poor stock picking. We rate each fund under our coverage with a Portfolio Management rating. The Portfolio Management rating measures the quality of a fund’s holdings.

Figure 1 juxtaposes the ratings of stocks in the Small Cap Blend style with the portfolio management ratings of mutual funds and ETFs in the style. 1067 out of the 2596 stocks held by Small Cap Blend funds earn a Neutral-or-better rating. These Neutral-or-better-rated stocks make up 42% of the market cap in the Small Cap Blend style.

Figure 1: Portfolio Management Rating of Funds vs. Quality of Stocks

Sources:   New Constructs, LLC and company filings. 

Despite the high proportion of Neutral-or-better Small Cap Blend stocks, just 10% of ETFs and 16% of mutual funds in the style even manage to earn a Neutral Portfolio Management rating. No ETFs or mutual funds earn an Attractive Portfolio Management rating.

Even more disheartening is that the three ETFs that do earn a Neutral Portfolio Management rating contain less than 1% of the assets invested across all Small Cap Blend ETFs. Similarly, just 11% of all Small Cap Blend mutual fund assets are in mutual funds that earn a Neutral Portfolio Management rating.

Even though the advice “past performance is not a guarantee of future returns” gets repeated again and again, investors still gravitate towards funds with a strong history of performance. Unfortunately, that means investors in the Small Cap Blend style are missing out on funds with superior holdings simply because said funds don’t yet have established track records.

High Costs Only Worsen an Investment

The second reason for so many poor funds in the Small Cap Blend style is the high costs across the board. The Small Cap Blend Style is one of the most expensive of all 12 styles, with average total annual costs of 2.09%, ranking behind only the Small Cap Value and Small Cap Growth styles.

Normally investors do a good job of avoiding funds with high costs. However, in this case, investors are ignoring the high costs associated with the Russell U.S. Small Cap Equity Fund (RLACX). RLACX is one of our least favorite mutual funds in the Small Cap Blend style and charges total annual costs of 4.40%. Despite its poor holdings and high costs, RLACX has over $2.3 billion in assets. While the fund’s expense ratio of 1.25% might look attractive, its high front-end load costs of 5.75% and transaction costs of 0.79% loom large.

Many investors don’t take these costs into account when investing in a fund, but these additional costs erode 36% of their return over a 10-year period. To make matters worse, RLACX charges investors these high costs while 48% of its portfolio consists of Dangerous-or-worse rated stocks.

A Bad Stock in a Bad Fund

Granite Construction (GVA) is RLACX’s top holding and earns our Dangerous rating. Over the past 10 years, Granite’s after-tax profit (NOPAT) has declined by just over 4% compounded annually. It seems Granite’s moat has disappeared as well, as its pretax margin has declined from 8% in 2008, to just 3% in 2014. Over the same timeframe, its return on invested capital (ROIC) has declined from 22% to just 4%, which ranks in the bottom quintile of all companies we cover. The company has also been bleeding cash and has a cumulative free cash flow of -$72 million over the past four years.

In addition to not being a growth stock, GVA is no value stock either. To justify its current price of $36/share, Granite must increase its pretax margins to 5% and grow profits by 21% compounded annually over the next 9 years. This expectation seems extremely unlikely given Granite’s long-term declining profits and value destruction.

If the company can grow profits by a still-optimistic 13% compounded annually for the next 10 years, the stock is worth $26/share, a 27% downside. This is the kind of downside risk embedded in RLACX’s top holding and we haven’t even looked at the rest of its portfolio yet. Investors don’t deserve to pay such high fees for such poor stock picking.

