Sometimes just trying to find the humor in a situation is all that I can do to cope with things that don't make much sense. Here we have a situation where earnings are forecast to be down for the first and second quarters and current estimates for 2015 are essentially the same as they were for 2014 just 4 or 5 months ago. Valuation is extremely high and pretty much everyone is bullish. Last week my technical indicators reversed to the positive side again, although only marginally. So the best reason to continue buying stocks is that they are going up. That is pretty funny to me.
This year's earnings estimate trend (excluding commodity companies)- 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%
Equity put/call ratio +50%
Small investor put/call ratio +35%
NAAIM Manager cash position -10%
Average sentiment exposure this week +25%
Long term valuation 0%
Stock prices represented by net current assets 0%
Stock earnings yield compared to ten year treasury yield +30%
Average valuation exposure this week +10%
Total exposure from above three factors +18%.
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 0%
Total technical adjustments +10%
Total stock exposure for the week +28%
Rounded to the nearest 25th percentile +25%.
Richard Moore, CFA
With my wife in Hawaii