For those that have requested weekly readings of Old_Skeets market barometer for the S&P 500 Index they follow below along with comment.
Last week the barometer closed the week with a reading of 142 which is in overvalued territory. For the rolling four week period the barometer had an averaged weekly reading of 146 which puts the Index barely in the fair value territory. A lower reading on the barometer's scale indicates there is less investment value in the 500 Index while a higher reading indicates there is more investment value. The barometer's scale ranges form a low of 120 to a high of 180 with the neural fair value reading set at 150.
During the week a revision took place within the earnings feed. At the beginning of the year trailing twelve month (TTM) earnings for the S&P 500 Index were projected by S&P to come in at $110.23 through June 30th. Through the months, thus far this year, downward revisions have taken place in this number which is now projected at $105.72. The 1st quarter ending TTM earnings number was projected at $106.13 with actual reported number at $99.70. With this, the member companies, as a whole, are not meeting the first of year S&P TTM earnings projections although they have improved year-over-year. Thus, a revision in the earnings feed has now been made because of TTM "reported" earnings shortfall.
Remember, the barometer is driven by three feeds of data coming from the S&P 500 Index. 1) An earnings feed that is comprised of both TTM and forward estimates, 2) a breath reading feed and 3) a technical score feed consisting of both the RSI and MFI readings.
I'm thinking we can not get too much more growth out of this economy as we are now at full employment with lower productivity being reported thus it is getting harder and harder for good economic growth. Also, a rising interest rate environment will be a headwind for growth both for the economy as well as for corporate earnings although some sectors will fair better than others. I'm also thinking the market is expensive, by my matrix, and Old_Skeet is still with his rebalance process of reducing his equity allocation as we approach summer prompted by a seasonal investment strategy along with low barometer readings. I'm still thinking ... now is a good time for me to accumulate more dry powder (cash). Please know, I am not selling out of equities just reducing my allocation to them.
Thanks for stopping by and reading.
