Inside The Stock Market ...trends, cross-currents, and outlook
Inside the Stock Market
The Major Trend Index still looks bullishly healthy, but our Early Warning work indicates a 7%-10% correction might be expected soon. Perhaps after a September rally.
View from the North Country
For a number of months this publication has been discussing the possibility of a crisis in dollar confidence on an international basis. It appears the risks of a waterfall panic dollar decline are again increasing. Widespread currency speculation combined with growing foreign holdings of dollars and Treasury securities are increasing dollar vulnerability.
Gold and Gold Stocks
Prudent investors should include gold in their long-term portfolio asset mix considerations. Most don’t, but they should. However, our intermediate term outlook for the price of gold is not all that optimistic. Nevertheless, we think the aggressive investor is currently being presented with an attractive capital gains opportunity in South African gold shares.
View from the North Country
The budget compromise was hardly satisfactory, but still far better than nothing. While the world currency markets are still fragile, from a psychological standpoint the dollar seems significantly less vulnerable today than last month or last week. We can sleep a little more soundly for a while.
Update: South African Connection Stocks
There have been a number of requests for more information on companies doing business with and investing in South Africa. We have spent considerable time over the past month on this investment morality play. Public pension funds are under increasing pressure, but I am coming to believe the ultimate course will be a boycott against buying offending companies, not divestiture.
Inside the Stock Market
The Major Trend Index continues to look bullishly healthy and, shorter-term, more upside is expected this summer. The Early Warning work remains positive.
View from the North Country
South African Divestiture: The campaign against investing in companies doing business with South Africa is rapidly building momentum…TV Tulips: Recent prices paid for commercial TV properties may be tulip bulb prices… Will It Take a Crisis?: I am just about convinced that only a crisis can bring meaningful fiscal reform.
Inside the Stock Market
It didn’t seem like much, but June turned out to be all right. Net gains for the averages were in the 1-2% range, but our model gained close to 3%. Annualized, that’s not bad.
Half Time
Drug stocks and Regional Banks helped us to a 21% gain in the first half of 1985, but are now being reduced. In the last half, our major bets are on technology, and selected cash cows, with perhaps a boost from consumer glamour growth stocks. Some consideration is also being given to an S&L play.
The Waves of Cash
A large and fast-growing amount of money is now flowing back and forth between money market funds and equity mutual funds. Billions of dollars are now involved each month. Are these timers right? The evidence is mixed. We do know these waves of cash are making things increasingly difficult for mutual fund portfolio managers.
As the World Turns
Private pension funds as a class can no longer be looked to as big net buyers of stock. More and more, the individual is assuming direct or indirect responsibility for his or her retirement assets. We view this as a secular trend, not a short-term aberration.
View from the North Country
Observations from the May Market Technicians Association gathering at Hilton Head and a disturbing recent 400-mile drive through the grain belt. For good measure we have thrown in an update on improving agricultural productivity around the world.
Inside the Stock Market
May was a surprisingly good month. After flashing an intermediate term caution warning in March, the Early Warning work moved back to the positive side May 13. The Major Trend Index improved this month and I think stocks could move up further than most think.
Quality Growth Stocks Look Relatively Cheap, But…
While blue chip growth stocks look cheap relative to low P/E stocks, they don’t look so cheap compared to recent earnings growth rates.
View from the North Country
The View from Down Under…Answering Some Questions: questions and comments about last issue’s essay on “The Value of Independence”…Yours from Minnesota, Ohio
Inside the Stock Market
April was disappointing. A better market was expected. The lack of deficit reducing progress in Washington is disturbing; but our Major Trend Index, while losing some points from last month, is still comfortably positive. At this point it is appropriate to be guided by the Index rather than emotions.
High P/E Quality Stocks Now Cheap
High P/E Quality stocks are now very cheap on a relative basis, at least when compared to low P/E stocks. Unfortunately, our timing work does not yet show favorable market momentum developing for these issues.
Inside the Stock Market
March was a month of divergences, but April is expected to be a good up month. The Major Trend Index remains comfortably positive, though less so than a month ago. Our Early Warning Work still advises some short-term caution, but could change momentarily.
View from the North Country
The Value of “Independence”: There are many changes going on in the third-party research business, changes that potentially may have a major impact on independent research firms such as The Leuthold Group…..Don’t Blame It All on the Dollar: The overpriced dollar is hardly the cause of all this country’s balance of payment woes.
Annual Component Changes in Royal Blue Index This Issue
Turnover in the top 60 stocks most heavily owned by institutions is higher than normal. Some of the changes were expected while others were mild surprises.
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