Quality Can Be Found in the Small Cap Blend Style

When it comes to overall rating, which combines our Portfolio Management and total annual cost ratings from above, there are a few Attractive rated funds in the Small Cap Blend investment style. These funds combine quality stocks with relatively low total annual costs. The top three funds, excluding those with less than $100 million in assets are as follows:

  1. Virtus Quality SmallCap Fund (PXQSX) – receives our Attractive rating by charging only 1.3% in total annual costs and allocating over 21% of assets to Attractive-or-better-rated stocks.
  2. Royce Small Cap Value Fund (RVVRX) – despite what its name would imply, RVVRX allocates more towards a mix of small cap stocks, not only value stocks. It receives our Attractive rating by charging only 1.3% in total annual costs and allocating over 21% of assets to Attractive-or-better-rated stocks.
  3. Janus Perkins Small Cap Value Fund (JDSNX) – much like RVVRX, despite what its name implies JDSNX’s portfolio more closely resembles a Small Cap Blend fund. JDSNX receives our Attractive rating by charging only 1% in total annual costs while allocating 52% of assets to Neutral-or-better rated-stocks.

While these three funds might earn our Attractive rating, they are few and far between. Fund managers need to do a better job allocating to quality stocks. At the same time, investors need to be more diligent about which funds they purchase in the Small Cap Blend style.

Disclosure: David Trainer and André Rouillard receive no compensation to write about any specific stock, sector, or theme.

Click here to download a PDF of this report.

 

About New Constructs

We find it. You benefit. Cutting-edge technology enables us to scale our forensics accounting expertise across 3000+ stocks. We shine a light in the dark corners of SEC filings so our clients can make safer, more informed decisions. Our stock rating methodology instantly informs you of the quality of the business and the fairness of the stock’s valuation. We do the diligence on earnings quality and valuation so you don’t have to. Learn more about New Constructs. Get a free trial. See what Barron’s has to say about our research.

In-depth risk/reward analysis underpins our stock rating. Our stock rating methodology grades every stock according to what we believe are the 5 most important criteria for assessing the quality of a stock. Each grade reflects the balance of potential risk and reward of buying that stock. Our analysis results in the 5 ratings described below. Very Attractive and Attractive correspond to a "Buy" rating, Very Dangerous and Dangerous correspond to a "Sell" rating, while Neutral corresponds to a "Hold" rating.

 

This article is from New Constructs, LLC and is being posted with New Constructs, LLC’s permission. The views expressed in this article are solely those of the author and/or New Constructs, LLC and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-05-27 14:17:33

Posted by
Russ Koesterich, CFA
BlackRock
Contributor
Stocks

Do Record Stock Highs Signal a Top?

With the U.S. stock market hitting a new record high every week, are we close to the bull market's top? Russ and an investment strategist on his team, Kurt Reiman, weigh in.

 

Despite higher rates, U.S. stocks have scored several record highs in recent weeks.

Stocks have been posting new records despite investor concerns about slowing U.S. corporate profit growth, persistent sluggishness in the economy and Greek bailout negotiations – to name just a few of the headwinds facing equities today. Adding to the anxiety is the fact that many investors are reasonably worried over the impact of the first Federal Reserve (Fed) tightening in nearly a decade.

Even Fed Chair Janet Yellen couldn’t help noticing in May that stock prices had become “quite high,” leading many to speculate that the U.S. central bank thought stocks had become overvalued.

However, there are several reasons why I believe we’re not yet at the peak.

Market highs aren’t the same as market tops, and stocks reach new highs fairly often. The S&P 500 has “celebrated” a new high on average 13 times per year, or 5% of all trading days, since 1928, as the chart below shows.

Note: Shading represents a new high in the S&P 500. Past performance is no guarantee of future results. A logarithmic scale is a nonlinear scale used when there is a large range of quantities.

Source: Bloomberg, BlackRock Investment Institute, as of 5/19/15.

And this statistic may understate the true frequency of market highs, since it includes the 25-year period after the 1929 crash when the S&P 500 failed to reach a new high. In other words, the market highs aren’t actually very newsworthy, given that they happen so often.

Valuations can go higher. With the exception of the 2007 market peak, most of the bull markets of the past 25 years witnessed a peak valuation on the S&P 500 of roughly 20x to 22x 12-month trailing earnings, higher than the S&P 500’s 17.5x valuation today. To be sure, not surprisingly, market peaks in the higher inflation, higher rate environment of the late 1960s to the mid-1980s tended to occur at a lower valuation, not far from where we are today. However, we’re in a different scenario, given the low-inflation, low-rate economic environment we expect for the foreseeable future.

