Good morning,
Stocks continue to climb the earnings wall with the S&P 500 Index closing at yet another high yesterday at 2,337.58 up +0.40% for the day. The three best performing sectors were financials, health care and consumer discretionary.
Old_Skeet's market barometer continues to fall as the stocks climb the earnings wall. The barometer currently has a reading of 142 which puts it within the overvalue area on the dial. Most of the indicators that feed the barometer are now reading overbought; however, the earnings outlook input is what is keeping the barometer from reading overbouht. The MFI reflects that money has been coming into stocks over the past 14 days. This is good. So, perhaps stocks will continue to climb the wall. However, don't be surprised if a near term pullback presents itself.
In checking the markets this morning as I write Europe is up across the board while Asia-Pacific is mixed with China and India being down. In the States the futures are pointing for both stocks and government bonds to be down. The U S 10 Year closed yesterday with a yield of 2.469%. The three best performing futures yesterday were sugar, orange juice and feeder cattle. As I write the vix, natural gas and orange juice lead. With the vix in the lead, this morning, perhaps some volatility will be in store for us in the markets.
http://markets.wsj.com/usoverviewhttp://finviz.com/futures.ashxSome noteworthy companies to report earnings today are Applied Materials, CBS Corp., Kraft Heinz, PepsiCo, and US Foods plus many more.
https://biz.yahoo.com/research/earncal/today.htmlNow that
@Ted is back with his "Breakfast Briefing" my posting of ... "The Markets & More" ... will no longer be done daily. However, I'll try to continue this as a weekly if its readership warrants.
Have a great day ... and, most of all I wish all ... "Good Investing."
Old_Skeet
Comments
Thanks , Derf
Thanks for stopping by and for the question.
I don't think that there is any one right, or wrong, answer to your question as how to allocate for foreign and emerging markets.
For what it is worth, I run an asset allocation model and within equities they range from 45% to 55% of my portfolio. With this, I am about a third in foreign (17%) and a third that in emerging markets.
Don't know if this is hepful ... but, it is how I am currently allocated and have been for sometime. I believe, in time, the bus will eventually stop at my out of favor investments. This recently took place in 2016 for my small cap sleeve that was out of favor for a good period of time and is now up better than 50% over a rolling twelve months. Now, I am starting to see my foreign postions starting to gain some traction with emerging leading. Both of the sleeves that host my foreign and global funds in the growth area of my portfolio are up about 25% over the past rolling twelve months. So they are now starting to move.
Perhaps, others might be able to offer some comment as to how they might be positioned and to what their thoughts might be.
Old_Skeet
That is an interesting question from Shostakovich. Have you ever thought of doing a similar value metric for say Europe or Asia?
Regards,
Ted
Do you have a chart showing your barometer overlaid a stock market chart? This could help in visualizing the performance of the barometer.
Well, ok. Perhaps, you can fill in for me starting this Friday through next week while I'm traveling. But, don't over do it.
Thanks much,
Old_Skeet
I'll be back sometime late this afternoon.
So stay tuned>
Skeet
I really enjoy reading your Market barometer reports. Please keep posting them as they are very helpful. Thank you
The barometer is not scaled to the 500 Index so I not sure it would provide any meaningful information.
The purpose of the barometer is to take about five (sometimes six) readings and input these readings into a spreadsheet/matrix and then scored. The barometer reading is a sum of the score. The lower the reading on the barometer the less value there is believed to be in the Index and a higher reading would indicate more value is believed to be present.
I use the barometer as a guide to assist me as to when to raise and lower my equity allocation within my portfolio. I also use a seasonal strategy as well where I load equities in the early fall, winter on through early spring. Sometime around Easter I'll begin to reduce my allocation in equities if the barometer has not yet called for me to do so. Likewise, I also use it to aid me with entry points into the markets. What the Index is selling for has little to do with the barometer reading as it is a value indicator.
When I am finding good value in the Index I'll load equities (within my equity allocation range of course) and as value leaves the Index I'll rebalance and reduce my allocation to equities. Should the barometer reach a reading of 135 indicating the Index is overbought I'll then start an equity trimming process to reduce my equity allocation within my portfolio. As of this evening I computed a barometer reading of 138 which is down four points from yesterday's market close of 142. That is a pretty good move not often seen.
Just this past January & February during the stock market selling stampede the barometer's reading rose to a reading in the 165 range (indicating good value) and I began to load equities towards my upper limit ... and, I trimmed equities as we approached summer.
Currently, I am not at the top of my equity allocation mark but close enough to start a trimming process if I feel warranted. The barometer has worked well for me and I am not by any means saying others should shadow trade behind me.
It is something that I found interesting and I have been using in helping me govern my equity allocation so I thought I'd write about it. I am sure there are others that have some sort of system as well. I know of a few that trade off the RSI alone and others like myself that run a more complex system that uses more indicators. The barometer, like I have stated in earlier post, uses five and at times six indicators and is a system that combines both some fundementals along with some technicals in its reading.
Skeet
The RSI is an example of it.
You might find it interesting to chart your barometer along with the stock market and your change in allocation to fine tune your strategy.
https://www.fidelity.com/learning-center/trading-investing/technical-analysis/technical-indicator-guide/RSI
"continue this as a weekly if its readership warrants."
Look's like this has been a nice popular addition to the board.Thanks
"Until he (Ted ) returns I plan to keep posting "The Markets & More" each weekday morning and I welcome comments to help keep the board energized."
You've done that quite well,O_S
@Old_Skeet said to @Ted "you can fill in for me starting this Friday through next week while I'm traveling. But, don't over do it"
No pun intended ??
Be Safe
The indicators that drive the barometer readings are inputs that is comprised from the number of stocks above (or below) the 200 moving average in the 500 Index, an earnings input consisting of TTM and forward estimates, along with a technical strength input consisting of RSI and MFI readings and if felt necessary an input from the slow stoch.
So, yes you are correct there are oscillators incorporated into the barometer plus some other stuff as well.
Old_Skeet
Here's a suggestion. Ask the moderators to pin a thread that only you can post to where you can then post the number daily, weekly or at a turning point - whichever you choose.
I think it will get lost in various threads named "Markets and more...".