I realize that there are many excuses for ignoring the poor market environment: It's only temporary; The dollar is the problem and it will reverse; oil prices will help the consumer and lead to more consumer spending; how can I possibly sell when the alternatives yield so little?; earnings for 2016 will be much better. The fact, though, is that earnings expectations continue to deteriorate and the other components of my model are still negative or neutral. This remains a high risk environment and should be regarded as such.
This year's earnings estimate trend - Negative
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 0%
Equity put/call ratio +50%
Small investor put/call ratio +35%
NAAIM Manager cash position +20%
Average sentiment exposure this week +35%
Long term valuation 0%
Stock prices represented by net current assets 0%
Stock earnings yeild compared to ten year treasury yield +30%
Average valuation exposure this week +10%
Total exposure from above three factors -78% or 78% short.
Comparison of Treasury Bond yields compared to lower quality corporate bond yields -10%
New highs minus new lows on the NASDAQ +20%
Trend indicator for new highs minus new lows -25%
Total technical adjustments -15%
Total stock exposure for the week -93%
Rounded to the nearest 25th percentile -100% or 100% short.
Richard Moore, CFA
With my wife in Hawaii