Inside The Stock Market ...trends, cross-currents, and outlook
Birth of the Bull
The stock market appears to have made a cyclical bear market low. The Early Warning Index of market bottoms, which turned Positive last issue (Feb. 26) has been confirmed by a move from Neutral to Positive by Major Trend Index. Equity earmarked funds should be put to work now.
View from the North Country
Spring has come to Minnesota (kind of) and The Leuthold Group finds it has made some errors in one of its historic inflation charts. A corrected version in included.
View from the North Country
Federal debt and its close relationship to inflation is tracked from 1791 to date. Clearly the two are intertwined. Unless some fiscal sanity prevails in Washington, the nation may be in a hyperinflationary mode before the decade is past, regardless of the current cyclical downtrend.
The End Is in Sight. That Is Good.
The stock market is in the process of making a cyclical bear market low. The Early Warning Index for market bottoms has turned Positive. The Major Trend Index is Neutral. It is time to start buying stocks again with cash reserves but hold long bond positions for now.
View from the North Country
The weather is awful here. Who has more brains, ducks that fly south or Minnesotans who stay home?
On Buying the “Best Managed” Companies
Does it pay to buy companies Wall Street widely recognizes as having good management? Probably Not! This study examines 45 companies which over the last ten years have received the “best managed” accolade. What happened, to their earnings, dividends and the stock prices after being anointed “best managed”?
Still Down, But Getting Close?
The stock market may be on the verge of 1982’s best buying opportunity, even though for the time being the caution light is on. Early Warning Index and Major Trend Index both Neutral now and 750-780 may be just around the corner, and, a “surprise” financial shock may no longer be a surprise.
Inside the Stock Market
Still a super cycle bull market, but cyclical uptrend in question. Major Trend Index still positive but has slipped badly. Early Warning Index turned Negative Dec. 21…Caution!
View from the North Country
Did you see Mike Blumenthal’s article, “What Ronald Reagan can learn from Jimmy Carter”? If not, read this brief synopsis. Advises RR to adjust economic program quickly and decisively to new conditions. Don’t hang tough, then retreat step by step. Changing course is not politically wrong.
Keeping the Tradition: The View of 1982
Tradition calls for predictions and prognostications this time of year. Some call it thermal pollution time. This ritual is, however, a relatively harmless practice, just so long as investors do not take it too seriously.
Interim Memo
The coronavirus epidemic/pandemic is getting the bulk of the blame for the sudden collapse in U.S. equities, and certainly qualifies as one of the few “black swans” seen in modern market history. We do not think the ultimate path of the coronavirus contagion can be analyzed at this point, and medical experts foresee possible outcomes ranging from a serious epidemic to a short burst of illness that fades with the summer weather.
Estimating The Upside
Given the very long-term ebb and flow of market valuations, it is hard to believe that—with old valuation norms finally and decisively violated to the downside—the market will spring back to anything like the valuations seen in the middle of this decade.
Random Notes
Polling The Pro's: We have no new results this issue because no polls were taken. Next issue, you will see what institutional types in Seattle, Portland, Denver and Los Angeles think about the stock market's prospects.
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