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 !!!

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.


2 comments:

Hans said...

How good is the S&P500 index? Since June of 2001 to
January 27, 2018 it has advanced a tepid 110%.

This is a near compounded annual interest rate of a
earth shaking 4%. This is on par with real estate
returns.

Now I should ask myself, why on earth did I purchase
a SPY call option at 320 Dec, 2018??

Hans said...

It did not take long, Mr Richardson.

November the 9th your comment states:

"In my years on this earth, I have been genuinely intrigued by few leaders because of their
compelling humanity. They would be Jack and Bobby Kennedy, Dr. King and Barack Obama.
The Donald is more of a case study in egomania and not an engaging person and leader.
I plan to be a mere pale shadow in Trumpworld, and to keep my head down and my
distance."

You may write an excellent stock market report, however,
your political views are extremely tained, indeed.

And to suggest, that The Donald is not engaging, is one of
the most understated political comment I have heard for 2018.

You do indeed qualify as a "contributor" for CNN, MSNBC, CBC,
PBS, NPR and Mother Jones.

You are just a post and ghoster.