Whether it was about footballs or European quantitative easing, the topic of the week was deflation. My model takes into account neither of those factors so it essentially ended up with no change in its exposure for the week. The most concerning element of the outlook is still earnings but, so far, they are still showing a neutral profile. If I had to predict, though, I think they will go negative over the next few weeks. This means a net short position for my model if that scenario plays out. For now there is no change in the recommended exposure of 25%.
Earnings: This year's earnings estimate trend - Positive 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 +50% Sentiment: Equity put/call ratio +50% Small investor put/call ratio +50% NAAIM Manager cash position -10% Average sentiment exposure this week +30% 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 +37% 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 +17% Rounded to the nearest 25th percentile +25%
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With my wife on Aruba
December 2019 Categories |