Fed tightening doesn’t necessarily mean a bear market. The Fed is likely to begin raising rates this fall, but this doesn’t mean markets are in for a major correction. Looking at history, U.S. stocks tend to initially react negatively to the start of a tightening cycle and then rebound 6 to 12 months later, producing positive, albeit subpar, returns over the longer term. Of course, the fact that U.S. equity multiples have been consistently rising since 2011 means that markets are at greater risk for at least a modest correction, say, 5% to 10%, following Fed liftoff. That said, an initial tightening of U.S. monetary policy is unlikely to end today’s bull market.

While we may be quite happy to learn that the market is moving higher, a new high is neither something to be celebrated nor feared. New records are fairly routine and don’t necessarily contain a lot of information. History suggests that, absent an exogenous shock, neither valuations nor rates represent an imminent threat to the bull market.

Still, U.S. stocks are no longer cheap. While investors shouldn’t abandon the United States, we believe they should be raising their allocation to international equity markets, such as the Eurozone, Japan and select emerging markets. These overseas markets are also posting new highs, but at much more reasonable valuations.

Sources: Bloomberg, BlackRock

 

Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog and you can find more of his posts here.

Kurt Reiman, a Global Investment Strategist at BlackRock working with Chief Investment Strategist Russ Koesterich, contributed to this post.

 

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of May 2015 and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader.

©2015 BlackRock, Inc. All rights reserved. BLACKROCK is a registered trademark of BlackRock, Inc. All other marks are the property of their respective owners.

iS-15656

 

This article is from BlackRock and is being posted with BlackRock’s permission. The views expressed in this article are solely those of the author and/or BlackRock and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-05-27 13:41:54

Posted by
Wall Street Horizon, Inc.

Contributor
Stocks

International Earnings & Event Calendar Highlights

Wall Street Horizon’s newly expanded International Earnings and Event Calendar includes more than 20 data sets and averages over 18,400 tradable corporate events per day, which represents a 25% increase in coverage,  across approximately 6,000 companies and 91 countries. 

For more information, visit www.wallstreethorizon.com/international.

Source: Wall Street Horizon, Inc.
 

About Wall Street Horizon, Inc.

Wall Street Horizon delivers accurate data on upcoming earnings dates, dividends, ETFs, investor conferences and other single-stock events through low-latency alerts and intra-day feeds that give our clients visibility ahead of volatility. For more information, visit www.wallstreethorizon.com.



This article is from Wall Street Horizon and is being posted with Wall Street Horizon's permission. The views expressed in this article are solely those of the author and/or Wall Street Horizon and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-05-27 12:28:53

Posted by
Singapore Exchange

Contributor
Futures

Malaysia Posts Better-than-Expected 1Q Growth; Ringgit Rebounded Recently

  • Malaysia’s 1Q 2015 GDP expanded 5.6% year-on-year, slightly above consensus estimates. The ringgit has also strengthened in recent months.
  • The government targets the economy to grow 5%-6% during the five-year period of the 11th Malaysian Plan, based on sustained domestic demand and increasing contribution from the external sector.
  • Investors can gain exposure to Malaysia’s growth through the SGX MSCI Malaysia Index Futures, which demonstrates high correlation with the underlying index.

Supported by domestic demand, Malaysia’s economy expanded 5.6% year-on-year in 1Q 2015. On a quarterly basis, real GDP grew 1.2% in the first quarter versus 1.8% in 4Q 2014, slightly above the consensus estimate of 5.5%.

“Despite uncertainties in the global economy, we managed to perform better than others in terms of economic growth, led by domestic demand and supported by strong private consumption and investments,” Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah told a press conference on 16 May.

Husni pointed out that Malaysia’s GDP growth was higher than most Asean countries, including Singapore (2.1%), Indonesia (4.7%), South Korea (2.4%), the US (3%), the UK (2.4%), and Germany (1.1%).

Another plus factor for Malaysia is the recent strength of the ringgit. The ringgit fell sharply in the last quarter of 2014 as falling crude prices damaged government finances and dented investor confidence. Since March, it has appreciated 2.78% against the US dollar amid a rebound in oil.

