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The Long Term View


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#41 Rich C

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Posted 19 June 2019 - 10:08 PM

Q1 GDP was revised down a tad to 3.1% on the second estimate, still good.  Factset has lowered its forecast for Q2 earnings to -4.0% vs. the prior year, a negative.  The Fed left rates unchanged today, but indicate they are monitoring economic activity and are open to easing if it is warranted.  International economies are slowing and the question is how much will back up into the US economy.  The valuation on the S&P remains about the same as last month, 21.5 on the 12 month trailing GAAP P/E, moderately overvalued.  When you look at the long term chart, we remain in the long term up channel we have been in for a decade, but since the fall we are living in the bottom half of the channel, which is a little concerning. 

 

The long term bull market remains in effect, but chinks in the armor are starting to show.  I don't see the seeds of a big market upswing any time soon, and there are issues that could derail the market if they go in the wrong direction.


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.


#42 Rich C

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Posted 17 July 2019 - 09:12 AM

The Atlanta Fed GDPNow estimate of GDP for Q2 is now 1.6%.  I don't put any credence in GDPNow early a new quarter, but within a couple of weeks of the govt. release of data, I find that it gets reasonably accurate.  That will give the Fed all the cover it needs to deliver a small rate cut on the 31st and the market will like the cut, but it is cutting because of slight economic weakness, and that is not good.  Factset still projects Q2 earnings to be flat to slightly negative.  Valuation remains moderately elevated with the 12 month trailing GAAP PE of 21.5 compared to my trimmed 30 year average of 19, unchanged from last month.  Technically I look at a 10 year chart for the long term update, and the price action is comfortably within the long term up-channel.

 

The long term bull market remains in effect.


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.


#43 Rich C

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Posted 21 August 2019 - 03:34 PM

My monthly Long Term update is on the blog.  GDP for Q2 came in at +2.1%, a good enough reading.  It was down from 3.1% in Q1, but I think there was an anomaly with the Q1 number, so I don't think we slowed as much as the numbers indicate.  The Fed cut the Funds rate by 1/4% on 7/31 to the range of 2.0 - 2.25%, as expected.  The 12-month trailing GAAP PE fell to 21 from 21.5 last month, on the new tariff threat against China.  The valuation is moderately overvalued relative to my 30 year trimmed average of 19.  S&P 500 earnings with 90% of the index reporting are down .7%, the second consecutive quarter of negative earnings vs. the prior year, the first time that has occurred since 2016.  Regarding the geo-political environment, conditions are a bit less stable, and less supportive of the long term bull market.

 

Bottom line: The long term 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.