Inside The Stock Market ...trends, cross-currents, and outlook
Answering Client Questions
Many of the questions in this month’s issue came from November’s client meetings in San Francisco.
Steve The Technician
Last month, we had a request for technical readings on the major market indices. Being a long time card carrying member of the Market Technicians Association, I decided I should oblige.
Consumer Confidence & The NASDAQ…..Who Leads Who?
A closer look at the relationship between Consumer Confidence and the NASDAQ over the last three years.
Valuations…..Most Bear Markets End Around Median P/E Levels
Earnings are rebounding strongly. S&P operating earnings estimates are up 21% from 2001 to 2002, and up 23% from 2002 and 2003. Severe cost cutting may not be fully factored into analyst estimates. Look for upside earning surprise.
November Mutual Fund Flows
November’s moderately positive cash flow ends five consecutive months of net redemptions.
The VLT Momentum Indicators…..New Buy Signals On S&P 500 & DJIA
VLT Momentum, a long term technical measure, recorded buy signals on S&P 500 and DJIA. This is a very reliable indicator.
Insider Block Measures....Bullish
You may notice we have raised the buy and sell zone going back to 1997. The reason for this adjustment becomes pretty clear when you look at how the dollar volume of big block net selling has been trending upward since 1997.
Playing The Bounce Update
The Leuthold Group is not currently “Playing The Bounce,” but may do so in December, depending on market conditions.
View From The North Country
Just buy and hold good blue chip stocks? …..No growth is permanent.
October Mutual Fund Flows
October’s weekly fund flow was interesting to watch because it really confirmed that Main Street’s investing patterns in past bear markets could be repeating in the latest cycle, at least so far.
A New Cyclical Bull Market
Continued positive economic data. Q3 GDP up 3.1%. Initial unemployment claims trending down. Capex is rising. Group leadership in early stages of recovery: big initial Tech and Telecom bounce from the October 9th low, but will it be sustained?
Volatility Update…..Both S&P 500 And NASDAQ Very Volatile
October's reading the most volatile in the S&P 500 since 1938 and fifth highest over the entire history of this work.
Eye On The Consumer
Important pillars of economic bridge until Capex kicks in and business confidence improves. Interest only mortgages-the ticking time bomb debt. U.S. Consumer debt OK compared with other countries but, what happens when interest rates rise?
Insider Block Measures....Selling Pressure From Insiders Continues To Wane
Latest 10-week reading of 0.29% remains in the normal range of net selling territory.
S&P's "Core" Earnings Methodology Losing Support?
We applauded S&P for developing a standardized approach which adjusts GAAP earnings for several problem accounting areas and produces a better representation of “True” earnings.
Short Interest...Short Interest Still High Despite October Performance
Short interest was actually up 1.1%, but a 16% surge in average daily volume accounted for the short interest ratio decline.
P/E Peaks and Troughs…..Since World War II
It’s possible that valuations could ultimately fall to their “ultra cheap” levels, with P/E ratios around 10x earnings. However, it is more typical for bear markets to bottom around the median P/E levels of 16.0x.
Short Interest...Both Ratios In Bullish Territory
This month’s NASDAQ ratio remains in bullish territory after last month’s buy signal.
View From The North Country
“Managing Your Mother Lode”—Ten Commandments: outline of Steve’s speech for the Jim Fraser’s Contrary Opinion Forum.
Volatility Update…..S&P Volatility Remains Very High In September
The S&P 500's September reading is the most volatile since 1938 and fifth highest over the entire history of this work.
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