![]() Not much change again last week but at least there was some intraweek price volatility to keep things interesting. My model is turning a little more positive as some investors got a little spooked last week. Most of them, though, are still very complacent: Earnings: Earnings results reverted to previous readings as last twelve month numbers declined substantially. The gap between last twelve month results and future twelve month expectations is now almost 27% and it is growing again. My first earnings indicator is back to 0%, down from 100% last week. Twelve month forward earnings are still trending higher and improved last week as optimistic analysts increase their estimates. This indicator is still positive at this point with 100% exposure. 2013 estimates are my third indicator and they too continue positive. They also call for 100% exposure. Total exposure from the earnings factor is back to 67%, down from 100% last week. Sentiment: Rydex leveraged fund investors got still more bullish last week and this indicator continues in an extreme bearish position. Exposure from this indicator continues at -10%, same as last week. Small option buyers swung over to put buying last week, indicating their growing concern. Exposure increases to 65%, up from 50% last week. NAAIM managers continued to be very optimistic and my indicator remains in extreme negative territory. Exposure remains at -10% this week, the maximum bearish level. Total sentiment exposure is 15% this week, up from -10% last week. Valuation: Percentage of stock prices represented by net current assets remained the same last week so exposure continues at 20%, same as last week. Comparison of stock earnings yield to ten year treasury yield stayed the same last week. Exposure remains at 30%, same as last week. Total valuation exposure is 25%, same as last week. To combine these three factors, I multiply them together and then take the cube root. This week, that number is 29%, up from -10% last week. Technicals: My comparison of yields on treasury bonds compared to lower quality corporates remained positive last week. I add 10% to account for this factor. New highs - new lows on the Nasdaq are still positive. I add 20% to account for this factor. Total technical adjustments this week are +30%, same as last week. After adjustments, total exposure for the week is 59% or, after rounding, 50% compared to 25% last week.
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With my wife on Aruba
December 2019 Categories |