![]() It seems like every week the S & P 500 gets rescued by European news. The average stock, on the other hand, declines just a little more. My indicators continue to weaken: Earnings: The trend in estimated earnings is still slightly down and that trend is accelerating. It could improve with a couple of weeks where estimates get raised but that doesn't seem likely. Exposure = 0%, same as last week and shorting the market is a possibility. Sentiment Factors: Investors in the Rydex Funds continued to hold extremely bullish positions. This indicator has been bearish for so long that I took a close look at it to see if it still was worth following. I still think it is. Exposure = -10%, maximum bearish position. NAAIM investors stayed very bullish last week. Exposure = 5%, same as last week. Small option buyers seem confused and have moved to neutral. Exposure = 50%, up from 35% last week. Total sentiment factor exposure = 15%, up from 10% last week. Valuation: Percentage of value represented by net current assets declined as the market advanced on Friday. Exposure = 40%, down from 60% last week. Comparison of bond yields to stock earnings yields remained the same last week. Exposure = 50%, same as last week. Total valuation factor exposure = 45%, down from 55% last week. When earnings are trending down, I average the sentiment exposure and the valuation exposure and then subtract 100%. So (15% + 45%)/2 -100% = -70% (or 70% short). This is down from -67.5% exposure last week. Technicals: The trend in high yield bonds compared to treasuries is still in a very slight uptrend so I add 10%. This week I subtract 10% because NH-NL is still negative. Total technical adjustments are 0% and exposure = (70%), down from (67.5%) last week. Two week moving average is -69%, down from -56% last week.
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With my wife on Aruba
December 2019 Categories |