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Showing posts from October, 2013

Oct 25 2013 Weekend Market Comment

Oct 25 2013 – It almost Halloween so lets see if there will be tricks or treats this week. Japan's stock market is in the process of getting destroyed, and U.S. investors are treating it like an entertainment that is only partly scary and mostly funny, like a Godzilla movie with rubbery monsters and bad dubbing.
This is either a rational response or a clueless response to what's happening. If investors are being rational, then the Nikkei stock index's 20 percent collapse since May 23 is nothing much to worry about. If they are being clueless, then the Nikkei's bear market is a warning sign that the rubbery monsters are going to cross the Pacific and start stomping on U.S. markets, too. Not so funny then!

(as always click any graphic to enlarge)  Here's the case for not worrying so much about Japan: The Nikkei's collapse is happening mainly because investors are starting to wonder whether Prime Minister Shinzo Abe is going to be able to effectively work his plan…

Oct 19 2013 Weekend Market Comment

Oct 19 2013 - The S&P 500 closed Friday at 1,744.50, an all-time high, making it safe to say the bulls are in control on Wall Street. Neither the four-month rise in benchmark Treasuries yields that topped in September nor the government shutdown and near-technical default on U.S. debt earlier this week could derail the rally. In retrospect everyone knew a deal had to be done because you cannot be the world’s reserve currency and pull shenanigans like Russia did in 1998 and still be an economic safe haven. But more concerning is that investors calmly stayed long through the whole thing, because that means there is both complacency and a clear message to the politicians, that these kind of games are not damaging but clearly they are.

It looks like clear sailing up to S & P 500 level of about 1800. At 14.6, the S&P's forward price-to-earnings ratio is near its highest in four years and slightly under the long-term mean of 14.9. The P/E multiple has risen throughout the y…

Oct 12 2013 Weekend Market Comment

Oct 12 2013 – OK Last week I was showing you how our indicators were heading down and it looked like we were completing another predictable cycle. As the U.S. government shut down loomed investors ran for the sidelines.  Well this week we were handed another lesson in “Fundamentals Trump Technicals” as the market rudely rallied while I was mostly in cash. 
The snap back has been very strong. But perhaps that is what is concerning. Look at this simple graph of the S & P 500 and how quick the market was to run back up, in a couple of days we have recovered most to the dip.

 (as always, click any graphic to enlarge)

Of course our indicators all look a lot better.

On the one hand you could say, hey with the government shut down out of the way for now there is little to hold the market back. Global economics are strengthening and there is little bad news. For the very short term I would agree, but with the US government facing the music on it spending craze and 2% growth predicted for …