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This is a discussion on Stock Market within the Trading Systems forums, part of the Trading Forum category; It's likely that pundits will forecast high single-digit returns for the markets in 2018. It's also likely they'll be wrong ...

          
   
  1. #141
    Senior Member FXstreet's Avatar
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    Why 2019 Won't Be An Average Year For Stocks

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    It's likely that pundits will forecast high single-digit returns for the markets in 2018. It's also likely they'll be wrong due to basic statistics. Here's why.

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  2. #142
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    Plans To Launch Scottish Stock Exchange

    The company behind a proposed new Scottish stock exchange, Bourse Scot, has signed a contract with pan-European Euronext Technologies for a trading platform. But can it succeed where other upstart exchanges and MTFs across Europe have previously failed or been acquired by the incumbent players?

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  3. #143
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    Major Stock Indices

    WHAT ARE INDICES IN TRADING?

    Stock market indices represent the value of a group of underlying publicly-traded companies. A stock market index tracks a collection of stocks to gauge a market’s overall performance. For example, the S&P 500 consists of 500 US companies, so the index tracks the US market.
    Indices are highly liquid, have clear chart patterns and trade with tight spreads making them ideal tradable assets.
    Some popular indices you may be familiar with include:

    • CAC 40 (France 40)
    • DJIA (Wall Street)
    • DAX (Germany 30)
    • FTSE 100
    • S&P 500 (US 500)
    • ASX 200 (Australia 200)
    • Nikkei 225 (Japan 225)
    • Hang Seng (Hong Kong HS50)
    • IBEX 35 (Spain 35)
    • Euro Stoxx 50 (EU Stocks 50)

    HOW ARE STOCK INDICES CALCULATED?

    It is important for a stock market to be transparent. Transparent in what stocks are included in the index and how the index is calculated. Transparent indices are easier for ETF’s to track because they help ETF managers allocate the right weights to the different stocks in the ETF.
    There are many ways to calculate the value of a stock index, but the most popular methods are:

    • The Market Capitalization Weighted Method whereby the stocks in the index are weighted using the market capitalization of the individual companies. The largest company in the index by market cap will generally lead to the most movement in the index. The S&P 500 is an example of a market capitalization weighted index.
    • The Price Weighted Method whereby the stocks in the index are weighted by the price of the stock. This can lead to companies with smaller market capitalizations but higher stock prices having a bigger effect on the overall index. The DJIA is an index weighted using the price-weighted method.
    • The Equal WeightedMethod whereby the return of each stock in the index is calculated and then summed and divided by the amount of stocks in the index.
    • The Fundamental WeightedMethod whereby the index is constructed using fundamental aspects like price to earnings ratios, earnings, book values and others.

    Most indices are calculated using the market capitalization weighted method.

    WHAT MOVES INDICES MARKETS?

    An index moves as its constituents move whether they be market caps, fundamentals, or just the prices of the stocks. The method used to calculate the index can also lead to different results.
    Indices rates are influenced by a few things, mainly:

    1. The index constituents. The companies that make up an index will affect its price. The largest contributors to the index should be always be monitored as they will move the index the most.
    2. Economic Data. If, for example, the index is based mostly on US stocks like the S&P 500 then economic data on the US economy will most likely affect the price of the index. The data that investors will look at include inflation, unemployment, inventory levels and treasury yields. amongst others. All this economic data can be found on our Economic Calendar.
    3. Politics. Trade wars and regulation can have adverse effects on indices. Generally, indices will benefit from talk of free trade, talk of de-regulation and lower taxes.

    WHY TRADE INDICES?

    Stock market indices are traded in large volumes and are very popular in the investing community. They are not only a great place to start for beginners but are also traded by experienced professionals daily. Indices are great for day-traders and long-term traders alike.
    Here’s some of the benefits of trading the major indices:

    • They are highly liquid, which gives traders tight-spreads and clear chart patterns.
    • They provide volatility. Indices represent the health of the economy they track, changes in the economy can cause the indexes volatility to increase which leads to great trading opportunities.
    • Indices allow traders to bet on the price of the index going up and down. This leads to more opportunities as traders can capture the upside and downside of a movement.
    • There are different indices for different industries and sectors, so traders can gain exposure indices that match their preferences. If a trader wants to capture gains in technology, he/she can trade the US Tech 100.

