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Jolly
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Lettura per il weekend 
Stocks Still Overvalued
by Carl Swenlin
November 20, 2009
Stocks have been in the overvalued end of the normal P/E range since the early-1990s, and this condition shows no sign of abating. Below is an excerpt from our daily earnings summary that will offer readers a better perspective. I have outlined the 2009 Q4 results because that is the first quarter not distorted by the huge loss reported in 2008 Q4. While the results of the current quarter are not final, 90% of companies have reported, and I don't think there will be any surprises from the remaining companies sufficient to change the estimated results a substantial amount. As you can see, valuations are projected to be well above the overvalued limit of the range (P/E of 20) through the first two quarters of 2010. If the market continues to rally, the over valuation will persist into the foreseeable future.
Stocks Still Overvalued
by Carl Swenlin
November 20, 2009
Stocks have been in the overvalued end of the normal P/E range since the early-1990s, and this condition shows no sign of abating. Below is an excerpt from our daily earnings summary that will offer readers a better perspective. I have outlined the 2009 Q4 results because that is the first quarter not distorted by the huge loss reported in 2008 Q4. While the results of the current quarter are not final, 90% of companies have reported, and I don't think there will be any surprises from the remaining companies sufficient to change the estimated results a substantial amount. As you can see, valuations are projected to be well above the overvalued limit of the range (P/E of 20) through the first two quarters of 2010. If the market continues to rally, the over valuation will persist into the foreseeable future.
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Jolly
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Seguito:
Since price movement over the last two decades seems to have little relationship to P/E ratios, why pay any attention to values? In fact, Decision Point's trend-following models consider price movement and nothing else. Nevertheless, we still want to be aware of the condition of the fundamental foundation of the market, and we believe that investor ignorance in this regard will only lead to more pain. After all, investors have been ignoring valuations for nearly two decades, and the result has been a stock bubble and two major bear markets. Most have not fared well during this period.
At each price top for the last two months I have been expecting a correction to begin, yet price declines have been relatively small and each top is followed by a higher top. Frustrating! I am not trying to identify a shorting opportunity, because shorting is not recommended during a bull market. The only reason that a decent correction is important is that it will provide a lower-risk opportunity to open new long positions. For two weeks the market has been rolling over into what could be another short-term top. Or it could be the beginning of the long-awaited correction. Negative divergences still abound, but, as I told a subscriber, these conditions are usually not too serious in a bull market. The market is vulnerable, but it is not a time for shorting. We could reasonably expect the rising wedge pattern to break down, but you can see that there is support just below the wedge.
Bottom Line: Market P/E tells us that there is no fundamental foundation under the market. This information is not useful in timing decisions, but it does tell us that there is more pain ahead in the long-term. In the short-term the market is topping again, and a correction is still possible.
Decisionpoint.com - Complete Market Research at a Glance
Since price movement over the last two decades seems to have little relationship to P/E ratios, why pay any attention to values? In fact, Decision Point's trend-following models consider price movement and nothing else. Nevertheless, we still want to be aware of the condition of the fundamental foundation of the market, and we believe that investor ignorance in this regard will only lead to more pain. After all, investors have been ignoring valuations for nearly two decades, and the result has been a stock bubble and two major bear markets. Most have not fared well during this period.
At each price top for the last two months I have been expecting a correction to begin, yet price declines have been relatively small and each top is followed by a higher top. Frustrating! I am not trying to identify a shorting opportunity, because shorting is not recommended during a bull market. The only reason that a decent correction is important is that it will provide a lower-risk opportunity to open new long positions. For two weeks the market has been rolling over into what could be another short-term top. Or it could be the beginning of the long-awaited correction. Negative divergences still abound, but, as I told a subscriber, these conditions are usually not too serious in a bull market. The market is vulnerable, but it is not a time for shorting. We could reasonably expect the rising wedge pattern to break down, but you can see that there is support just below the wedge.
Bottom Line: Market P/E tells us that there is no fundamental foundation under the market. This information is not useful in timing decisions, but it does tell us that there is more pain ahead in the long-term. In the short-term the market is topping again, and a correction is still possible.
Decisionpoint.com - Complete Market Research at a Glance
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sbaopao
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ottimo lavoro Jolly!!
ti posto dei livelli per lunedi per un'operatività intraday.
Allora abbiamo due linee di tendenza che determinano se il trend sarà o positivo o nevativo e dei supp. e resit. dove i prezzi "dovrebbero" arrivare. E' da un'pò che li studio su carta e mi sembrano validi.
ti posto anche il grafico d venerdi con quest'ultimi.
Bias positivo: 1759.75
Bias negativo: 1758.75
Resistenze: 1761.00 1762.50 1765.50 1766.75 1768.00 1771.50 1773.25
Supporti: 1757.00 1755.00 1753.50 1752.00 1748.50
ti posto dei livelli per lunedi per un'operatività intraday.
Allora abbiamo due linee di tendenza che determinano se il trend sarà o positivo o nevativo e dei supp. e resit. dove i prezzi "dovrebbero" arrivare. E' da un'pò che li studio su carta e mi sembrano validi.
ti posto anche il grafico d venerdi con quest'ultimi.
Bias positivo: 1759.75
Bias negativo: 1758.75
Resistenze: 1761.00 1762.50 1765.50 1766.75 1768.00 1771.50 1773.25
Supporti: 1757.00 1755.00 1753.50 1752.00 1748.50
Allegati
Jolly
Forumer attivo
Grazie
Vediamo un confronto con i livelli settimanali (che però si riferiscono all'indice e non al future).
1795 LongBreakOut
1780 Short
1775
1770
1759
1754
1749 Long
1733 ShortBreakOut
N.B.: chiusura settimana scorsa: 1764,39
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