What’s You’re Biggest Regret?

Dr. Travis Bradberry recently shared an article he wrote on LinkedIn titled, “Five Choices You Will Regret Forever.” With a title like that, it’s hard not to click. I’m a sucker for good clickbait. I had a personal connection to each of the five choices  Bradberry lists (I included them below). Our lives are full of decisions, some mundane others live-changing, but all are important.

I recently returned from an amazing trip to Italy with my wife. We visited six wineries, saw some breathtaking historical art and monuments, learned more than my brain could hold on to, all while eating some amazing food. While I’ll have memories from the trip that (I hope) last a lifetime – one of the biggest takeaways was the need to experience more of life. In my final days, as Bradberry’s article discusses, I want to limit the number of regrets I have. I am not naive in thinking there won’t be any, but at the age of 30 I’m still young enough to keep that list as short as possible.

Anyway, I thought Bradberry’s list of five regrets is well worth sharing and so here the are (in abbreviated form with a link at the bottom of this post to the full article):

Bronnie Ware spent her career as a palliative care nurse, working exclusively with people who were 3 to 12 months from death. She made a habit of asking them about their greatest regrets, and she heard the same five regrets time and time again. By studying these regrets, you can make certain that you make good choices and don’t fall victim to them yourself.

They wish they hadn’t made decisions based on what other people think. When you make your decisions based on other people’s opinions, two things tend to happen:

  1. You make a poor career choice: There are too many people out there who studied for a degree they regret or even spent their lives pursuing a career they regret. Whether you’re seeking parental approval or pursuing pay and prestige over passion, making a poor career choice is a decision that will live with you forever.
  2. You fail to uphold your morals: When you get too caught up in what your boss thinks of you, how much money you think your spouse needs to be happy, or how bad you will look if you fail, you are at high risk of violating your own morals. Your intense desire to make yourself look good compromises your ability to stay true to yourself and, ultimately, to feel good.

They wish they hadn’t worked so hard. Working hard is a great way to impact the world, to learn, to grow, to feel accomplished, and sometimes even to find happiness, but it becomes a problem when you do so at the expense of the people closest to you. Ironically, we often work hard to make money for the people we care about without realizing that they value our company more than money.

They wish they had expressed their feelings. We’re taught as children that emotions are dangerous and that they must be bottled up and controlled. This usually works at first, but boxing up your feelings causes them to grow until they erupt. The best thing you can do is to put your feelings directly on the table. Though it’s painful to initiate, it forces you to be honest and transparent.

They wish they had stayed in touch with their friends. When you get caught up in your weekly routine, it’s easy to lose sight of how important people are to you, especially those you have to make time for. Relationships with old friends are among the first things to fall off the table when we’re busy. This is unfortunate because spending time with friends is a major stress buster. Close friends bring you energy, fresh perspectives, and a sense of belonging, in a way that no one else can.

They wish they had let themselves be happy. When your life is about to end, all the difficulties you’ve faced suddenly become trivial compared to the good times. This is because you realize that, more often than not, suffering is a choice. Unfortunately, most people realize this far too late. Although we all inevitably experience pain, how we react to our pain is completely under our control, as is our ability to experience joy. Learning to laugh, smile, and be happy (especially when stressed) is a challenge at times, but it’s one that’s worth every ounce of effort.

Any of those stick out to you? I’m sure at least one does if you are honest with yourself. While this blog’s focus is on technical analysis and the financial markets I think it’s important to recognize there’s a world beyond the 500 S&P stocks. My passion is trading and it’s something I believe I’m good at. But it’s important to not lose focus on other aspects of life and making sure the list of  regrets is kept as small as possible.

Source: Five Choices You Will Regret Forever (LinkedIn)

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Price and Seasonal Weakness Plague Mid Cap Equities

Last week I discussed the growing divergence within the S&P 500 as the largest components of the index were outperforming the smaller $SPX stocks. To continue on that topic, below we’re going to look at the S&P 400 Mid Cap Index.

