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Todd Market Forecast: Short Term Bearish

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Posted by Stephen Todd - Todd Market Forecastt

on Monday, 08 May 2017 14:55

3:00pm PST Monday May 8, 2017

DOW + 5 on 350 net declines

NASDAQ COMP + 2 on 350 net declines

SHORT TERM TREND Bearish

INTERMEDIATE TERM Bullish

STOCKS: The markets got what they wanted in the French election, but it was discounted last week. Today was sell the news.

The market is quite overbought by many measures. That by itself would not render a short term sell signal, but when you consider the underlying breadth, it makes us a bit cautious. We cover this more in the chart section below.

Any multi day retreat from current levels should provide an opportunity. The intermediate trend remains quite positive.

GOLD: Gold was flat. Not much happening here, but it is oversold.

CHART The S&P has been up 5 out of the past 7 days, but breadth has been down 5 out of the past 7 days. There are no guarantees in this business, but that is normally a short term negative. Sorry to use the same chart so often lately, but it's the most important consideration currently.

Screen Shot 2017-05-08 at 2.23.28 PM

BOTTOM LINE:  (Trading)



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Stocks & Equities

A Look at NYSE Margin Debt and the Market

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Posted by Jill Mislinski - Advisor Perspectives

on Wednesday, 03 May 2017 07:01

Note: The NYSE has released new data for margin debt, now available through March.

The New York Stock Exchange publishes end-of-month data for margin debt on the NYX data website, where we can also find historical data back to 1959. Let's examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.

The first chart shows the two series in real terms — adjusted for inflation to today's dollar using the Consumer Price Index as the deflator. At the 1995 start date, we were well into the Boomer Bull Market that began in 1982 and approaching the start of the Tech Bubble that shaped investor sentiment during the second half of the decade. The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July 2007, three months before the market peak.

Debt hit a trough in February 2009, a month before the March market bottom. It then began another major cycle of increase.

The Latest Margin Data

The NYSE has released new data for margin debt, now available through March. The latest debt level is up 1.7% month-over-month. The current level is at another record high. Note the inflation-adjusted version is also at its record high. The March data gives us an additional sense of investor behavior since the start of the new administration.

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...continue reading & 4 more charts HERE



Stocks & Equities

Regression to Trend: Another Look at Long-Term Market Performance

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Posted by Jill Mislinski - Advisor Perspectives

on Tuesday, 02 May 2017 07:28

Quick take: At the end of April the inflation-adjusted S&P 500 index price was 97% above its long-term trend, unchanged from the previous month.


About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis (see footnote below) to the question.

...continue reading HERE

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...continue reading HERE

...also from Advisor Perspectives:

Is the Stock Market Cheap?



Stocks & Equities

Stock Valuation and Occam’s Razor

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Posted by Dash of Insight

on Thursday, 27 April 2017 07:28

occams-razor-4-728The use of this principle is valuable, but not completely determinative in science.  It often has an important application in investing.

Let us consider two hypotheses.

  1. A method of valuing markets that relies upon backward-looking data, looks at replacement value, or depends upon some other fixed ratio. Put another way, all the most popular valuation metrics.
  2. A method that considers prospective earnings, expected inflation, and interest rates.

Method one has been wrong for many years.  In fact, it has been mostly incorrect for decades.  Method two has been on the right side of market moves, but still shows significant deviations.  What can we learn from Occam’s Razor?

Method One

Since this method has been mostly wrong, many explanations have been offered.  I think I left a few out, but you get the drift.

  1. Speculation
  2. Not recognizing “fundamental” risks – Euro collapse, China collapse, recession, Brexit, etc.
  3. Depending upon dubious earnings estimates
  4. Market is about to crash
  5. Method not good for market timing, but returns will be poor for the next 5, 7, 10, 12, ? years
  6. Fed intervention – money printing and pumping up the market via QE
  7. Plunge protection team
  8. European Central Banks
  9. Suckers’ Rally
  10. Myopia of the investment world – no efficient markets
  11. High Frequency Traders and Algorithms

Method Two

Since this method has been mostly right, little explanation is needed.  The expected increase in market prices and multiples is consistent with the theory.  It should continue for another 8-10% and further if forward earnings increase.

Question

Should investors accept the complex and ever-changing explanations for method one?  Or perhaps should they consider that the method itself is flawed?

....also from Dash of Insight:

Weighing the Week Ahead: Time to Rebuild the Wall of Worry?



Stocks & Equities

Trader: Trump Tax Plan Likely To Send S&P To New Record Highs "No Matter What He Says"

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Posted by Zerohedge

on Wednesday, 26 April 2017 07:24

hqdefaultHaving extensively previewed the various known and unknown aspects of Trump's tax plan yesterday, set to be announced shortly, the reality - at least according to Bloomberg's Mark Cudmore - is that no matter what Trump says today, it will almost certainly lead to more stock buying, leading to yet another "Trump Bump." Which is ironic for one main reason: "Trump’s tax plan is expected to promise great things, but it’ll mean little without approval from Congress. So the consensus is that it’s unlikely to impact too much either way beyond some short-term volatility." Furthermore, and counterintuitively, it would be a "positive surprise if the plan isn’t overly ambitious and doesn’t promise too much. That would make fiscal stimulus suddenly seem more achievable and realistic."

However, Cudmore says that is an unlikely outcome: "One of the few inarguable facets of Trump is he knows how to get attention and viewers. Trump’s tax proposal is likely to be dramatic with some bold statements."

...continue reading HERE

 

also from ZeroHedge: French Establishment Mount The Ramparts Against Le Pen



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