Sunday , 24 September 2017


These 2 Stock Market Metrics Make Me Feel Uneasy – What About You?

It’s been an amazing run in the stock market but…I start to feel a bit uneasy aboutinvesting10 things when I see all news reported as good news, because it either means the economy is getting better or more QE is coming. The fact, though, is that the market is just driving higher on what looks like sheer optimism of continued QE and little else. You can see this optimism in two indicators you’ll recognize.

So writes Cullen Roche (pragcap.com) in edited excerpts from his original article* entitled 2 Charts That Make Me Feel Uneasy About The Stock Market.

[The following article is presented by  Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Cullen goes on to say in further edited excerpts:

1. Total Market Cap to GNP

…The latest reading of 110% has only been surpassed by the Nasdaq bubble.

(click to enlarge)

(chart via Orcam Research)

2. Margin Debt

The other chart that makes me feel uneasy is the amount of borrowing that’s being done to purchase equities as evidenced by NYSE margin debt at all-time highs:

(click to enlarge)

(chart via Orcam Research)

Conclusion

I’ll be honest – I’ve never really understood the obsession with equities, and being a macro guy I probably never will, because I have so much love for so many asset classes and approaches.

If I were 100% allocated in equities at this point in the cycle, however, I would feel rather uneasy about my positioning.

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

*http://pragcap.com/2-charts-that-make-me-feel-uneasy-about-the-stock-market (Copyright © 2013 All Rights Reserved)

Related Articles for a Balanced View:

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1. 4 Clues That a Stock Market Collapse Is Coming

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2. Stock Market & Economy Could Be in BIG Trouble By End of October – Here’s Why

I generally shy away from making time-specific economic and stock market predictions simply because odds are very low you’ll be correct on both the prediction and the timing. However, there are certain times when the environment is conducive for a prediction that comes along with an expiration date. Today is one of those times. Read More »

3. Bernanke Has Created the Mother of ALL Stock Market Bubbles – Here’s Why

We have NEVER been this overextended above this line at any point in the last 20 years. Indeed, if you compare where the S&P 500 is relative to this line, we’re even MORE overbought that we were going into the 2007 peak at the top of the housing bubble. Read More »

4. A Stock Market Crash Followed This Occurrence In 1929, 2000 & 2007 – It’s Happening Again!

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The S&P 500 index is trading at record high levels and optimism remains high with Barron’s professional money manager survey indicating a record 74% money managers being bullish on markets even at current levels. [When one] measures valuations with respect to expected growth, [however, the ensuing ratio, the PEG ratio,] suggests overvaluation at these levels. [Let me explain further.] Words: 254; Charts: 1 Read More »

7. These 5 Leading Investment Indicators Suggest the Stock Market Is OVERvalued – Take a Look

We have been in the throes of a secular bear market, subject to strong cyclical swings in either direction, since 2000. Currently, based on the 5 leading investment indicators analyzed in this article, the measures all confirm that, from a longer-term perspective, the market remains overvalued. Let’s take a look at each to see why that is the case. Read More »

8. Here’s How to Crash-Proof Your Portfolio

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Some times in history, investors feel so confident about the future of stocks, they actually use up all their available cash and then borrow money to invest in the stock market.  Now is one of those times – and it suggests that now is the time to lower one’s stock exposure. Here’s why. Read More »

11. Don’t Get Greedy! The Greedometer Gauge Has a 100% Track Record – Here’s Its Most Recent S&P 500 Forecast

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Investors are more bullish now than at any time since 2002 but the current rally has not been fueled by improved prospects of actual growth and wealth creation. Instead, it’s mostly due to:

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B. Optimistic Views of the Market

1. Stock Market Bubble & Coming Recession? These Charts Say Otherwise

The real value of the stock market is positively correlated, over time, with the amount of freight hauled by the nation’s trucks (in other words, the physical size of the economy has a lot to do with the real, inflation-adjusted value of the economy) and the latest numbers (see chart) strongly suggest that we are not in a stock market bubble. Read More »

