Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
The Breakfast Briefing: Dow Poised To Keep Head Above 21,000 After 303-Point Surge
Yesterday the S&P 500 Index closed at another record setting high of 2,295.96 with the U S 10 year yielding 2.458%. The three best performing sectors were financial, energy and materials.
In checking the markets as I write this morning Asia-Pacific is mixed with Australia, Japan and Singapore being up. In Europe France and Italy are up. In the States the futures are indicating stocks to be down and government bonds up.
Old_Skeet's market barometer reflects readings that have not been seen before. I developed the market barometer and my equity weighting matrix to help me throttle my equity allocation (within certain ranges) within my portfolio.
The barometer consist of three feeds. They are a breath feed which is a measure of how many stocks within the S&P 500 Index are above (percent wise) the 200 day moving average. The second feed is a fundamental feed consisting of both TTM reported earnings and forward estimates. The third feed is a technical score feed consisting of the RSI and MFI readings.
I usually run floors and ceilings on each feed. With the floors in place the barometer has a reading of 130. With the floor stops removed the barometer has a reading of 112. The feeds below their floor stops are the breath feed and technical strength feed. Remember, the lower the barometer reading the less value there is to be had in the Index while a higher reading indicates more value. For reference purposes the barometer had a reading on election day of 162 indicating stocks were undervalued (just short of being oversold) and a reading of 157 when Trump took office, still at this point, a touch undervalued.
Since, the barometer is producing unprecedented low readings that I have not seen before makes me wonder what is really up with this market. In reading many thoughts and drawing my own conclusion here is what I have come up with. Since year-over-year reported earnings are up strongly and forward estimates have been on the rise with little downward revisions, thus far this year, investors are willing to pay premium prices for stocks because of their earnings outlook.
I have read where the carry trade is very favorable at this time and with this a lot of foreign money has been coming to the States along with some retail investors now beginning to buy stocks and perhaps sell off some of their bonds. Whoevery is buying has now bid stock prices to elevated levels and thus extended the markets.
So, what is Old_Skeet going to do? Usually, and in the past, I have followed my barometer and equity weighting matrix and would have reduced my allocation to equities pursuant to matrix readings. This year, I decided to ride the Trump rally and I am now fining myself overweight equities by 10% over what the barometer and equity weighting matrix are calling for. With this, I have decided to continue to ride the rally through March or until I see my technical score feed starting to break down. In addition, I will probally, monitor the slow stoch and MACD as well.
In the nearterm, Old_Skeet is looking to reduce his allocation to equities by coming in alignment with what my barometer and equity weighting matrix are calling for. Since, March has historically been a good month for stocks I am not ready just yet to start my rebalance process but stand ready to move should I feel conditions warrant.
Because, I am doing this does not mean you should. I'm stronly up and well above my normal equity allocation but just short of its ceiling. Based upon this it will soon be time for me to start a rebalnce process anyway but I'm going to give March a go.
I'll be leaving today and traveling through Sunday. I most likely will not be able to write much but plan to check the board when time permits.
Thanks for reading ... and, I plan to be back on Monday, Tuesday at the latest.
What I have noticed is that the Asia and Euro markets for the most part have gone sideways since the beginning of the year. In the case of Asia the markets have almost gone flat. Quite interesting.
Comments
Yesterday the S&P 500 Index closed at another record setting high of 2,295.96 with the U S 10 year yielding 2.458%. The three best performing sectors were financial, energy and materials.
In checking the markets as I write this morning Asia-Pacific is mixed with Australia, Japan and Singapore being up. In Europe France and Italy are up. In the States the futures are indicating stocks to be down and government bonds up.
Old_Skeet's market barometer reflects readings that have not been seen before. I developed the market barometer and my equity weighting matrix to help me throttle my equity allocation (within certain ranges) within my portfolio.
The barometer consist of three feeds. They are a breath feed which is a measure of how many stocks within the S&P 500 Index are above (percent wise) the 200 day moving average. The second feed is a fundamental feed consisting of both TTM reported earnings and forward estimates. The third feed is a technical score feed consisting of the RSI and MFI readings.
I usually run floors and ceilings on each feed. With the floors in place the barometer has a reading of 130. With the floor stops removed the barometer has a reading of 112. The feeds below their floor stops are the breath feed and technical strength feed. Remember, the lower the barometer reading the less value there is to be had in the Index while a higher reading indicates more value. For reference purposes the barometer had a reading on election day of 162 indicating stocks were undervalued (just short of being oversold) and a reading of 157 when Trump took office, still at this point, a touch undervalued.
Since, the barometer is producing unprecedented low readings that I have not seen before makes me wonder what is really up with this market. In reading many thoughts and drawing my own conclusion here is what I have come up with. Since year-over-year reported earnings are up strongly and forward estimates have been on the rise with little downward revisions, thus far this year, investors are willing to pay premium prices for stocks because of their earnings outlook.
I have read where the carry trade is very favorable at this time and with this a lot of foreign money has been coming to the States along with some retail investors now beginning to buy stocks and perhaps sell off some of their bonds. Whoevery is buying has now bid stock prices to elevated levels and thus extended the markets.
So, what is Old_Skeet going to do? Usually, and in the past, I have followed my barometer and equity weighting matrix and would have reduced my allocation to equities pursuant to matrix readings. This year, I decided to ride the Trump rally and I am now fining myself overweight equities by 10% over what the barometer and equity weighting matrix are calling for. With this, I have decided to continue to ride the rally through March or until I see my technical score feed starting to break down. In addition, I will probally, monitor the slow stoch and MACD as well.
In the nearterm, Old_Skeet is looking to reduce his allocation to equities by coming in alignment with what my barometer and equity weighting matrix are calling for. Since, March has historically been a good month for stocks I am not ready just yet to start my rebalance process but stand ready to move should I feel conditions warrant.
Because, I am doing this does not mean you should. I'm stronly up and well above my normal equity allocation but just short of its ceiling. Based upon this it will soon be time for me to start a rebalnce process anyway but I'm going to give March a go.
I'll be leaving today and traveling through Sunday. I most likely will not be able to write much but plan to check the board when time permits.
Thanks for reading ... and, I plan to be back on Monday, Tuesday at the latest.
I wish all ... "Good Investing."
Old_Skeet
SFGIX, S: Seafarer Overseas G & I (Asia+Europe: 75.1%), +8.6% YTD
GPROX, S: Grandeur Peak Global Reach (Asia+Europe: 62.4%), +5.8% YTD
FMIJX, S: FMI International Fund (Asia+Europe: 70.8%), +4.7% YTD
ARTGX, S: Artisan Global Value Investor (Asia+Europe: 40.6%), +5.6% YTD
Flat?
Note: YTD from M*, 3/1/17.