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The Long Term View


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#11 Rich C

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Posted 19 April 2017 - 08:09 AM

The Atlanta Fed has reduced its GDPNow forecast for Q1 to .5%, down from 1.2%.  The Fed raised the Fed Funds rate in March to .9% as expected, but rates on longer term treasuries have come back down to Nov. levels.  Do the bond mavens see something wrong with the economy, or is there a flight to safety motivated by the French election and tension in N. Korea?  The 12-month trailing GAAP PE on the S&P 500 fell to 23.7 this month (still overvalued), on the back of the 3% correction we experienced.   76% of S&P companies are beating earnings estimates with 8% reporting, and earnings are projected to rise by 9% vs. a year ago, which should limit this correction.  The S&P continues to run in the bull market uptrend channel it has been in the last few years.

 

The bull market continues, IMO.


Blogging at http://RichInvesting.wordpress.com

 

My swing trades typically last a couple of weeks to a couple of months and I focus on SPY.


#12 johngeorge

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Posted 24 April 2017 - 12:47 PM

Rich

 

I too think the bull continues as long as the S & P remains in the up channel as shown on the chart in your blog. Could well be we have a long way to go yet on the upside.   By the way, I really like the blog.  Lots of great information.  Thank you for sharing. flowers.gif

 

Best to you. smile.png


Peace
johngeorge

#13 Rich C

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Posted 24 April 2017 - 04:15 PM

Rich

 

I too think the bull continues as long as the S & P remains in the up channel as shown on the chart in your blog. Could well be we have a long way to go yet on the upside.   By the way, I really like the blog.  Lots of great information.  Thank you for sharing. flowers.gif

 

Best to you. smile.png

Thanks for the feedback, and I'm glad you find the blog to provide some value!


Blogging at http://RichInvesting.wordpress.com

 

My swing trades typically last a couple of weeks to a couple of months and I focus on SPY.


#14 Rich C

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Posted 17 May 2017 - 12:43 PM

Q1 earnings have come in powerfully, projected now to end 13.6% higher than a year ago, that's impressive!  The counterbalance is that the Trump rally took stock prices up so that the 12 month trailing GAAP (as reported) PE barely budged at 23.7, moderately overvalued.  GDP for Q1 came in a +.7%, measly, but all Q1's are measly, so no big surprise.  Interest rates have been stable and low, a plus.  Globally, economies look to be growing slowly, with no active major political hot spots.  N. Korea simmers, but we will give the Chinese some time to see if they can moderate the situation.  Bottom line, the bull market continues.


Blogging at http://RichInvesting.wordpress.com

 

My swing trades typically last a couple of weeks to a couple of months and I focus on SPY.


#15 Rich C

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Posted 21 June 2017 - 09:47 AM

Q2 earnings are projected to rise by 6% over last year, a solid performance if that is how it turns out.  Q1 GDP was upgraded from .7% to +1.2%, which is a bit low but all Q1's are low and this beat last years number.  Regarding valuation, the 12 month trailing GAAP PE is 24.3, up a bit from last month and it remains moderately overvalued compared to my 30 year trimmed average of 19.  The Fed hiked short term rates by a quarter of a point and the increase in my monthly money market income will keep me in box wine through the end of 2017!  While short term rates are going up, long term rates have been falling for a few months, flattening the yield curve.  Normally this would be concerning, perhaps the bond traders see a recession on the horizon.  But, things are not normal, and with some large overseas economies still sporting negative interest rates, perhaps money is just chasing a safe higher yield in the US.  Economic statistics are a bit of a concern, will falling new car sales (from record levels in 2016), soft home sales, soft retail sales, and a sharp drop in consumer confidence this month.  A soft patch, or the start of something bigger?  One explanation I have heard for sluggish business investment is that CEO's are waiting for the details on tax reform before they will commit to spending big bucks.  Technically on a long term monthly chart, things look good as the S&P remains in an uptrend channel that has been in place for several years.

 

On a long term basis, the market remains a bull market IMO, but the soft economic data recently raises a caution flag that we need to keep a close eye on developments.  

 

Note:  I like to look forward in time, and I am always skeptical about believing future prognostications.  I have stopped quoting the Atlanta Fed GDPNow stat, since they seemed to start quite optimistic and then drop the estimate each month.  They got close by the end of the quarter, but I just did not find their exercise to be useful.


Edited by Rich C, 21 June 2017 - 09:55 AM.

Blogging at http://RichInvesting.wordpress.com

 

My swing trades typically last a couple of weeks to a couple of months and I focus on SPY.


#16 Rich C

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Posted 19 July 2017 - 04:54 PM

Not much has changed since last month.  Q2 earnings are projected to rise 6.8% vs. last year.  GDPNow for Q2 is projecting +2.4%; I grew to not trust GDPNow early in the quarter, but 2 weeks prior to the official first estimate it should be close.  The interest rate situation has not changed much since last month and it is accommodative.  Geo Politics is relatively quiet, N Korea is off the front page and there has been good economic news out of China recently.  The price action on the S&P 500 is in the middle of the long term uptrend it has been following for the last 6 years.  RSI is overbought on a long term basis, limiting the magnitude of an upside move.

 

Conclusion:  We have been in a bull market since March 2009, and the bull market continues.


Blogging at http://RichInvesting.wordpress.com

 

My swing trades typically last a couple of weeks to a couple of months and I focus on SPY.


#17 Rich C

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Posted 16 August 2017 - 10:01 AM

Interest rates did not move very much over the last month and they remain historically low.  Q2 GDP first estimate came in at 2.6%, a respectable number.  Geo-politically, we seem to be moving back from the edge with N Korea, which is a good thing.  Earnings for Q2 are up 10% vs the prior year.  The 12 month trailing GAAP PE of the S&P is 23.4, moderately overvalued IMO, but not a major threat at this point.  The S&P price action remains in the middle of the up-channel it has been in for the last few years.

 

Conclusion:  On a long term basis, the bull market continues.


Blogging at http://RichInvesting.wordpress.com

 

My swing trades typically last a couple of weeks to a couple of months and I focus on SPY.