Mullooly Asset Management

Fiduciary Fee-Only Financial Planner | Investment Advisor in Wall, NJ

NASDAQ

Tim’s Top Links – 1/6/17

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timA few weeks ago our President, Tom Mullooly, was a part of the NASDAQ Advisor Symposium in New York City.  The panel addressed the upcoming Department of Labor Fiduciary Rule.  This rule has recently come into question with the new administration about to take office.  The first link below is an article detailing some of the discussion from that day.

Here’s what I’ve been reading this morning:

‘DOL Fiduciary Rule Will Encourage More Dialogue and Closer Alignment With Investors’ – James Williams – Hedge Week

‘The Two Types of Knowledge In The World’ – Ben Carlson – A Wealth Of Common Sense

‘The Philosophical Failings of Forecasting’ – Barry Ritholtz – Bloomberg View

‘The Difference Between Impatience and Having No Tolerance For Inefficiency’ – Morgan Housel – Collaborative Fund

‘Department Stores, Once Anchors At Malls, Become Millstones’ – Sapna Maheshwari – The New York Times

ENJOY!

Point and Figure Update: March 23, 2015

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We have two quick updates on the S&P 500 and NASDAQ Composite indices today. Both are sending encouraging signals on their point and figure charts. They seem to be setting up for one of two potential patterns: the bullish catapult or the shakeout. Both the bullish catapult and shakeout are very bullish patterns.

Of course, we don’t know if these patterns will come to fruition, but they are something we’ll be monitoring closely in the coming weeks. A key with point and figure is to not anticipate signals or indicators, so while we are encouraged by these developments, things can change. Luckily, point and figure charts let us know what is happening in real time, as things pertain to the markets. We’ll be ready to adapt when the charts change.

Check out the point and figure charts of the S&P 500 and NASDAQ below for details. As always, our point and figure charts are provided by our friends at Dorsey Wright and Associates.

NASDAQ March 2015 Bullish Catapult or Shakeout S&P 500 March 2015 Bullish Catapult or Shakeout

Market Commentary March 5, 2015

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Here is a quick market commentary for March 5 2015.  More than anything else, we focus our efforts on:

How to properly manage the risk in your investments.

With that in mind, there are two noteworthy points that came up this week.
This past week (March 2, 2015), the NASDAQ Index closed above 5000. The last time this happened was 15 years ago.  For those who did not live through that precious moment in time, from 1998 through 2002 (five short years), the NASDAQ Index ran from 1500, up over 5000, and BACK down to 1300.  The NASDAQ went “all one way” for  while, then went “all one way” for a while more.

If you want to see a “bubble” in action, fasten your seat belts:

Quick trip down the NASDAQ Memory Lane
January 1998:  1500
January 1999:  2100
January 2000:  4100
March 2000:  5100
May 2000:  3300 — and the chart broke support dating back to 1992
September 2000:  4200 — a brief recovery, then:
October 2000:  3600  broke newer support
December 2000:  2300 — down 50% in nine months

And finally the five year round trip came to rest:
October 2002:  1300

We know from the charts: when an asset class, a group, a sector — or even a stock — falls out favor, there IS NO BOTTOM. And NASDAQ investors learned that lesson the hard way back then.  Learning how to manage the risk is a full-time job, not something someone can do part-time or on weekends.

As an advisor, watching your investments get dragged down into the dirt — for years — because an investor wants to be “long-term” is not really a game plan for managing risk. At some point even Warren Buffett sells the losers. Individual investors should consider that too.  If you truly want to manage risk in your investments, you cannot simply buy and hold forever.

At the end of February 2015 and heading into March, we continue to push our chips across the table (investing), because our indicator lights are all green — but that does not last forever.  And this is where we can really better manage the risk in our investments.  We will get clear signals from our indicators when to get more conservative. Even if our short-term indicators indicate a possible stall or pull-back, looking at the intermediate and longer-term view we still appear fine.

Right now, we’re seeing small cap stocks making a move. Regardless of whether you hold small, mid-cap or large cap, US stocks remain the place to be. As an investor, if you are diversifying AWAY from the US markets, you are making a mistake. The strongest sectors continue to be healthcare, transportation, consumer stocks and biotechnology.

