Tuesday, 31 January 2012

Daily Reads

Another edition...

  • Hong Kong Housing Prices Continue to Drop
    • As expected, the Asia property prices for places like Hong Kong (and China and Singapore as well) continue to drop.  The bubble it was in for several years was a bit delayed vs the western countries but it was inevitable as valuations were significantly higher than historical trends.
  • Japan Corporations Cutting Outlook
    • As mentioned on the last edition, the Yen is not sustainable at its current level if Japanese companies are to be competitive.  Its not a question of whether Japan needs a devaluation, its a question of how and whether the Japanese government is capable of doing it.
  • Case Shiller Index Shows House Prices Continue To Drop
    • While indicators show the market is no longer accelerating, the market is still yet to fully turn around.  Has it been lounging around in the bottom?  Maybe.
  • Last Year's Laggards Are This Year's Heroes
    • Last year's poor performers (hello financials) have outperformed this month so far.  Lets see if they can keep this up.

Monday, 30 January 2012

Daily Reads

Another edition:

Sector Performances and Why S&P Performance Today is Misleading

The S&P 500 had a great recovery today, recovering from being 1% down and closing only 0.25% down.  Or did it?  One curious note if you looked through sector performances is that the average stock did not recover nearly as well.  As you can see from the sector breakdowns:

SectorChange% down / up
Basic Materials-0.76%
Capital Goods-0.51%
Cons. Cyclical-0.29%
Cons. Non-Cyclical-0.44%

Source: Google

Even though the S&P ended down only 0.25%, almost none of the sectors performed well with the exception of Technology.  In fact, tech & healthcare are the only 2 sectors that were above the S&P performance.

Another look via a heat map shows the same trend.  Financials never recovered today and most other large sectors such as oil/commodities, consumer goods, conglomerates all underperformed.  Tech was the standout factor.  So be wary of today's move.  What initially looked like a strong recovery actually showed very little breadth which raises a red flag.

Source: Finviz.com