Friday , 10 July 2020


Stock Indices

Surprise! Limited Downside Risk Exists In S&P 500

A market is not built solely on fundamental realities, but how broadly those realities are expected by investors. So it goes without saying that it can be very insightful to compare market expectations to reality. When expectations are high there is the likelihood for disappointment. When expectations are low there is a potential for upside surprise. There is actually an index that measures the relationship between economic reality and crowd expectations. It is the Citigroup Economic Surprise Index (CESI). [Let's take a look at what it is saying these days.] Words: 773

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Here's How to Make the Most of Upcoming Buying Opportunity

This quarter’s mid-period has a negative focus [and we are] now seeing the result - a growing belief that the stock market run is over. [If that is, indeed, the case then it is most important to know exactly how to take advantage of the buying opportunities that are about to come about. Here's what you need to know to do just that.] Words: 925

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Today's Market Breadth is Bad Breath for Tomorrow's Market – Here's Why

"Where breadth goes, the market usually follows,” goes an old market saying and as Richard Russell said recently, "In a deteriorating market breadth situation where the ‘soldiers’ are deserting even while the ‘generals’ continue to march forward would be a prelude to disaster. In the stock market, it may be the same." [Let's review the current situation and see where we're at.] Words: 478

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Could Dow 20,000 be Just Around the Corner?

Most first quarter 2011 earnings reports are in and...over three-quarters exceeded expectations... [with] results showing a desirable combination of growing revenues, profitability and cash flow ... [As such,] today's stock market valuations are conservative compared to typical bull markets accompanied by investor enthusiasm. In the past, using 2011's estimated earnings, the average P/E ratio could easily be 15 and...that would put the Dow Jones Industrial Average (DJIA) at 15,000 today – about 20% above today's level. [Were we to] add in high optimism like the kind we've seen in other investments recently, a 20 P/E ratio would be possible - and the DJIA would be 20,000 – 60% higher [than it is today! Let's take a look at the possibility.] Words: 540

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Note: Current Cyclically Adjusted Price Earnings Ratio Says S&P 500 is Over-valued

The Cyclically Adjusted Price Earnings Ratio, abbreviated as CAPE, or the more precise P/E10, closely tracks the real (inflation-adjusted) price of the S&P Composite. After dropping to 13.3 in March 2009, the P/E10 has rebounded to 23.0. The historical average is 16.39 raising concerns about the current price level of the S&P Composite. Let me explain. Words: 1298

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Counterpoint: Equities Are NOT Overvalued

There are different ways to interpret corporate profits and different ways to measure them [and in this article I substantiate] my belief that profits are quite strong and that the market is almost certainly not overestimating their value [unlike other analysts who, in articles here and here, and using different criteria, have come to different conclusions. Please read all the various points of view and come to your own conclusions.] Words: 646

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5 Signs All is Not Right With the Markets

A number of secondary indicators are showing worrisome negative divergences... indicating that the risk-reward tradeoff [for stocks] is becoming increasingly unfavorable. [As such,] the prospect of selling in May and going away is starting to sound good right now. [Let me explain.] Words: 536

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Dow Theory: "Hats Off" to TRAN's "Heads Up"

Trading the TRAN all on its own will produce better returns than most systems when you have the power of the dominant Hurst cycles on your side - and all indications are that 'Sell in May' may be late this year ! Let me explain how the Dow Theory works and illustrate the ebb and flow of its signals with 2 charts. Words: 919

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