Risk Back On - Part Deux

As a follow up to Monday’s post about what appears to be a global equity breakout, my next two charts are from Asia. Both Taiwan and Hong Kong look very strong. In both cases, price has broken above prior resistance and is above a rising 200 day moving average. RSI momentum is in the bullish zone, is rising but has more room to run before it reaches an overbought state.

Additionally, in both charts price is moving strongly higher on the breakout from the neckline of an inverse head and shoulders reversal (bottoming) pattern and have more room on the upside before their targets are hit.

While the timing is a little late to the party, it looks as if both of these opportunities could provide swing investors with additional upside potential with limited, known, downside risk.

Risk Back On - World Equity Markets Are Breaking Out

The post-Brexit vote equity selloff didn’t last long as most world markets have rebounded strongly and are breaking out. From a technical standpoint, it appears (for now) as if investors are favoring stocks. To illustrate this point, all my posts this week will focus on some interesting and exciting opportunities. 

The first being the emerging markets (using EEM as my proxy). As you can see in its chart below it peaked in mid-2014 and declined some 35+% bottoming in January of this year. It has since taken back 50% of that loss and has formed and broke out from an (in blue) inverse head and shoulders bottoming reversal pattern. If this pattern plays out to completion its upside target is some 20% higher. With RSI momentum in the bullish zone and rising and price above a rising 200 day moving average, you can’t ask for a nicer opportunity setup.

Just for the Smell of It

The Hard Rock Café Hotel in Orlando pumps out artificial scents of sugar cookies and waffle cones that act as “aroma billboards” to draw people to their ice cream shop in the basement (increasing sales by 45%). The marketing company ScentAndrea attached chocolate artificially-scented strips to some vending machines in California, tripling Hershey’s sales. The Hershey’s store in Times Square uses artificial scent machines that blow the scent of chocolate into their store. Disney reportedly applies an artificial “grilled scent” to their frozen burgers to make them smell fresh, along with strategically placed scent machines in the bushes that disperse scents of cotton candy, popcorn, or caramel apples. According to the Scent Marketing Institute, when the smell of fresh baked bread was pumped into a grocery store, sales in the bakery department tripled. A grocery chain in New York (Net Cost) admittedly places scent machines that release scents of chocolate and baking bread to make customers hungry, and sales jumped.

Even subtle changes in operations can trick our noses and make a big impact on increasing food sales. For instance, Panera Bread recently moved its baking time to daytime hours so that customers smell the bread all day long and their New Haven, Connecticut location has a small “show oven” without a hood, so the smells vent into the restaurant. This is the same reason that Subway places their bread ovens up front in their restaurants, so that smell hits you when you walk in the door. Starbucks has an “aroma task force” to make sure their stores smell like coffee and not the cheese from their breakfast items

So don’t be surprised the next time you drop into our office and feel rich as we are working with the SF Federal Reserve to capture a new, “crisply minted $100 bill” scent for use in our Glade “office fresh” dispensers.

July 2016 Charts on the Move Video

July brought a welcome relief to the markets as most US indexes broke out to all time highs. For some that is all that is needed to jump all in, for others prices are too high so its time to take some chips off the table. Where do you stand?

https://youtu.be/CbhUDukKjN8

Put it in Perspective

I know I spend way too much time on market research, living every peak and valley and have come to realize the hard way it is a distraction for the things that matter most in life. There has to be balance but finding it can be a struggle for me. As such sometimes I find it good to put it in to perspective and this chart helps me do that. Maybe it can help you - - -

“The 7 cardinal rules in life”