$MID recent made a run back to its prior 2017 high but was unable to breakout, creating a lower high in momentum, based on the Relative Strength Index. This creates the third major lower high since its December as momentum continues to weaken for this mid cap index.

While the 100-day Moving Average was able to provide some support during the low earlier in the year, price has unable to gain transaction along with the large cap U.S. equities. The bottom panel of the chart shows the relative performance of the S&P 400 vs. the S&P 500. With relative performance having peaked in December, the ratio line has been putting in a series of lower highs as mid caps struggle to keep up. While price is still well off its prior low, relative performance is beginning to creep closer to its 2017 low, a bad sign for mid cap stocks.

Looking at volume on this daily chart, we can see a recent increase in large selling days. In early April we saw three consecutive above-average days of selling as a short-term low was put in for $MID. However, more recently two more days of above-average down volume have taken place – a sign that many traders attribute to institutional selling.

Turning our focus to seasonality, this recent weakness in the mid cap index begins to make a little more season. Based on the below chart from EquityClock, over the last 20 years, the S&P 400 has put in a short-term high in early May before picking back up later in the month

Going forward I’ll be watching to see how $MID acts if price gets back to the prior ’17 low and if the relative performance ratio does in fact set a new low. This period of weakness does align with long-term seasonality and if the seasonal pattern continues to play out we could see mid caps weaken further until later this month.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

A Growing Divergence in Performance for the S&P 500 Components

As we approach the final days of April, if you were to look back and try to put your finger on a theme for the last four months, one that you may select could be the growing divergence taking place in the S&P 500. What I’m referring to is the separation in performance that appears to be taking place among the largest of the S&P 500 stocks and the less large (smaller?) stocks that round out the index. Eyeing a long-term chart of the equity market there appears to have been a couple previous examples of this taking place, I’ll get into those later. First let’s look at present day…

Below is a chart of the S&P 500 Index (red line) and the ratio between the S&P 500 Equal weight ETF ($RSP) and the S&P 500 ETF ($SPY) which is cap-weighted. (yes I could have used the indices but I, no big reason why I chose not to. I just naturally gravitate to ETFs). I tweeted out this chart yesterday but I wanted to provide a little more commentary to what’s taking place.

When the Black line is rising that is telling us that the Equal Weighted $RSP is rising more (or falling less) than the cap-weighted $SPY, and when it’s declining the opposite is taking place. The latter is what we are seeing play out so far in 2017 with the largest of the S&P 500 components leading the charge higher.

Another instance we saw this play out was in 2012. During the initial bounce off the low in May we saw the S&P 500 begin making higher lows but it was being done on the backs of the largest components – as we can see with the black ratio line making lower highs from May through August. This divergence was ultimately responded with the market as a whole heading to new highs and the smaller S&P companies once again taking the lead.

The reason that we may attention to which parts of the market are leading and lagging is because it provides insight into the level of risk taking that’s occurring within the market. It’s commonly believed that the larger the company’s market cap, the less riskier the stock (obviously there’s plenty of examples of this not being 100% true all the time). When the market is trending higher many bulls want to see the more riskier portions of the market, such as small caps and mid caps show strong relative performance. And one way we can measure that is by looking at which parts of the S&P 500 are showing that relative performance – the largest weighted or the smallest weighted stocks within the index.

Here’s another example a divergence being formed between the two differently weighted ETFs. Let me first say, yes this is showing the 2007 peak in stocks before the Financial Crisis. No, I’m not calling for a long-term top in the S&P 500, this is just another example of a similar divergence. As with many major market peaks, the are lead by a narrowing of breadth, also known as participation. This showed up in the lack of relative strength among the smaller S&P 500 stocks in June 2007 through the rest of the year. And we know how that played out in the next twelve months….

So there are two examples of a growing separation in the largest and smallest stocks that make up everyone’s favorite equity index. One (2012) was resolved with the market going higher and another (2007) that led to a major bear market. Which one will we see? No idea, and there’s no reason we must replicate either of these instances. The important takeaway is the acknowledgement that the largest companies in the index are what have been leading it higher – that’s where bulls seem to be concentrating their efforts.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.