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Senior Market Strategist, LPL Financial Member FINRA/SIPC http://www.finra.org - http://www.sipc.org Third party posts found on this profile do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.

[ryandetrick]

Cincinnati money manager lands high-profile national job

Here’s a copy of a story about me in the Cincinnati Business Courier.

[ryandetrick]

I’m Joining LPL Financial!

On Monday, January 11, I will begin working as the Senior Market Strategist at LPL Financial.  

I’m so excited to get started and will be focusing much of my energy on bringing top-notch and unbiased research to their more than 14,000 advisors.  Over the coming weeks I be will quiet on social media, as I get up to speed on things.  Don’t worry though, I’ll be back soon!

I’ve met many of the people on LPL’s Research team and I can say they are hands down regarded amongst the best in the world for a reason.  I can only hope to add to this team and make it that much stronger.  

Leaving Kimble Charting Solutions was a very difficult decision, as Chris is one of the truly good guys in our industry.  I wish him nothing but the best and can’t wait to get to Kansas someday and eat some Cozy burgers together at the Cozy Inn.  

I wish everyone a healthy and happy 2016.  Hope to see you soon!

[ryandetrick]

Welcome To The Worst Start To A Year Ever For Equities

Welcome to the worst start of the year ever for the S&P 500 and Dow.  

So what’s it mean?  As we are watching CNBC run another “Markets in Crisis” special this evening, the overall opinion of most after such a weak start is the end is near.  Especially when you see years like 2000 and 2008 in the data above.

Here are all the times the Dow was down more than 3% after four days.  Nice bounce the rest of January and up big the rest of the year.  Not too shabby.  

Extending this out to down 1.5% after four days gives more signals and does mute the returns.  Still, it says the odds of a huge sell-off the rest of the year isn’t very likely.  Sure, 2008 crashed the rest of the year, but only two other times did the rest of the year lose 10% from here.  

Here are the returns for the S&P 500.  Up the rest of the year a coin flip and pretty much flat on average.  Again, 2008 crashed, but rarely did the rest of the year see a significant drop.  

Overall, the economy continues to hold tough.  Remember, the stock market can correct in a strong economy (’87 and ‘11), but all true market crashes take place during a recession or depression.  Without signs of a recession (we had record vehicle sales reported yesterday), the odds of this one being ‘the big one’ continues to be very slim.  

That doesn’t mean the weakness can’t continue and and it doesn’t mean the volatility is over.  It does mean panicking right here and now might not be the best decision.  

Lastly, check out the AAII Bulls.  They came in at their lowest level since last July and near the lowest levels going back three years.  Previous times the bulls were this low marked some decent times to be long equities.  

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

Does A Big Down Day On The First Day Of The Year Mean A Bear Market Is Coming?

2016 got off to a rough start, with the S&P 500 dropping more than 1.5% on the first trading day of the year.  This was the 6th worst first day of the year since 1928  

Stealing many of the headlines was early in the day it was also the worst start to a year for the Dow since 1932.  A late rally negated this, but it was still the worst first day since 2008.  

This brings up the logical question, does a bad first day of the year tell us anything about the coming year?  The last two times the first day of the year was down more than what we saw yesterday were 2008 and 2001, both bear markets.  

Last year the first day of the year was flat and the full year ended up being flat.  Then when you consider in 2013 the first day of the year was up +2.54%, the full year goes on to gain nearly 30% - maybe there’s something to the first day?   

I love diving into things like this, but the reality is in this case there is no way one day’s worth of action sums up what might happen a full year.  My pal Anthony Valeri of LPL Financial summed it up like this to the Wall Street Journal, “[Monday] is not an omen for the rest of the month or year at all.”  He called Monday’s losses an “overreaction” and said that a single day’s events or one batch of economic data doesn’t signal what’s to come for the remainder of the month.

I agree with Anthony here.  One day is fun to talk about and extrapolate out, but it really is totally random.  Remember, the S&P 500 in December saw 11 days move more than 1% (up or down).  That was one of the most volatile Decembers ever.  To think that volatility would stop simply because it was a new calendar year is wishful thinking.  

With my disclaimer I wouldn’t put much into this data, here’s what I found when I looked.  When the S&P 500 on the first day of the year drops more than 1% (like ‘16), the rest of January gains +3.3% on average and is up a median of +5%.  Guess it isn’t as bearish as many were making it sound.  Yesterday was only the 14th time this ever happened.  

