Fundamentally Transformed

From Bloomberg.com: 

The U.S. homeownership rate fell to the lowest in more than 50 years as rising prices put buying out of reach for many renters.

The share of Americans who own their homes was 62.9 percent in the second quarter, the lowest since 1965, according to a Census Bureau report Thursday. It was the second straight quarterly decrease, down from 63.5 percent in the previous three months.

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Active Managers May Be Very Bullish, But…

Individual investors remain quite cautious.  The AAII bullish reading fell to 31.3% this week.  This is now a record of 38 straight weeks below the long term average of 38.5% bullish. 

AAII(American Association Of Individual Investors) Explained:   A non-profit, membership-driven investor education organization. The American Association Of Individual Investors (AAII) was founded in 1978 by James Cloonan. The AAII’s mission is to teach individuals to manage their own portfolios and to beat average S&P 500 returns, while taking on lower-than-average levels of risk. AAII also publishes the results of its weekly investor confidence surveys that are based on its members’ feelings about where the stock market is headed.

Active Investment Managers Are Very Bullish

Extremely bullish that is.  They have increased their U.S. equity exposure to 96.5%.  That’s in the 98th percentile of readings since 2006:

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Is this high exposure a contrarian indicator?  Maybe not.  Key bit from Charlie Bilello:  Many seem to be interpreting this development as a bearish signal, a contrary sentiment indicator. If active managers have a high exposure to equities, they say, it must be a sign of an impending top.

If we look back at the evidence, is this indeed the case?

As it turns, out, not necessarily. Historically, the forward returns following the highest exposure readings (top decile) are actually above average from 3 months through 12 months.

Very interesting.  Link to the article is here:  https://pensionpartners.com/when-active-managers-go-all-in/?utm_source=ReviveOldPost&utm_medium=social&utm_campaign=ReviveOldPost

Amazing Stat

Just how powerful has the s&p 500 rally been since the 2009 low?  This powerful:

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It’s made even the absolute worst market timers look smart. 

Hat tip BI.com

Restaurant Sector Sending Warning Signs

Key bit:   The restaurant sector could be sending a warning sign about the US economy.  In notes to clients published Tuesday, Stifel analyst Paul Westra and his team argue that US restaurants are showing signs of heading toward a sector-wide recession.  And in the past, restaurants have typically been a leading indicator of a broader economic downturn.

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You wouldn’t expect this after viewing the post earnings action in Panera Bread and Buffalo Wild Wings.  Both stocks are up sharply today after report their latest quarterly results. 

Here’s a link to the BI.com story:  http://www.businessinsider.com/restaurant-sector-recession-could-lead-the-economy-lower-2016-7

The California Pension Bomb

California politicians continue to struggle with math, simple math.  The likely solution to this problem will be higher taxes.  Key bit: 

CalPERS on Monday announced a preliminary net return of 0.61% for the fiscal year ended June 30.

The latest fiscal-year return, coming on top of 2.4% in the prior year, means CalPERS has not met its expected 7.5% rate of return for the last 20 years, Ted Eliopoulos, chief investment officer, disclosed Monday at a press briefing on the returns.
Read the whole thing:  http://www.the-american-interest.com/2016/07/19/the-california-pension-bomb-just-got-more-explosive/
Hat tip Instapundit.com

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How Are Futures Positioned?

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The Commitment of Traders Report(COT) shows a very bullish tilt.  Now at highest level since January 2015.

Hat tip SeeItMarket.com

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