with Alco reporting.
For me, I am not looking for the stock market to rally as I am thinking earnings for 1Q2016 will be in decline when compared to a year ago; but, hopefully up from last quarter. At this time my equity weighting barometer has me at 48% to 49% equity within my portfolio. This is based upon three things. They are as follows: stock market price as measured by the S&P 500 Index, a blended P/E Ratio measure which combines both reported earnings with that of forward estimates and some technical analysis which is mostly comprised of the MACD, Money Flow, Slow Stoch and RSI indicators.
I am currently positioned in what I call an all weather asset allocation of about 25% cash with bonds also being at about 25% and stocks at about 50%. If the market moves upward I have a good exposure to equities at 50% and will be so rewarded; and, if the market proceeds into another pullback that leads into a downdraft and/or correction territory then I have ample cash to do a little buying. My buy steps are currently set at 1920, 1870 and 1820. Should the market reach the 1820 mark then I'll be somewhere around 53% to 55% equity at this mark. Should the market continue to decline then I'll continue to buy thus keeping my allocation at the 53% to 55% bubble. Once, the market has bottomed and begins to move upward I'll begin a systematic sell proccess based upon certain readings I receive from my equity weighting barometer.
This system worked like a champ during the last stock market pullback and correction and has been used by me and my family for a good number of years along with a traditional seasonal market strategy where I load equities in the fall and lighten up my exposure to equities come spring.
It seems, from my perspective, now might be the "seasonal" time (knock, knock, knock) to lighten up a little within equities. At least that is what the equity allocation barometer is calling for.
Will it have foretold the right forecast? And, will we be in for another selling stampede if the forecast is correct? Remember, stocks traditionally and for the most part go soft during the summer months.
Stay tuned!
Comments
Regards,
Ted
http://www.marketwatch.com/story/why-beating-lowered-earnings-expectations-wont-help-stocks-soar-2016-04-08/print
Thanks for making comment.
Yes, the bar is set low for projected 1Q2016 earnings reporting. One of my reference sources is calling for reported earnings (TTM) to come in somewhere around $89.00 and change. This is down from a year ago from the low $100.00 range by better than ten percent. However, stock prices are well above where they were a year ago as measurd by reported earnings (TTM) 20.5 (03/27/2015) vs. 23.8 (3/31/2016) which is about 15% above where they were a year ago, on reported earnings (TTM). So while earnings have declined stock prices have stayed relative about the same for the S&P 500 Index at 2061 (3/27/2015) vs 2060 (3/31/2016).
Hey, for me stocks are expensive ... and, so it goes.
Old_Skeet
Regards,
Ted
http://www.investors.com/news/rejuvenated-alcoa-looks-to-top-wall-street-estimates-twice-in-a-row/?ven=YahooCP&src=AURLLED&ven=yahoo
Regards,
Ted
http://www.marketwatch.com/story/what-to-expect-from-alcoas-earnings-2016-04-08/print
From David Snowball's April 2016 Commentary
Otter Creek Long/Short Opportunity (OTCRX): we’d describe the young Otter Creek fund as “pure alpha” – it has outperformed its peers by 11% a year since inception – except that it’s also done it was lower volatility and a near-zero correlation to the market. We’ll leave it to you to sort out.
I own and continue to add.First real stumble.
From the April 7th Commentary and March 2016 Fact Sheet
Month End Attribution
The Otter Creek Long/Short Opportunity Fund Institutional Class declined approximately 3.39% in March. Equity markets appreciated significantly during the
month with the S&P 500 rising 6.78%. Clearly, March was a disappointing month as our long book underperformed the overall market and we had few profit
makers on the short side.
The most difficult market environment for our strategy is one where asset prices rise in a correlated manner and volatility compresses sharply in a short period of
time. We have experienced that kind of market since the February 2016 low, as the S&P 500 has risen 13% and volatility as measured by the VIX has fallen
from 28 to 14 at the end of March. During these types of market stretches we expect to relatively underperform the market, but not necessarily lose money.
March was a month where we experienced a tough market environment, and we also did poorly from a stock selection standpoint as two long positions detracted
meaningfully while the market appreciated.
Market Commentary/Earnings Expectations
It appears the macro environment is on firmer footing near-term with the manufacturing industry showing some signs of a modest stabilization and the US
consumer remaining in a relatively good position. The move higher in oil has also helped sentiment. This coupled with a steadying dollar and dovish Fed has
led to a risk-on environment. Investor sentiment surveys have improved significantly since earlier this year.
Looking forward, the domestic macro environment appears to remain stable in the US, however, overall growth is still sluggish. The consumer is spending,
payrolls are improving, and the housing market continues to recover. Meanwhile, broader manufacturing gauges appear to have shown a potential bottom.
Internationally, we continue to have concern over China’s growth considering it has been driven by incremental amounts of debt.
However, we remain cautious on corporate profit growth which is set to register another year on year profit decline in the first quarter. Sales growth remains
elusive, margins are set to face headwinds from rising labor costs, and company buybacks are near 2007’s peak levels. In the meantime, earnings expectations
have been reduced throughout the first three months of this year, despite the rapid appreciation in the equity markets over the past seven weeks. This has led
to broader market valuations to be relatively unattractive with the S&P 500's trailing price to earnings ratio of 19x-20x.
http://www.ottercreekfunds.com/media/pdfs/OCL_Factsheet.pdf
Thanks for making comment and posting the March 2016 OTCRX Fact Sheet. Since the fact sheet and my reference sources seem to be in conflict about the reading for the S&P 500's trailing price to earnings ratio (TTM P/E Ratio) ... I thought I'd post my reference sources which I drew information from to make my comment.
Source 1) Comes form advisor perspectives and is linked below: http://www.advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php
Source 2) Comes form the Wall Street Journal and is linked below:
http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=wsj_mdc_additional_ustocks
Thanks again for posting the fact sheet; however, I felt the fact sheet offered an emblished spin to what my findings were; and, with this, I felt an additional comment was warranted along with providing my reference sources to posture my comment. Perhaps they are referring to the average trailing TTM P/E Ratio for the quarter while my number is reflective of it's closing number. Don't know for sure how they derived their number; but, there is a distinguished difference between theirs and mine.
Old_Skeet
Like you, I think the market is a bit too high......not like Cheech and Chong. But I think with earnings falling and the oil meeting coming and the May thing coming, I'm not too inclined to buy right now. Have been selling everything not considered core. I know I've said this before.....Duke's tired of hearing this too. I saw company buybacks are at the highest since 2007. I see lots of houses for sale....the most since before 2008. Prices seem good around here. Jobs are plentiful. Also, I do not fear the "R" word. I don't see it happening around here....things look good. Like the summer of my content......the beer's cold, the sun is warm......LET'S PARTY!!
God bless
the Pudd