Source: Bloomberg

11th Malaysia Plan: GDP to Grow to 2.6 Trillion Ringgit in 2030

More than 40% of Malaysia’s total employment will consist of skilled workers, compared with approximately 35% in 2020, according to a vision laid out by the Economic Planning Unit of the Prime Minister’s Department in the 11th Malaysia Plan.

The government targets the economy to grow 5%-6% during the five-year period of the 11th Malaysia Plan, based on sustained domestic demand and increasing contribution from the external sector. According to projections, the economy will expand to 2.6 trillion ringgit in 2030.

More importantly, the Federal Government will balance its fiscal position by 2020 by strengthening the tax base and improving the decision-making processes of development allocation for proposed projects. The fiscal deficit will be reduced from 3.2% to 0.6% by 2020.

Productivity gains are also emphasised to ensure sustainable and inclusive growth. Innovation will be a key growth driver over the next five years, while domestic consumption will be boosted by government efforts to lift income levels for the bottom 40% of household income groups.

No Rate-Cut Party

Bank Negara left its key rate unchanged at 3.25% at its policy meeting on 7 May. With economic growth cruising at above 5%, most analysts did not expect a rate cut.

Malaysian central bank Governor Zeti Akhtar Aziz confirmed the assessment in an interview earlier where she spoke of little need for an interest-rate cut in the near term, save for the threat of a “fundamental” downturn in the economy.

“We are on a steady growth path, and if there was a fundamental economic slowdown, the risk to that going forward, on the horizon, then it would prompt a downward adjustment,” she added.

MSCI Malaysia IndexSM

The MSCI Malaysia indexSM has a free float capitalisation of US$143 billion and comprises 42 stocks listed on the Malaysian Exchange.  The top 10 stocks of the MSCI Malaysia Index have a weighting of 57% in the index.

A rebalancing will take place on 29 May that will see Westports Holdings deleted from and UEM Sunrise added to the MSCI Malaysia indexSM.

Constituents of MSCI Malaysia IndexSM can be found at the MSCI website here.

Top Ten Components of MSCI Malaysia IndexSM

Source: Bloomberg

SGX MSCI Malaysia Index Futures

Based on the MSCI Malaysia IndexSM, the SGX MSCI Malaysia Index Futures offers exposure to the top companies in Malaysia such as Public Bank, Malayan Banking and Petronas Gas. The SGX MSCI Malaysia Index Futures is denominated in US dollars and has a notional contract value of approximately US$12,000.  The minimum price fluctuation is 0.25 index point (with an equivalent value of US$5).  Trading hours are 8.30 am to 5.30pm, with a T+1 session from 6.30pm to 2.00am the next day.  Its close correlation with FTSE Bursa Malaysia KLCI index and other regional indices allows for pair trading or arbitraging between the indices and the futures contract.

 

This article is from Singapore Exchange and is being posted withSingapore Exchange’s permission. The views expressed in this article are solely those of the author and/or Singapore Exchangeand IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-05-27 10:30:55

Posted by
Andrew Wilkinson
Chief Market Analyst
Interactive Brokers
Contributor
Stocks

Death cross in Dow transports?

During the first week in May I pointed to a potential loss of momentum apparent in the small-cap Russell 2000 index (Breadth of small-cap stocks losing momentum). At the time, the index was trading at 1215 while 53.5% of stocks were trading above their 200-day moving average. As of Tuesday, that number was a little higher at 54.4% while the Russell itself closed at 1238. Switching gears, if you’ll pardon the pun, the following chart reflects the same situation in the Dow transports average. However, unlike the Russell, the transports index has lost 3.0% during this timeframe while 40% of its components are trading above their 200-day moving average. That compares to 55% during the first week of May. The rollover in the transports index looks uglier when you throw in the widely-watched 50-and-200-day moving averages. A so-called death-cross appeared this week as the shorter 50-day average closed beneath the longer 200-day moving average. The bullish tone had been intact since December 2012. The number of stocks trading beneath their 200-day moving average has not been lower than 40% since November 2012 when the index was trading at 5051 and 65% below its current level.

