HOW WAS 2014 FOR HOUSEWIVES?

One of the funniest parts of analysis in stock markets: if you look back couple of months or a year how people forecasted the future. I have loved during the whole year the bearish sentiment about the market rally. But finally the 2014 has been quite a good year again for investors in stock markets in row for 5 years.

2014 Index returns:

• S&P 500 +12,55%
• Dow Jones 8,48%
• Nasdaq +14,39%

It has been proved again the best investment is still the stock markets and you had should forget the gold and property in 2014. So, at the beginning of 2014 there was a survey what pops & moms are thinking about the best investment in 2014. This year they had good shots since last year 2013 was an exceptional good year for stocks so the mean used to be very optimistic about stocks this year generally and they were right. They didn’t trust in commodities and gold and they were right again, the whole commodity asset group suffered its biggest drop since decades. But it seems clearly after three years of falling of gold the love has gone away.

They were super sceptical about bond market, but this asset group performed quite well. All in all if this kind of choppy and volatile market they really put the bets on stocks they made nice returns, but I am concerned a bit that they really did since we had two big corrections in US indices closely 10% in 2014, and those days and pops & moms usually capitulate.

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The BFM Assets Team.

6 RULES I LEARNED FROM SEAL SOLDIERS AS A TRADER

The military is far from trading, but I have found some similarities between SEAL (Special Operation Forces Sea, Air and Land) and investment: the preparation, the professionalism, the special skills and the commitment. The soldiers have many great habits which we should consider as investors being more efficient and profitable.

During the trainings of SEAL they get new habits and lose the wrong and useless ones. They are trained for the mission as we are as investors on our horizon there is only one goal at the end of the day– the profit. They learn from their mistakes day by day and the purpose is to get good habits and stick to them.

1. Be loyal. Team loyalty in SEAL, but in trading means you should be loyal to your system. Don’t change that often. Never let your emotions rule your trading. Follow your rules around the clock. 
2. Be reflective. Analyze yourself and your trading history and reflecting on your mistakes and learn from them. Ensures you never repeat them. 
3. Be obsessively organized. Sleep, do exercises and make your whole day organized. The best traders are very well organized and work hard. 
4. Assume you don't know enough. Because you don't. Any effective trader understands that training and learning is never complete. Being an investor is a long life learning process which never stops. 
5. Be detail-oriented. Take all your attention at the small informations and news and analyse them. Be well informed and read as much as you can to get more information to make better decisions. 
6. Never get comfortable. The trading arena and the floor is not that place where you are going to have comfort feeling. It is a battlefield and you should push yourself outside of your comfort zone.

This list is the beauty of trading and proves why is one of the most fascinating and inspirational job in the world. Maintain these habits, and encourage yourself to follow them.

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The BFM Assets Team.

EXPERTS’ CRYSTAL BALLS ARE CLOUDY

Most of them forecasted a big fall, but finally Mr. Market has delivered a nice rally in December. Experts stated during the month that the market will crash, new correction will happen, but they are wrong. They convinced many investors with this negative sentiment staying without positions, so they lost again an opportunity to invest in this rising market.

Around Xmas days there were no volume, but the markets are gained further nicely. We saw new highs in the major indices S&P 500, DJIA, Nasdaq, Russell 2000. This is a very strong confirmation of the bull market is alive and well for all those doubters. Nasdaq closed at highest level since March 2000. The Dow index has gained for seven consecutive trading days, and enjoyed its biggest seven-day point gain since 2008. The Nasdaq has been up for eight of the last ten weeks, while the S&P 500 has gained for nine of the past ten weeks. This is a typical end of year rally.

In technical terms the Dow made a clear breakout last week at 17.960 and stayed in the untouched territory, so any forecast without indication of resistance levels is just guessing. What we are expecting is the index is going strengthen further in the following 5-10 days.

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The BFM Assets Team.

GETTING CLOSER TO SANTA RALLY?

