Until recently, scores of gurus had questioned the sector rotation into non-cyclical sectors. April jobs numbers were “phenomenal” and corporate earnings were sensational. Why should investors sell in May and go away? Yet telecom, health care and consumer staples (e.g., toothpaste, peanut butter, etc.) were rocketing up the relative strength percentile rankings. And many analysts explained that the April-May [...] Continue Reading...
Stocks haven’t quite “gone away” in May. In fact, the S&P 500 at 1346 remains within spitting distance of its multi-year peak of 1370. In spite of remarkable stock resilience, the 10-year treasury bond yield has dropped to a jaw-droppingly low 3.14%. That has helped Bond ETFs hit 52-week highs for the fourth consecutive week. (Remember, it wasn’t that [...] Continue Reading...
It wasn’t that long ago when I criticized terms such as “overbought” and “undervalued.” (See April’s Going Global: Rethinking the Overbought Concept.) In essence, I explained why investors may give more credence to powerful-sounding words than they give to common sense information. With that said, you should look at a sector’s P/E ratio and compare it against the sector’s P/E [...] Continue Reading...
Two of the most bullish voices in the mainstream media include money manager Ken Fisher and Bob Doll, the chief equity strategist at Blackrock. Fisher experienced an epic “fail” by completely missing the 2007-2009 bear/financial collapse; he had little choice but to stick with a never-ending bullish theme to claim credit for calling the “turnaround.” Bob Doll has always [...] Continue Reading...
There has been a lot of talk about equity market resilience. There has been even more talk about the enormous amount of Stock ETF inflow… $5.5 billion last week alone! Nevertheless, the largest gains are coming from the least volatile sectors. Healthcare ETFs have been noteworthy outperformers over 1 and 3 months. What’s more, share prices of peanut butter and [...] Continue Reading...
How many times have you heard some variation on the following words: The most critical driver of underlying stock prices are corporate earnings growth prospects. Would you say you’ve read a similar sentence 10 times? 100 times? 1000 times? While I don’t disagree in principle, I do disagree in principal. (Note: Fundamental valuation fanatics need to look back [...] Continue Reading...
In March of 2008, I talked about Warren Buffett’s increasing financial interest in transportation companies like Burlington Northern Santa Fe. It served as a “lead-in” to the notion that the iShares DJ Transportation Index Fund (IYT) could tell you when the U.S. economy might heal. Similarly, the folks at Morningstar recently mentioned that Buffett acquired the 2nd [...] Continue Reading...
The broader S&P 500 may not have fallen far enough to have met the technical definition of a stock market correction. Yet we shouldn’t dismiss an intra-day, high-to-low pullback of 7% as unremarkable. (For that matter, there may be more selling pressure ahead.) On the flip side, what if the worst of the selling has passed [...] Continue Reading...
Analysts like Bob Doll at Blackrock believe that U.S. economic growth will accelerate, with GDP likely to come in at a vibrant 3.5% for 2011. Economists polled at the Economist Intelligence Unit may be a little less enthusiastic, but they have raised their forecasts from 3.0% to 3.1%. So here’s my question: If the U.S. economy is [...] Continue Reading...
For the past eleven trading days, the S&P 500 sported an average daily trading range of 1.3%. That’s a far cry from the 7% intra-day swings of late ‘08. On the other hand, it’s significantly more volatile than what we had been experiencing before the rebellion in Libya. Indeed, the CBOE Volatility Index (VIX) has traded above its 50-day trendline since February 22. What’s [...] Continue Reading...