What about the full year?  Remember 2008 and 2001 both saw big drops on the first day also.  Doing this shows the rest of the year is up +2% on average.  This isn’t a huge gain, but it sure isn’t wildly bearish like many made it sound like if all you listened to was ‘the last time this happened was 2008 and 2001′ crowd.

What stands out to me the most about above is the rest of the year has seen some big moves.  Many moves of 20% or 30% (up or down) mixed in there.  

Here’s what happens when the first day of the year is up more than 1%.  Wouldn’t you know it, the rest of January is actually weaker than when the first day is down big.  The rest of the year is skewed by a big drop in 1931.  

To summarize, there’s no way one day tells us much of anything.  We’ve seen some big drops on the first day of the year before that lead to bear markets, but we’ve seen it happen in bull markets also.  Remember, don’t get sucked into the scary headlines and take a closer look at things before panicking.  

Lastly, here’s a chart I made this morning.  Is early year weakness really a rare thing?  If you look at what the average S&P 500 looks like over the past decade, early weakness is actually normal.  

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

How Bad Has 2015 Been For Diversified Investors?

So just how tough has it been for diversified investors in 2015?  Think about it, stocks and bonds are flat, cash makes you nothing and commodities tanked once again.  Most years being diversified is the way to go, this year has been historically tough.

I took a look at various asset class returns over the past 30 years and made some hypothetical portfolios for each year.  I put 50% into the S&P 500 (stocks), 25% into 10-yr bonds (bonds), 10% into commodities, and 15% into cash.  

With two days to go, diversified investors are down 0.50% in 2015, the worst year since 2008 and one of the worst years going back 30 years.  

Bigger image HERE.

A few thoughts on above.

* Even with two historic bear markets and the worst one day crash ever, the S&P 500 is still up +12% (with dividends) on average going back 30 years.

* Commodities are down on average the past 30 years.

* Commodities are down five straight years for the first time ever.

* A diversified portfolio returns nearly nine percent on average and has a lower standard deviation than either stocks or bonds. 

What about if we took out commodities?  I’m aware doing something like this is by itself a big buy signal, but I’ll do it anyways.  The average for a diversified portfolio goes up to nearly 10% a year.  

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

Why 2015 Has Been A Historically Tough Year For The Bulls

Yesterday was only the third back-to-back gain for the S&P 500 since early November.  In fact, twice this year the S&P 500 has gone 28 days without back-to-back gains.  That has only happened happened four times total the past 45 years and twice was this year.  Wow.  

Looking at back-to-back gains for the S&P 500, it has done this 51 times so far in 2015.  Not surprisingly, this is one of the lowest ever for any year.  

Bigger image HERE.

The bottom line is 2015 has been incredibly difficult for the bulls to gain any traction at all.  The glass half full look at this would be the S&P 500 is barely negative and positive on a total return (including dividends) in 2015.

Another way of showing how tough it has been for the bulls this year is only 47.56% of all the days so far this year have been positive.  This is the lowest since the bear market of 2002.

Bigger image HERE.

Lastly, here are how all years with less than 48% of the days higher have done.  Down about 12% on average and higher only 24% of the time.  The fact this year is flat (and has a good shot at being green) is actually rather rare and very impressive.  

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

Can The S&P 500 Finish 2015 In The Green?

Hard to believe it, but there are only seven trading days left in 2015.  The S&P 500 closed Monday at 2021.15 and needs to get over 2058.90 to finish green for the year.  This comes out to a 1.87% gain is needed to finish green.  Yes, this is just price, not total return (so no dividends).  If you include dividends, the S&P 500 total return is 0.14% YTD currently.  

So can the S&P 500 gain more than 1.87% the final seven days to finish higher?  Going back 87 years, it has gained this amount the final seven days 23 times or about 26% of the time.  This late year rally is widely known as the Santa Claus rally and it is the last five days of the year and first two days of the next year.  

Here’s what the average December looks like the past 20 years.  Somewhat surprising that as of the 15th of the month the return is actually negative.  It isn’t until later in the month that the buyers really step in.  

Here are the only times the final seven days of the year gained more than 3%.

Incredibly, the final seven days of the year have dropped more than 1% only four times out of the past 87 years.  That pretty much sums it up, late in the year is usually strong, but more than anything it is rarely lower.  

Here are all the returns for the rest of the year for all years since 1928 for the final seven trading days of the year.  Up 78% of the time, with a median return of about 1% is pretty impressive.  

Bigger image HERE.

