Monday, March 08, 2010

Any takeaways from today's low volume?

Today's volume in the markets was the lowest of 2010 and many are searching for meaning in this stat. I don't read much into this fact - it was a Monday with little news to move the markets after all - but I'd note that tomorrow is important for some tea leaf readers. Many momentum traders buy stocks based on their price relative to the stock's 52 week low. So if it a stock hit a low of $10 within the last year but is now trading at $20 they'll keep trading the name because the trend looks to be up (this is a wild oversimplification but bear with me).

Well, tomorrow is the mother of all bottoms 3/9/09 was the day we closed at the bottom of the crash and it was off to the races from there. Here's why tomorrow is tricky - after tomorrow's date, even if stock's hold their own for the next month their momentum will appear to be slowing because the 52 week low is going to be going up every day. While stocks are up 60-70% from the lows a year ago, almost half of that gain came in March of 09. By the time we hit April of 2010 the percentage of stocks trading 60-70% above their lows will plummet substantially (barring another huge March rally). This could get the chart readers a bit worried, but we won't know until we see it unfolding in the market.


Best of the web....

Can the Renminbi replace the US dollar as the world's reserve currency? Perhaps the most interesting chart of the day lies in this piece. Look at some of those projected shifts in global GDPs!!! Admittedly, this is from a report published pre-crisis, but will be fun to watch this play out over the next 40 years.
The Cost of Competing with China -- A groundbreaking deal for a 55 per cent increase in coking coal prices, a key input in steelmaking, has been agreed between BHP Billiton, the world’s largest miner, and JFE Steel of Japan. The contract, which will run only for the quarter between April and June, marks a break with decades of tradition under which contracts were agreed on an annual basis.
This new deal with see JFE pay $200 a tonne for coking coal instead of the $129 a tonne under its current annual contract which expires at the end of the month.
This shows how aggressive countries have become in competing with China for natural resources. "China has become a black hole, and the Japanese steel makers are trying to lock up their supply," Burns said.
Finally --- Ah, to be 11 again!
An 11-year-old boy from Azerbaijan became the owner of nine waterfront mansions.
The total price tag: about $44 million
-- or roughly 10,000 years' worth of salary for the average citizen of Azerbaijan.
But the preteen who owns a big chunk of some of Dubai's priciest real estate seems to be anything but average.
Basically, the 11 year old son of Azerbaijan's President - who makes a cool $228k/year - has found a way to leverage his connections to the tune of $44 million worth of plummeting Dubai real estate. If you get a chance you should read up on the President of Azerbaijan - he's a piece of work.

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