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  4. #144
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    Another Rough Day As Stocks Hit 14-Month Lows Amid Shutdown Fears

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    Today, for one of the first times in this entire sell-off that started in October, some investors appeared to start panicking. The orderly, methodical selling that’s characterized the market wasn’t so evident.

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  5. #145
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    5 Stocks Now Selling Below Book Value

    With the market much lower, these 5 stocks are now trading for less than their book value -- and they're dividend-paying stocks.

    U.S. Steel is an old name New York Stock Exchange traded stock now going for below book value by 18%.

    Western Digital makes data storage devices and trades on the NASDAQ. Right now, the company can be purchased for 92% of its book value.

    Western Digital makes data storage devices and trades on the NASDAQ. Right now, the company can be purchased for 92% of its book value.

    Enable Midstream Partners is New York Stock Exchange traded and now goes for 80% of its book value. The oil and gas pipelines company has a price/earnings ratio of 14.6.

    Meta Financial Group is a savings and loan firm that trades on the NASDAQ with the symbol "CASH." The company is available now at a 10% discount to book value with a price/earnings ratio of 10.5.

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  6. #146
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    4 Market Trends To Watch In 2019

    Here are some of the more interesting trends to monitor in the market as 2019 progresses.

    1. Relatively High Valuation Of The U.S. Market
    This trend has persisted for longer than many expected, but remains notable in a historical context. At the time of writing, the S&P 500 trades at a PE of 18x, with other metrics telling a similar story. That's high by historical standards. On the other hand, developed markets outside of the U.S. trade at around 12x earnings, closer to average. That means that the U.S. market is trading at a 50% premium to other developed markets. Historically, that premium hasn't persisted. In fact we've seen times when foreign markets traded at level above the U.S. It's hard to call when this trend may turn, but history seems to be on the side of overseas markets and American investors may be underexposed to this potential move.

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    2. Low European Bond Yields
    Even though bond yields have risen at least in the U.S. in recent years, it remains true that yields on government debt are low by historical standards. The yield on 10-year Swiss government debt is negative, and many European countries have very low yields. Again, we're a decade into this trend, a have seen four decades of generally declining yields globally as inflation has been tamed. Nonetheless, broader history, and the fact that U.S. inflation is around 2%, suggests this may not last.

    Stock Market-eurobund.weekly.png

    3. The Shape Of The Next Recession
    There's a lot of debate around recession probabilities. However, recessions can differ quite significantly. The last two recessions in our memory have been a lot worse than average in terms of their severity. As such, just as important as when a recession occurs is how severe it is, and which parts of the economy are hit hardest. It may be that the next recession is softer, perhaps at least for investors, than many people imagine. This may simply be because the 2008 experience was so awful and unusual. Nonethless, our most recent experiences stick in the memory and may receive more attention than they deserve.

    4. The Flat Yield Curve
    The U.S. yield curve is flat compared to history. This implies the bond market sees the Fed as close to the end of its tightening cycle. Presumably, the bond market thinks a recession may be close.
    The U.S. yield curve is flat compared to history. This implies the bond market sees the Fed as close to the end of its tightening cycle. Presumably, the bond market thinks a recession may be close.

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  7. #147
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    Can You Bank On A Stock Market Bottom?

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    The powerful gains last Wednesday were encouraging. Does this mean that the worst of the selling is over and that buyers can safely step back into the stock market? That is the view of some in the financial media, but is it consistent with the technical and sentiment readings?

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  8. #148
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    Starbucks: Why I Recommended Selling It

    A lot of readers asked why I didn't research Starbucks before recommending a new client sell it. It's a fair question that merits a thoughtful reply.

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    The stock's price-to-earnings multiple is 19 which is comparable to that of the S&P 500. A company without a clear growth plan trading at a market multiple is not a compelling investment. To be compelling, the stock would have to be a lot cheaper, or the CEO has put forth a credible plan to restore growth. Until then, there is no way Starbucks would not crack my top 20 stocks so I am comfortable that selling it is the right call.

    Even if I were convinced that Starbucks was a top 20 stock, I would still recommend selling enough to bring the position down to 5% of her portfolio. Keeping 20% of the portfolio in any stock just to avoid the capital gains tax is a bad idea. There are cases where a stock is so compelling that I would be willing to let it be a 20% position. But the strongest case for Starbucks, as put forth by its CEO, falls far short of that.

    Yes, it is still possible that Starbucks is a gem that all of my managers and I missed. I can live with that. There are plenty of other stocks with better chances of delivering a good return for investors.

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