The bottom line is after the rough start to December, many stopped believing in Santa.  I’ve said all month that the Santa rally starts later in the month, but for some reason most think Santa comes right after Thanksgiving anymore.  Could once everyone stops believing be what is needed to spark the Santa Claus rally?  That would be a good way to end 2015 and I think it is very possible.  

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

What Does A Big Drop For Equities On Thursday and Friday Mean For Monday?

Things were going great on Wednesday after the Fed decision, then massive selling came in the final two days of the week.  This got me thinking, what could it mean for Monday?  I threw out some stats on Twitter Friday evening and we discussed this event over the weekend in the research report (Coffee With Chris and Ryan) that I do with Chris Kimble.  Now I want to dig in some more.  

Well, the last time we saw Thursday and Friday both down >1.50% for the S&P 500 was in August.  The next Monday was the 1,000 point Flash Crash.  In the end, the S&P 500 dropped 3.94% - the worst day of the year.  Not to be outdone, we saw similar late week weakness right ahead of the Crash of ‘87 as well.  

Now before you go jump off a bridge, this isn’t the end of the world.  Last week was the 23rd time since 1950 both Thursday and Friday were down more than 1.50%.  The median return the next day is actually flat and higher exactly 50% of the time.  What stands out more is there’s an above average chance for a volatile day.  The average drop is 3.57%, while the average gain is 1.54%.  

Bigger image HERE.

Could tomorrow be a crash?  Sure, but I doubt it.  The reason being December is historically not very volatile and the week of Christmas is especially dull usually.  In fact, looking at that list above, only one time did we see a late week sell-off in December and that was in 1974.  The next day was up +0.91%.  

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

Options Expiration Is This Week, Why This Could Provide Some Fireworks

First things first, with the Fed interest rate decision out on Wednesday, this week is anything but normal.  With that said, this week is also option expiration week (OpEx).  We’ve noted before that this week tends to have an upward bias, but some of the largest weekly drops also tend to happen this week.  In other words, when things turn bad it happens in a hurry during this week.  We don’t think it is a coincidence the major drop in August took place this week.

Above sums it up well, usually things go well, but when they don’t go well; it can get ugly fast.  Three of the four red weeks were down 1% or more.  The reason has to do with millions of option contracts expiring and when things turn south, option market makers are forced to hedge more.  This hedging can lead to more selling or what is known as a delta-hedging decline.  All you need to know is these weeks can provide more fireworks to the downside than your average week if things turn south.

What about December OpEx?  Going back 10 years, this week has been higher eight times.  The one big drop was in 2011.

As we’ve been sharing nearly every week in our Coffee with Chris and Ryan report, 2015 has done a great job of imitating 2011 so far.  If this continues, this week could be expected to drop again soon.  The good news is 2011 did bottom later this week before a nice year-end bounce.

Lastly, last week the S&P 500 dropped 3.79%.  Going back to late 2011, one common trait of this market has been to see a very strong bounce the following week after a 3% drop.  In fact, the week after a 3% drop tends to bounce back by 2.7% on average.

This was originally posted on Kimble Charting Solutions blog HERE.

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

The S&P 500 Annual Returns Going Back 200 Years In The Form Of A Christmas Tree

As we wind down 2015, the second half of the year has been rather volatile – but in the end, the S&P 500 is about flat for the year.  Now don’t forget, the second half of December is historically the best part of the month, so don’t give up on Santa coming to town quite yet.

Here’s a chart that seems to turn up each year around this time, so we decided to make our own version.  Here are all the US equity annual returns going back 200 years …. but we did it in the form of a Christmas tree!  Should the S&P rally a little bit from here, it will finish between 0%-10%, this the most ‘popular’ return going back 200 years.

Click here for a larger IMAGE.

This was originally posted on Kimble Charting Solutions blog HERE.

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

Three Reasons To Remain Bullish In December

I get it, the concerns are growing.  The commodity implosion continues, profit margins have peaked, credit markets are in full fledged panic mode, and only the largest market cap stocks make up most of the gains on the year.  

With all of that, here are three reasons to be on the lookout for a bounce in December.  First off, weakness early in the month is normal.  Santa usually comes the second half of the month.

The McClellan Oscillator (a measure of market breadth) is near oversold levels that have sparked rallies in the S&P 500 over the past year.

Bigger image HERE.

Lastly, we saw a major spike in fear yesterday looking at the CBOE options equity-only put/call ratio.  Spikes above 0.90 have marked some near-term lows in the S&P 500.  

Bigger image HERE.