Chart – Dow transports losing momentum

 

The analysis in this article is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 

2015-05-27 10:20:41

Posted by
John Carter
President
Simpler Stocks
Contributor
Stocks

Simpler Stocks: Tuesday Movers

Stocks slipped Tuesday after the broader markets slipped 1% on the day to start the holiday-shortened trading week. The session marked the biggest slide since earlier in the month, and some marquee names such as Visa were down more than the market.

Workday Inc. (Ticker: WDAY)

Shares in WDAY dropped sharply on in-line guidance, which could set the stock up for both a breather and possible buying opportunity. The Street expects a beat and raise for some high-flying stocks, and punishes any disappointment. The HR tech company has sales growth estimated at 39% plus over the next two years.

Alibaba Group Holding Limited (Ticker: BABA)

A strong play on the Chinese consumer, Alibaba is looking to help promote local brands in the country.  The backwards looking multiples on BABA are eye-popping, with a much more interesting 24x forward EPS and PEG ratio of just above 1x. The stock, recently trading near $92.00, is trading well below recent highs of $120.00, yet looks to be making a run at both the 50-day and 200-day moving averages.  

Jabil Circuit Inc. (Ticker: JBL)

OEMs stand well-positioned to capitalize on electronics demand, and the company is expanding operations in Malaysia. Jabil Circuit trades at 0.3x sales, 6x ebitda, and at a forward PE of just about 10x, with a 22% payout ratio likely to help give the dividend, currently at 1.4% yield, a boost.

Palo Alto Networks Inc. (Ticker: PANW)

PANW may be worth watching ahead of earnings Wednesday as the company could ride the continued wave of cybersecurity demand. The stock is expensive on most metrics, especially a triple digit PE. But, there is now solid support at the 50-day moving average, and could conceivably be a strategic buy at a $13 billion market cap.

EMC Corp. (Ticker: EMC)

Data storage and virtualization company EMC Corp. is said to be buying Virtustream for $1.2 billion. EMC has been pushing harder into the virtualization realm and has been under fire in recent months from activist investors to do something strategic or financial to reward shareholders. The yield is relatively decent at 1.7%. The forward PE is a cash-adjusted 11x, with a PEG ratio just above 1x and the free cash flow yield is just about 10%.

AutoZone Inc. (Ticker: AZO)

The auto parts company reported solid results Tuesday after a competitor missed estimates last week.  AZO stated that first-quarter earnings were up 13% to $9.57 a share, which topped the Street by a nickel. The domestic same-store sales were up 2.3%, while overall top line was up 6% for the year-over-year period. The forward PE is 17x, with beta a palatable 0.7x. 

 

About the author: John Carter has been a full time trader for 15 years, serving over 100,000 subscribers in over 100 countries.  For more analysis on high growth stocks visit www.SimplerStocks.com.

 

This article is from Simpler Stocks and is being posted with Simpler Stocks’ permission. The views expressed in this article are solely those of the author and/or Simpler Stocks and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-05-27 04:43:30

Posted by
Elaine Chen
Sales Trader
International Business Division
Guosen Securities
Contributor
Macro

GUOSEN Closing Bell (May.27)

NEWS

*The director general of BusinessEurope said in a recent interview with Xinhua that China-EU cooperation can help realize growth potential in China's digital economy. Markus J. Beyrer, director general of BusinessEurope, an association of enterprises in 33 European countries, said the digital industry is a game changer for the global economy and will have a huge impact on EU competitiveness. Intelligent, interconnected systems now seamlessly support industrial activities along the entire value chain, he added. Europe will have to reap the benefits of this huge potential, putting in place a real strategy to digitize all sectors of the economy. (China Daily)

*The majority of China's billionaires has increased or maintained their financial investments but has shown less interest in putting their money into traditional industries, according to a report. It said that more than 50 percent of respondents will increase investment in the financial sector and 43 percent will maintain the current level of their financial investments. It also found that more than one-third of Chinese high net worth individuals surveyed said they expect to increase their investment in innovative industries such as information technology, biotechnology and alternative energy. High net worth individuals are defined as having investable assets of more than 10 million yuan ($1.6 million). (China Daily)

*BYD Auto's share price reached new high repeatedly. The company said it plans to raise funds from the market by way of private additional share offering to support the company's development. The investment direction will points to the fast-growing new energy car business. (AAstocks)

MARKET

Chinese stocks closed slightly higher today, with the benchmark Shanghai Composite Index ended at 4941.71 points. The market fluctuated around 4900 points most of the time. Coal and building sectors led the gains; while building and bank sector led the falls. Combined turnover for both markets was 2152.6 bn yuan, down 0.07% dod.

