Fourth quarter earnings are being reported and they definitely don't look good. In addition, prospects for 2015 are generally being downgraded. This has brought my earnings indicators into a just marginally positive position with a high likelihood of going negative as early as next week. My model has gone to a zero exposure position and will most likely go to a net short position very soon. Needless to say, this is not the time to be overly exposed to the equity market. Things could get very ugly in a hurry if earnings prospects don't improve.
Earnings: This year's earnings estimate trend - Neutral Earnings estimates 52 weeks out - Negative Gap between future 52 week estimate and latest 12 month results - Neutral Total earnings exposure and maximum total exposure under these conditions +25% Sentiment: Equity put/call ratio +50% Small investor put/call ratio +35% NAAIM Manager cash position -10% Average sentiment exposure this week +25% Valuation: Long term valuation 0% Stock prices represented by net current assets +20% Stock earnings yeild compared to ten year treasury yield +80% Average valuation exposure this week +33% Total exposure from above three factors +27% Technical Adjustments: Comparison of Treasury Bond yields compared to lower quality corporate bond yields (10%) New highs minus new lows on the NASDAQ (10%) Trend indicator for new highs minus new lows 0% Total technical adjustments -20% Total stock exposure for the week +7% Rounded to the nearest 25th percentile 0%
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With my wife on Aruba
December 2019 Categories |