Yellen and Bernanke have been the most transparent Fed Chairs we’ve EVER had, period. Whenever the Fed does decide to raise rates, it won’t be a surprise. Here is something important to keep in mind: Yellen has mentioned a desire to avoid upsetting markets when rates rise.  Yellen also has an eye on how to manage the risk in the markets.  See pages 17-18 of the Fed Minutes: http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20150128.pdf

How does this impact you and I?  Well, I have written more about that, here: https://mullooly.net/federal-reserve-preparing-to-raise-interest-rates/7977

Remember, it does not matter WHEN the Fed raises rates.
It’s how the market reacts to that news, that will truly matter.

Keep Your Eyes On the RIGHT Chart!

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Stephen Suttmeier made a pretty interesting commentary regarding the NYSE chart.  After we found this on Josh Brown’s website, we wanted to share it with you!

Recently, the focus on many investors, and many market-related news articles, have been about the NASDAQ and how it reached 5,000. Don’t get me wrong, that’s a great thing, but we think people might be focusing on the wrong chart!

The trend chart for the NYSE appears to be ready for a big breakout at the 11,100 area. This ties in nicely with the point and figure backdrop we have been seeing on many of our charts. In the very immediate short term, some charts may be expecting a pullback, but with our intermediate term indicators pointing higher, it could be a small hiccup on the way to better days!

 

Source:
http://thereformedbroker.com/2015/03/05/youre-all-looking-at-the-wrong-chart/

Fast Way to Tell If a Stock is NASDAQ or NYSE Listed

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Have you ever wanted to know whether a stock traded on the NASDAQ or New York Stock Exchange? There’s a simple way to determine which exchange a stock trades on. While it’s not always correct, more often than not you can tell which exchange a stock belongs to by looking at its ticker symbol. Tom discusses that in this week’s Mullooly Asset Management video.

If a stock symbol has three letters or fewer it is most likely a member of the New York Stock Exchange. If a stock has four letters or more it is most likely a member of the NASDAQ. Additionally, mutual funds will have 5 letters in their symbol and the last one will be an x. Like we mentioned previously, these aren’t always correct. More often than not, this will help you correctly analyze whether a stock is traded on the NYSE or NASDAQ.

Differences Between the NYSE and NASDAQ

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It’s often taken for granted by those familiar with the stock market, but plenty of people don’t know the difference between the New York Stock Exchange and the NASDAQ. There are several, key physical and financial differences in these exchanges that everybody should know. Tom and Brendan discuss these differences and more on this week’s Mullooly Asset Management podcast.

You may have heard the NASDAQ referred to as the OTC Market. It’s sometimes called this because it has no real physical location, like the New York Stock Exchange. Until about 1987 it was only called the OTC Market. Currently you’re more likely to hear it called the NASDAQ. What does NASDAQ stand for? It’s the National Association of Dealers Automated Quotations. The association is made up of all the member firms that trade with one another. Each of them has the ability to buy, sell, and post quotes. The NASDAQ, or OTC Market, started in the 1960s trading penny stocks on pink pieces of paper called pink sheets. You had to call in and get prices on most of these names. Today the system works electronically using the small order execution system (or SOES). The shift to electronic trading happened after market makers decided to not answer their phones during the 1987 stock market crash.

Before covering the NYSE, Tom and Brendan briefly discuss the American Stock Exchange. It’s currently owned by the New York Stock Exchange, but (for some stocks) it used to serve as a stepping stone between the OTC Market and the NYSE. Smaller companies started in the OTC Market and some moved to the American Exchange before finally ending up on the New York Stock Exchange. The American Stock Exchange was also sometimes called the “Curb Exchange”. It got this nickname because pre-1921 trades actually happened outdoors. Crazy stuff! During the 1980s, a lot of options trading was done through the American Exchange. Trading volume was never quite as high as the NASDAQ or NYSE though.

Finally we have the New York Stock Exchange or the “Big Board”. Located on the corner of Wall Street and Exchange Place in New York, if you’re ever in the area we recommend taking a tour. Many people think of the NYSE as a large cap exchange, but a solid percentage of the stocks trading on it are small and mid cap. Pretty much all large cap stocks are a part of the New York Stock Exchange though (not including Apple, Microsoft, and Google). The market capitalization of all the NYSE stocks is about $16 trillion!

As you can see, many differences exist between the NYSE and the NASDAQ. Make sure to listen to this week’s Mullooly Asset Management podcast to learn more about these exchanges!

You might also enjoy checking out this post regarding some additional differences between the NASDAQ and NYSE: http://www.thesecuritiesedge.com/2012/07/where-to-list-nyse-or-nasdaq/