 

CLOSE

%CHG

VOL (bn yuan)

%YTD

SH Composite

4941.71

+0.63

1116.2

+52.77

SZ Component

16963.52

+0.36

1036.4

+54.01

CSI300

5181.43

-0.34

777.8

+46.63

ChiNext

3628.67

+0.29

198.2

+146.55

 

Sector

Top 1

Led by

Top 2

Led by

Upward-leading

Coal

000571

Building

000511

Downward-leading

Building

002325

Bank

600000

 

FUND FLOW

This article is from Guosen Securities Co., Ltd. and is being posted with Guosen Securities Co., Ltd.’s permission. The views expressed in this article are solely those of the author and/or Guosen Securities Co., Ltd. and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-05-27 02:42:30

Posted by
Darren Chu, CFA
Founder
Tradable Patterns
Contributor
Technical Analysis

VIX (VX) Bouncing off Downchannel Support on Weekly and Daily Charts

The VIX (VX) surged yesterday, reinforcing the bounce off downchannel support (on the weekly and daily charts), and breaking downchannel resistance (on the 4hr chart).  The weekly RSI and Stochastics along with daily RSI, Stochastics and MACD are all bottomish.  The weekly MACD however, still slopes downwards, suggesting a fair amount of downward pressure remains.  Until the weekly MACD flattens out, any rally attempts will likely be capped at the weekly chart's downchannel resistance.  I exited my long yesterday at 14.9 and am looking to re-enter slightly lower at 14.8 today, and will target upside at weekly chart downchannel resistance.

 

VIX (CFE VX Jun15) Weekly/Daily/4hr/Hourly

 

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and equity CFD markets can be traded consistently profitably. Tradable Patterns’ daily newsletter (blog) provides technical analysis on a subset of ten to twelve CME/ICE/Eurex futures (commodities, equity indices, interest rates), spot FX and US equity markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

 

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-05-27 02:37:09

Posted by
Darren Chu, CFA
Founder
Tradable Patterns
Contributor
Technical Analysis

Nasdaq100 (NQ) Weekly Chart Ascending Wedge Near Complete

The Nasdaq100 (NQ) sold off yesterday, reinforcing the ascending triangle resistance line (on the daily chart) and increasingly close to completing an ascending wedge (on the weekly chart).  NQ is turning down on its weekly and daily RSI and Stochastics.  I will look to establish an intraday short today in the 4487-4500 range.

 

Nasdaq100 (CME NQ Jun15) Weekly/Daily/4hr/Hourly

 

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and equity CFD markets can be traded consistently profitably. Tradable Patterns’ daily newsletter (blog) provides technical analysis on a subset of ten to twelve CME/ICE/Eurex futures (commodities, equity indices, interest rates), spot FX and US equity markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

 

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-05-27 02:35:30

Posted by
Darren Chu, CFA
Founder
Tradable Patterns
Contributor
Technical Analysis

S&P500 (ES) Weekly Chart Ascending Wedge Near Complete

The S&P500 (ES) is increasingly wobbly following yesterday's selloff that leaves it just above a near completing ascending wedge's support (on the weekly chart).  On the daily chart, the ES appears to be gravitating towards upchannel support, and is turning down on its weekly and daily RSI and Stochastics.  I will look to establish an intraday short today in the 2110-2113 range.    

 

S&P500 (CME ES Jun15) Weekly/Daily/4hr/Hourly

 

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and equity CFD markets can be traded consistently profitably. Tradable Patterns’ daily newsletter (blog) provides technical analysis on a subset of ten to twelve CME/ICE/Eurex futures (commodities, equity indices, interest rates), spot FX and US equity markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

 

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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