About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Sunday, February 18, 2018

Stock Market -- This Is A Little Odd

While folks debate the near term future of the market, I content myself with an oddity in the
market internals. The TRIN measures the amount of selling pressure in the market. A high TRIN
signals heavy selling pressure and a low TRIN signals light selling pressure (low volume per issue
sold). During the extended period of market weakness over the latter part of 2015, the 13 week
TRIN reached a high of 1.6, indicating the accumulation of heavy selling pressure.  Weekly TRIN

Notice that despite the dramatic sell-off over the earlier part of February, the 13 week TRIN has
continued to trend down to low levels, and since it's now below 1.00, suggests the continuation of
accumulated net buying pressure through 2018.

Saturday, February 10, 2018

SPX -- Update

According to my cyclical valuation work, I have the SPX as fairly valued at 2610 for 2018 at 2720
through mid-2019. The modest increase in valuation product into next year reflects another year
of positive earnings direction offset by a reduction in the market's p/e ratio to reflect a higher
inflation rate of 3% by mid-2019. Although the inflation pressure gauges currently remain in
rather humble uptrends, that should change as the large fiscal stimulus programs kick in to boost
an already maturing economic expansion. there could very well be an interim period starting in
a month or two when the economy temporarily slows, and market players  run-up stock prices in
the erroneous assumption that "Goldilocks" has returned to preside over a period of more modest
growth and continuing low inflation. If such a strong rally occurs, there might be a classic
"get out " rally to reduce equity exposure.

Despite the current correction, the stock market remains strongly overbought on a long term
basis and mildly overdone in the intermediate term. The main trend of the market remains in
bullish mode with intermediate trend supports around 2600 on the SPX. Longer term trend
support stand around 2500.  SPX Weekly

Do not ask me where the market is going over the couple of weeks. However, by my conservative
trading discipline, I would give the market a hard look for a long side fling if the stochastic
measure (bottom panel of the chart) drops inside the 20 level.


Monday, February 05, 2018

Stock Market -- Historic Overbought Deflates

Yeah, well it was a market that became one of the most overbought in history. The best the bulls
could do was express some edginess the weekend before Groundhog Day (Feb.2). Little did folks
know that Punxatawny Phil  down in Pa. was not only forecasting six more weeks of winter, but
an Eagles win in the super bowl as well as a blowout of the parabolic move in the SPX that we
all witnessed in. Jan.'18. Easy come, easy go.

Now the market is assuredly on the oversold side and we'll just have to see whether the boyz can
rally around the fact that the SPX closed well off its low today or whether exhaustion has not fully
set in and there is more to go on the downside in the days ahead.

Several weeks back, I opined that if I stretched it, there was a case for the SPX to trade around
the 2610 level in 2018. That speculation immediately looked foolish as the market rocketed
above 2870 by the end of Jan. The rapid decline in the SPX to just below 2650 makes the 2610
estimate of fair value look less foolish.  SPX Daily

Market players are going to have to decide whether the prospect of higher business profits this
year will also include faster inflation and higher interest rates and what consideration of the
latter factors might do to their expectation for the SPX p/e ratio. I think it is fair to say that
most investors did not envisage crossing the p/e challenge bridge until well later in the year.
These issues may fully occupy investors if they keep their blinders on.

I happen to be entertaining a darker vision for the near term future. Not only is the US Gov't.
barely functioning, but I suspect Trump may consider some politically dangerous maneuvers
if the Mueller investigation closes in on him and his family especially. I have some fears here
involving challenges to our constitution in this era of sharp political division and given how
I view The Donald's history, I do not regard them as baseless. I also do not know whether
the serious misbehavior we see underway in Washington is bothering the market already and,
I do not know if the market will grow more troubled as matters get more heated as the Mueller
investigation proceeds. Let each of you decide how much we should pay attention to this
sad spectacle of America in worsening political conflict.
_____________________________________________________________________________