1. Industrial Production and Capacity Utilization: Industrial production did rise a greater than expected .8% in August. Capacity utilization rose from a revised 69% number in July to 69.6% in August. Industrial Production and Capacity UtilizationWhen Yellin refer to the slack in capacity in her speech recently, she was referencing this low number for utilization of production capacity. With high unemployment and a large amount of slack in productive capacity, many economists will not be concerned about an imminent rise in inflation. /Janet Yellin Speech/ The 69.6% capacity utilization rate is 11.3% below its average for the period 1972 through 2008. The July number was revised up by 1%, so the numbers are at least moving in the right direction.
2. Residential Construction: Building permits in August 2009 increased 2.7% from July but declined 32.4% from August 2008, to 579,000. Housing starts rose 1.5% from the prior month but decreased 29.6% from the prior year, to 598,000. http://www.census.gov/const/newresconst.pdf The increase originated from a 25.3% increase in multifamily homes. Single family home starts dipped 3% in August, the first decline after five months of gains.
3. Sold LT Silicon Image at $3.37 (see Disclaimer): My aging brain reached its limit and capacity on the LT selections with over 30 open positions, which combined do not amount to a hill of beans, and I am trying to pare now some of the ones that I have only a faint glimmer of comprehension about their products. Yesterday, I sold a Chinese semiconductor company after a 70% gain or so, VIMC, and today I dumped SIMG bought a few weeks ago at $2.19 Bought 50 SIMG as Lottery Ticket
One reader ask me why bother with buying such a limited amount of so many stocks. Well, I do not have much confidence in any of them, to start with, that is why I call them Lottery Tickets. And, a dollar has some value to me, particularly when I remember working for my dad during the summers, making maybe $2 a hour back in the late 1960s and early 1970s, in searing Tennessee heat. Imagine this formative type of experience and maybe you will understand. I would be batter boarding (Batter board Definition) a new home, which required driving a wooden stake into the soil that had not seen rain for at least a week, baked in 95 degree heat and the stake had been reused many times of course to save money. As a result of its prior use, it would have a dull edge. I was in much better shape back then, which is an understatement of course, and I could swing a pretty good sledge hammer. With all of the force that I could muster as a Young Stud, I would swing that sledge, hit the stake cleanly, it would kick up some dust and then bounce up into the air a few inches, making a dull thud sound. I would look down at the ground, and not be able to detect where I needed to place the stake for another whack. And that was for $2 a hour before taxes.
4. Prospect Capital (owned): This BDC was downgraded to market perform from outperform by Morgan Keegan, a regional brokerage firm based in Memphis.
5. TIDBITS: Before we become too excited about the market rally since early March, it is important to identify where we are in relation to where we were just a year ago or and two years ago on September 18th (I know that the 18th is tomorrow). On 9/18/2008, the S & P 500 closed at 1,206.51. The close on 9/18/2007 was at 1519.78, ^GSPC: Historical Prices for S&P 500 INDEX,RTH We are currently hovering just above the 1050 level. What concerns me now is simply the sheer magnitude of the gains off the low and the short time period those gains were made, with the S & P 500 as of yesterday up 58% since its March low. I have experienced only one move like it in my life as an investor. The bull move which started the secular bull market in August 1982 also took the S & P 500 up 58%. dshort.com: After that first decisive break in the secular bear market pattern in existence since the the mid to late 1960s, the S & P started an extended movement in a channel range, mostly moving between 150 to 170 from April 1983 to January 1985, when it broke to the upside again and continued its upward track to the crash in October 1987, which was incidentally forewarned by applying my VIX Model to the only volatility index then in existence, the one for the S & P 100: More on the Vix Model: What it Does not Predict is as Important as What it Does/Parallels to VXO 1987-1988
The bear move from October 2007 to early March 2009 was at least reminiscent of the bear move in 1973-1974, with its 48.2% decline between a high of 120.24 on 1/11/1973 to the low of 62.28 in October 1974, a horrendous decline like this last bear move. dshort.com
In that prior period during and after the October 1987 crash, volatility reached levels unmatched by even the highs after the Lehman failure in 2008. It took about a year, as I noted in a prior post, for the volatility to simmer back down to 20 after that 1987 shock: When VIX Model Gives A Signal To Change Asset Allocation-Each Individual Needs to Assess Their Own Situational Risks
The VIX is currently at 23.46. ^VIX: Summary for CBOE VOLATILITY INDEX It has been moving toward what I call a Stable VIX Pattern for months now, and that directional move is positive. It has not however crossed below 20, nor has it shown consequently a stable move below 20 for several months yet that would be consistent with prior patterns evidencing the beginning of a long term investable bull market lasting generally for more than 3 years.
It may ultimately devolve into that pattern, or it may not, only time will tell.
No comments:
Post a Comment