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

S&P 500 Without Back To Back Gains For A Month

The S&P 500 has officially gone over a month without back-to-back winning days.

We saw the same thing earlier this year, but overall this type of action is extremely rare. And perhaps it’s indicative of Mr. Market making up his mind.

Here is a chart of the S&P 500 going back to 1970 that shows all the other times we saw this rare phenomenon. In the upper left hand corner, there’s a table that shows the occurrences and the length of the streaks.

S&P 500 Chart – Days Without Back to Back Gains

Here’s another view of the same data. Just simply eyeballing this, it is clear that these events tend to happen in weak equity markets. The good news is they can sometimes happen near the end of weak periods on the S&P 500.

But the next question is: How does this affect S&P 500 returns?

Once we finally see a back-to-back win though, what happens?

Looking at the 12 other streaks that made it to at least 23 days, here is a look at S&P 500 returns (performance) after the streak ended. Negative a month out would suggest the bears remain in control in the near-term here, but going out longer shows things get more normal.

Lastly, over the past 23 days the S&P 500 is down only 1.55%. Looking at the other streaks that went 23 days without back-to-back wins, this is the second strongest ever. Interestingly, the streak earlier this year was the strongest and only time to sport a gain over those 23 days.

Given that the average S&P 500 returns for this type of streak is down 9.25%, perhaps being down less than two percent the past 23 days is a subtle sign of strength? I think it could be.

Thanks for reading.  See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

This article was originally posted on See It Market.  

[ryandetrick]

Why Is December Usually Bullish For Equities?

We all know the stats, December is the strongest month of the year for the S&P 500 - but why is my question.

Here are some stats that back up the point that the bulls usually have fun in December. 

Is this strength because of end of year buying?  People feeling good around the holidays?  Lighter volume, as many traders take off late in the year and there’s no one around to sell?  I’m sure there are more reasons, but it all adds up to usual strength in December.   

Now here’s what the average December since 1950 looks like.  What I find interesting is it tends to bottom near the middle of the month, before a strong end of year rally.  This late year rally is widely known as the Santa Claus rally.  

Bigger image HERE.

Taking a closer look at the first chart above, it stands out that when December is higher, it is up ‘only’ +2.89% on average.  Compare that to the +4.21% average gain in January.  Yet, January is only the 5th best month on average.  The reason for this is when January is lower, it is in the red by 3.85% versus December down only 2.08%.

So is the reason December is the strongest month of the year as simple as it doesn’t have many big down months?  I sure think so.  To prove this, I went back to 1928 and looked for how often a month dropped 3% or more.  To me, a 3% drop is what I’d call a ‘big drop’.  The results are stunning, as only 10% of the time December sees a big drop - the least big drops for any month.  

Bigger image HERE.

Taking a closer look above, we see September sees a big drop 27% of the time.  Not surprisingly, it is also the worst month on average - down 1.04% on average.  In sports they say a good defense wins championships, after doing this study, I think we could say the same things for equities.  

See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

Why A Big Up Day On The First Trading Day Of December Might Bring Santa

This was the best start to the month of December for the S&P 500 in five years.  This got me thinking, is this a good sign or a bad sign?  Remember, I noted why a big drop on the first day of September was a bad sign and that played out well.  

As I’ve noted several times the past few days, December is usually strong and it rarely has as a big down month.  Strength in December is widely called the ‘Santa Claus’ rally.  Since 1950, it is the best month and has the smallest average loss when it is red.  

But does a 1% gain on the first trading day tell us anything?  Turns out, it is a very good sign.  Since 1950, the average December return after the first day of the month is +1.73%.  Not bad, not bad at all.  

Here’s where it gets good.  After a >1% gain on the first trading day of the month, the average and median return the rest of the month actually turn stronger!

Could this be a sign Santa is coming?  It sure looks like it.  

See more of our research at Kimble Charting Solutions and be sure to follow me onTwitter and StockTwits.

[ryandetrick]

Will The S&P 500 Really Be Flat Two Years In A Row?

The team at Goldman Sachs just announced they expect the S&P 500 to finish 2016 at 2,100.  Given it closed at 2,090 on Friday, they are looking for a flat year.  Since the S&P 500 is up +1.5% so far in 2015, this would be two flat years in a row.

First things first, we have a whole month to go in 2015, so we might look up and this year could be anything but flat.  Given December is the top month for the S&P 500 going back to 1950 (and strong on various other time frames), a nice move into year-end is a strong possibility.  

