Divergence on NDX

I generally take a dim view of old-timey technical indicators, perhaps they work for some people but I have found there are much better tool available. One exception is divergence, which in this case is when price makes a new high, but the MACD (or your favourite oscillator) does not.  

There is very nice looking divergence on NDX, and it also shows up in a weaker form on SPX and INDU. I never take it as a trade signal by itself, but it does make me look a little closer. I have marked off some previous occurrences as well. It does not give any indication about when a sell off may occur, or how much of a sell off will eventuate. Pretty useful isn't it?

Another form of divergence I take note of is the marked failure of RUT to make it back to its recent highs, which differs from NDX/SPX/INDU. 

You can also see in the charts above that volume has been declining, especially over the last 4-5 weeks. 

I do think we are in a long run bull market which still has a few more years to go. In the event of a shorter term sell off I would generally be looking to buy dips. 

A good sign of a bull market is shrugging off negative events. We've had some reasonably serious geopolitical happenings, the invasion in Ukraine, a coup in Thailand, and anti-Chinese riots in Vietnam that produced a number of fatalities. 

Struggling to think what a catalyst might be, perhaps some unpleasant surprise regarding QE tapering, or unconstrained collapse in the Chinese property market, both of which I think are pretty unlikely

There's a bunch of macro data out next week, and Apple is having its WWDC. Apple used to make up a very large amount of NDX, something like 24% of the index value was determined by AAPL prices. I know they rebalanced it and am not up to date with where it currently stands.

Apple is really cool

My secret shame

I am a hardware luddite, and have basically zero interest in gadgets for gadgets sake. Only in February this year did I upgrade from my Nokia 6600. I am also terrible at assembling things. Once I bought a plastic peg basket consisting of three separate parts, two sides and a flexible body bit you snapped in to the sides. Despite the apparent simplicity I somehow managed to fail while attempting its assembly. Got it the second time though. In my high school woodshop class, my final project got an A for the idea and a C for the execution ... it's just not my forte.

My new macbook finally arrived. When I am looking for hardware, I try to do the bare minimum to ensure what that I buy will do what I actually need, and that's it. I only really upgraded as I needed some specific hardware for some graphics stuff.

So for a one paragraph review, and as someone who doesn't really care about hardware, it is amazing. It is light, quiet and incredibly fast. The retina display is markedly better than anything I have seen, it is more or less impossible to not notice the difference, despite how little one thinks they care about such matters.

Junk

One of the things that has engaged my time the last month or so was visiting my parents and cleaning out a lot of my old junk, which has lain dormant at their house for who knows how many years. Although it pained me greatly at the time, I threw out the following machines:

These are all UNIX workstations. If you don't know what that is don't worry, they are all horribly obsolete and all of the companies that made them are either bust, bought out or have abandoned the ideas behind them. 

The second one from the bottom of that stack is a HP Visualize C200 running HP-UX. It's huge and clocks in at 17 kg, all for a 200 MHz cpu. As a ballpark reference the A5 cpu in the iPhone can run at 800 - 1000 Mhz. The blue machines come from SGI, and behind them are 2 CRT monitors also from SGI which weigh about 20kg each. All up it's probably over 100 kg of hardware.

Having spent so much time with these machines, this macbook sitting next to me is seems other worldly. It is orders of magnitude faster than all of those machines combined. Due to the larger screen, it is bigger than my current laptop yet lighter, and height wise it's about half the width of my thumb. I can't help but be impressed by it's engineering, how did they get so much stuff in something so small and light?   

Apple is cool for other reasons

I spent some time the last few days seeing just how much of an outlier Apple really is relative to other companies. It can be a little hard to get your head around why that may be, but this is how I think of it, and why I think they will continue to be successful for the foreseeable future.

Take the microcosm of a free to air TV station as an example. In a nutshell, a production company will make a show and license it to the station for a fee. The station will show it for free and sell advertising to companies wanting to reach the viewers who watch it.

Now instead, imagine that the production company bought the equipment to make the show from the station, paid the station to broadcast its show, and gives the station a cut of any revenue it generates. That revenue is generated from consumers who also bought their TV from station. Throw some advertisers giving the station money in the mix there as well. Actual TV is not yet where it could be, but for software and music, that's how it works for Apple. I can't help but find it kinda cool. TV and movies are there in some form, but so far only nerds and youngish people watch that stuff on their computer.

This also says nothing about Apple's control over supply of the components used to make their hardware, as well as their patents. There's a reason why the trackpad on every other brand of laptop sucks. The success could easily breed complacency, but that hasn't happened yet. They make good products that do what they say on the box, which is something that seems simple but so many other companies fail at. 

No company is infallible, but they have a very strong position and have made a great success out of a new way to do things. I don't know of any other company that has been so successful while bringing about such a huge change (and it is a huge change). Amazon and Google have done a lot too, but I think Apple has gone further. I would love to hear of any others.