One of the most famous market phenomenon is the Santa Claus Rally at the end of the year. Obviously we don’t know this year will come or not since we don’t have a crystal ball, but we can find some data from the past to understand better this phenomenon. Namely this pattern means the last trading 5 days of the year and the first 2 days of the new one. Typically the markets are trending in those days, and mostly they are bullish.

According to the Trader’s Almanachs since 1969 the Santa Claus Rally occurred 34 times out of 44 years. So the winning ratio is pretty good, it is over 72%. The average cumulative return is around 1.6%, but there is always one day at least of decline. If we look back in longer period since 1896 the Dow Jones gained in 77% of the years with around 1.7%.

What is the underlying lift-power of Santa Claus Rally? To be honest I don’t have a faintest idea, my bet is more mass psychology than fundamentals, might be the year-end tax-related portfolio adjustments or optimism during the holiday season.

The BFM Assets Team.

IT IS TOUGH BEING SHORT IN THIS BULL MARKET

The U.S. stock market ended a great turbulent week punctuated with collapse of the Ruble, gyrations in the oil prices and the Federal Reserve’s policy meeting and most importantly with the biggest weekly gain since October 2014.

Once again Mr. Market proved that nobody knows anything. Nobody expected this low oil price early on and nobody expected the last week volatile rally. Most of the investors anticipated quiet pre Xmas weeks. On the contrary the S&P 500 had its biggest gain since 2009 and gained during the week with more than 3.4%, Dow gained +3%. Who shorted the market, he burned out for sure. Being on the sell side it has not been only hard mentally, but might be a super loser deal either.

Friday performances:

• S&P 500 +0.46%
• DJIA +0.15%
• Nasdaq +0.36%

The S&P hit the 2.075 previous record level last Friday, which is a great sign of the bullish sentiment, without any doubt we are expecting more gains on the index and it is going to get higher in the untouched territory over 2.100 shortly.

The BFM Assets Team.

MONSTER RALLY WITH EXTRAORDINARY BULLISH SENTIMENT

The rally has arrived as we forecasted beginning of this week. We have had many new records this week. Yes, this week will be in the books of trading history. The market not only rallied in crazy way with around 5%, but scored the best 2 days gain since 2002. I see the comments that traders are blaming for this fast rally the FED and new Cuba policy. This sounds like some kind of a conspiracy. Whatever they say, the point is that at the strongest bull market rallies you don’t really know what the main force behind the gains is.

The Dow delivered its biggest one day gain since 2011 and got back really close again to shouting distance of 18.000. First time happened since 2008 the DJIA recorded 200 points daily gain. The S&P 500 delivered its biggest one-day gain since 2012. And first time since 2002 the S&P500 posted two consecutive days of gains bigger than 2%.

Yesterday:

• DJIA +2.43%
• S&P500 +2.40%
• Nasdaq +2.24%

The other stock markets are also massively in green territory:

• DAX +3%
• ASX 200 +2.9%
• Nikkei +2.4%

Technically the Dow Jones deleted the 10 days drop in December within 4 days and recovered back to the record territory and erased all resistance levels. Recently the index needs to retest the 17.960 level and then after a few days consolidation the bullish sentiment is going lift higher the index into the untouched territory.

The BFM Assets Team.

BREAK-OUT?

Might be – I would say a small yes now, but tomorrow could be a big yes. In our interpretation the FTSE index delivered a break-out and pivotal point break-out last night, which usually means rebounce from the seven days free falling streak.

And the chart technically also developed a double bottom pattern which also supporting the bullish rally and sentiment in the following days. From the daily lowest point of 6.175 the UK benchmark index probably will retest the 6.415 key resistance level shortly.

After the great plunge which was closely 10% in December, the FTSE index might come back to a consolidation and gaining period and in 2-3 weeks the chart could go back to the previous prices territory around 6.750.

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The BFM Assets Team.