Let’s assume for a second that things are flat the final month of the year and the S&P 500 thus finishes flat for 2015.  How rare would it be to see two flat years in a row?  There needs to be a cut-off as to what determines ‘flat’ and I used between +3% and -3%.  Here are some stats to chew on.

* The last time the S&P 500 was flat two straight years was 1947 and 1948 at 0.00% and -0.65%.

* Using historical data back to 1872, only 15% of all years end up flat.

* 66% of all years move at least 10% (up or down).  28% of all years move at least 20% and 11% move at least 30%.  

Here’s a nice chart showing how likely a ‘big’ move is versus a flat move.

Bigger image HERE.

The bottom line is a flat year next year is highly unlikely.  As with anything, it could happen - but history would say be on the lookout for a big move next year.  In fact, I found 22 years were flat and the following year moved at least 10% (up or down) 14 of those times.  So, about two out of three times it moved double digits after a flat year.  

This is worth noting.  Since 1960, when the S&P is flat, the following year has never been lower and is up nearly +19% on average.  If you are truly a bull here, maybe you want a flat December.  

A few more notes on the chart above.  2007 was up +3.53% and 2008 crashed -38.49%.  But, we need to make some type of cut-off as to what flat is, but 2007 was really close to flat.  Also, the returns after flat years before 1960 are much more bearish.  There were 15 such occurrences and the average the following year was -2.43%.  

Lastly, do big years mean more solid gains?  Turns out the S&P 500 has gained more than 20% for the year eight times since 1990.  The following year was up every time for nearly a 17% gain.  

See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

Does Black Friday Matter For Equity Gains The Rest Of The Year?

We are entering one of the most bullish times of the year historically.  As we mentioned last week, the final 30 trading days of the year have been higher each of the last 12 years.  

Getting to today, it is Black Friday - the official start to the holiday spending season.  We've seen many stats that show this day isn't quite as important as it once was.  From many sales now starting on Thanksgiving, to Cyber Monday this coming Monday - there are other times people are looking for the best deals.  None the less, today will get a lot of hype and we wanted to look to see if this day really mattered or not.  

Recently, Black Friday has been rather weak - down five of the past six years.  

Did it matter the past six years?  Did a weak Black Friday hurt what happened in December?  Not so much, as five of the past six years were in the green.

 Bigger picture, don’t forget that December in general is the strongest month going all the way back to 1950.

What about the week after Thanksgiving and Black Friday?  Up six of the past seven years and up nearly half a percent on average going back 20 years.  

Here's how all Black Fridays have done going back 20 years and the subsequent S&P 500 performance the rest of the year.  The rest of the year is usually bullish.  In fact, 10 of the past 12 years have sported a gain after Black Friday till the end of the year and eight of the past nine years.    

Lastly, does a good or bad Black Friday matter?  Wouldn’t you know it, a red Black Friday bodes better for the rest of the year?  In the end, when Black Friday is red, the rest of the year is higher by nearly a three-to-one margin and the median return is nearly twice as high.  

The bottom line, Black Friday might get a lot of hype, but the end of the year is usually bullish and a lower move today could actually be a more bullish sign for future gains.  

This post originally was posted on the Kimble Charting Solutions blog.

See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.

[ryandetrick]

It Is Thanksgiving Week, Here’s How Equities Do

Here comes Thanksgiving week.  As with most holidays, expect lighter volume and the potential for an upside bias.  

First things first, here’s what the average year for the S&P 500 looks like since 1950.  Now is a nice time for strong seasonals to kick in.

Bigger image HERE.

Be aware, the S&P 500 gained 3.27% last week and the last time it was red after a 3% gain was four years ago.  In fact, the S&P 500 has been green the week after a 3% gain seven straight times.  I was surprised by this, but don’t ever argue with it.  Strength usually equals strength.

Turning to November, the average November since 1950 bottoms on the 20th before a late month surge.

Getting specifically to Thanksgiving week, the best gain since 1950 was a huge 12.03% gain in 2008.  The worst ever was a 4.69% drop in 2011.  Also, Thanksgiving week has been up three straight years.  Looking back, it has been up three straight years six times.  Five of those times it was up a fourth year in a row and the average gain that fourth year when it was higher was an incredible 1.29%.  A gain of 1.29% would put us close to new all-time highs on the S&P 500. 

Lastly, here’s how Thanksgiving week has done on various time frames.  

Hope everyone has a great Thanksgiving week and enjoy the time with your families.  

See more of our research at Kimble Charting Solutions and be sure to follow me on Twitter and StockTwits.