Good morning,
Here are my thoughts as we soon enter day number thirty two in the selling stampede.
The S&P 500 Index is off it's fifty two week high, of 1235, by about 12.6% and year-to-date by about 8.8%. Thus far fourth quarter year-over-year earnings for the Index are down but up over third quarter earnings. Febuary as reported earnings are expected to come in around $93.53. If this comes to be, then this computes to a TTM P/E Ratio of 18.7 using the 2/12/16 market close of 1865. Based upon my earnings valuation model stocks are currently oversold by about six percent from their recent computed to be full value reading of 1975.
Over the near term should reported earnings for the First Quarter come in as they are projected at $101.87 then I am looking for the markets to turn upward and follow earnings in this upward movement. It would be very helpful, I am thinking, if the FOMC would stand pat with no March rate increase.
Thus far this year during the downdraft I have bought, in several funds, at Index readings of 1922, 1880 and 1829. If for some reason the market continues a downward trend my next buy step is at a reading of around 1770. With only three buy steps completed, thus far, I am not sure I'll be buying the uptrend should it continue upward from the current level of 1865. As a longterm buy and hold investor, I have only added to several of my long term buy and hold positions (DEQAX and FDSAX) during this downdraft. I have not yet opened a spiff position because my timing models indicate cash is king at the moment.
I wish all a good holiday (this President's Day) ... and, most of all, "Good Investing" as we move through this rough patch.
Comments
No, I am not saying that at all.
If the markets continue to trend downward then my next buy step is around the 1770's for the S&P 500 Index. With this, I'll buy another step position in FDSAX.
Should the Index continue it's upward movement from its current level of 1865 I will most likely not do any near term buying in this upward movement because I am at my target allocation to equities, at fifty percent, within my asset allocation. Should I become overweight equities due to their upward movement I'll rebalance and sell some off back to my target allocation. Currently, my asset allocation to equities has a range from 45% to 55% with the target set at 50%. This allows for some movement (upward & downward) without me having to rebalance the portfolio.
I bought, thus far, during the downdraft because there are a couple of equity funds (DEQAX & FDSAX) that I wanted to increase their weighting within their respective sleeves. I have not yet began to buy more of PGROX; but, it is on my radar to follow FDSAX.
But...what has changed from a few days ago? The same headwinds are still there and nothing has been resolved.
You noted: "But...what has changed from a few days ago? The same headwinds are still there and nothing has been resolved."
And we probably know the best answer, yes?.............the ALGO money and the folks who push a few of the buttons are really itchy, eh?
Edit: Dumb me! Make that Thursday's intraday lows.