The bond/note action was rather quiet for most of the session but both the TLT and the IEF fell hard late in the day. The IEF ended the day with a key downside reversal. After opening higher the index closed well below Wednesday’s low. We expect more downside in the near term and are looking for a re test of key support near the IEF’s 200 day moving average. Just below this level are the June and July lows. If the IEF is not able to hold this important support zone the selling that dominated the action earlier this month will likely return. At this point we expect to cover some of our TBF/TBT(Bearish Bonds/Notes)as the $102.40 area comes into play.
And for a very good reason. According to a study by a Duke University professor, only 2% of hedge funds earned more than enough to cover their management fees. That’s a stunning number. More here from Mark Hulbert at MarketWatch.com: http://www.marketwatch.com/story/individual-investors-1-hedge-funds-0-2014-09-17?siteid=rss&rss=1
Peabody Energy, the world’s largest private-sector coal company, may have reached a significant low today. The stock has been hit hard all month opening up with 10 straight down days. Half of those loses attracted above average trade. Last week BTU fell to fresh 2014 lows as shares stretched their 2014 drop to 30%. With today’s powerful upside reversal, the downside momentum has been cleared out. Adding fuel to the move is a relatively high short interest ratio of 7.7. We expect more upside and regard BTU has a low risk buy near $14.00.
The Wall Street Journal has an article on the subject today. Very interesting stuff. Key bit: “ Corporations bought back $338.3 billion of stock in the first half of the year, the most for any six-month period since 2007, according to research firm Birinyi Associates. Through August, 740 firms have authorized repurchase programs, the most since 2008.”
More here from Josh Brown at thereformedbroker.com: http://thereformedbroker.com/2014/09/15/buybacks-and-tradebots/
It’s certainly not in Illinois where food-stamp enrollment has outpaced job growth by 2 to 1.