2. The Stock Market: There’s NOTHING to Be Bearish About – Take a Look

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There’s nothing to be bearish about regarding the stock market these days. I’ve reviewed my 9 point “Bear  Market Checklist” of indicators and it is a perfect 0-for-9. Not even one indicator on the list is even close to flashing a warning sign so pop a pill  and relax. There’s no immediate danger threatening stocks. Read More »

3. Pop a Pill & Relax ! There’s NO Immediate Danger Threatening Stocks

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There are several fundamental reasons to believe that this week’s stock market activity, where the S&P 500 has moved more than 4% above the 13-year trading range defined by the 2000 and 2007 highs, could mark the beginning of a long-term bull market and the end of the range-bound trading that has lasted for 13 years. Read More »

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U.S. stocks are off to one of their best starts in years. Most indices are up 10% year to date, prompting many investors to ask: “Are we in another bubble?” The answer is no, at least when it comes to equities. Here are three reasons why:

9. Research Says Stock Market Bull Should Continue Its Run Until…

The mainstream financial press would like us to believe that because the S&P 500 and Dow 30 are at or near their record highs that it must mean we’re nearing the end of the current bull market and, as such, now must be a terrible time to buy stocks. Let’s not  jump to any conclusions, though. Instead, let’s do our own due diligence to find out. Hint:  If you’ve been stuffing cash under the mattress since the last market crash,  you might want to finally go deposit it in your brokerage account. Here’s why… Words: 420

10. These 4 Indicators Say “No Stock Market Correction Coming – Yet”

While I remain cautious on stocks and the risk trade, the technical picture shows that the uptrend to be intact and the bulls should still be given the benefit of the doubt for now. At this point, any call for a correction is at best conjecture [as evidenced by the following 4 indicators]. Words: 399; Charts: 4

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The Swimsuit Issue Indicator says that U.S. equity markets perform better in years when an American appears on the cover of Sports Illustrated’s annual issue as opposed to years when a non-American appears on the cover. [What is the nationality of this year’s cover model? Can we expect returns above the norm or will we see a year of underperformance for the S&P 500 this year? Read on.] Words: 323 ; Table: 1

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13. QE Could Drive S&P 500 UP 25% in 2013 & UP Another 28% in 2014 – Here’s Why

Ever since the Dow broke the 14,000 mark and the S&P broke the 1,500 mark, even in the face of a shrinking GDP print, a lot of investors and commentators have been anxious. Some are proclaiming a rocket ride to the moon as bond money now rotates into stocks….[while] others are ringing the warning bell that this may be the beginning of the end, and a correction is likely coming. I find it a bit surprising, however, that no one is talking of the single largest driver for stocks in the past 4 years – massive monetary base expansion by the Fed. (This article does just that and concludes that the S&P 500 could well see a year end number of 1872 (+25%) and, realistically, another 28% increase in 2014 to 2387 which would represent a 60% increase from today’s level.) Words: 600; Charts: 3

14. 5 Reasons To Be Positive On Equities

For the month of January, U.S. stocks experienced the best month in more than two decades [and the Dow hit 14,009 on Feb. 1st for the first time since 2007]. Per the Stock Traders’ Almanac market indicator, the “January Barometer,” the performance of the S&P 500 Index in the first month of the year dictates where stock prices will head for the year. Let’s hope so…. [This article identifies f more solid reasons why equities should do well in 2013.] Words: 453

15. Start Investing In Equities – Your Future Self May Thank You. Here’s Why

As Winston Churchill once said: “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty” and in that vain I challenge all readers to fight off the negativity, see long-term opportunity in global equity markets and, most importantly, remain invested. Your future self may thank you. Words: 732; Charts: 6

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Use a portion of your portfolio in the form of credit spreads to protect and drive income over the next nine months. It’s an extremely simple strategy to learn and arguably the most powerful strategy in the professional options traders’ tool belt Read More »