(Doug Short, dshort.com, Advisor Perspectives)
“My monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with normal business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.” Full analysis at...
http://advisorperspectives.com/dshort/commentaries/Market-Valuation-Inflation-and-10-Year-Yields.php
GOLDMAN
OPTIMISTIC FOR 2013 (CNBC)
“U.S.
stocks will end 2013 higher as the economy picks up in the back half of the
year, Goldman Sachs chief U.S. equity strategist David Kostin told CNBC's "Squawk on the Street"
on Friday... ‘If you look out over 10 years, you will do better in equities
than in bonds," Kostin said. ‘Shorter-term, we're looking a decline in the
value of bonds over the next year because we have interest rates rising
slowly.’ ” Story at...http://www.cnbc.com/id/50027969
TIME TO
INVEST IN EUROPE?
I heard
a “talking head” suggest that investors are fleeing to Europe rather than
investing in U.S. stocks. Combined with
China’s improving economic data, it would seem that the EAFE Index (Europe and
the Far East – that’s the “I”-Fund in the Government’s version of its 401k )
might be the place to be. I’m not going
there...at least not yet. EAFE is making
a triple top (on the 3-month chart) and it will need to break higher before I’d
recommend that investment. Europe better
than the US? I am very skeptical. Their version of the fiscal cliff is
recession. Now they are in “mild”
recession, but over the last year they have underperformed the S&P 500 by
only 5%. Just on the surface, it doesn’t
look like a screaming value yet.
BOUNCE
IS OVER?
I
commented on Saturday that I thought the bounce was about over and the markets
were going to test the recent low of 1353.
That’s still a good guess since it looks like the “boys-on-wall street” pushed
the market up as far as they could last week and now they are selling. The 5-dMA of the S&P 500 action in the
last hour has turned down indicating late day selling trend is now down. It was
down again today. The pros are taking
their profits on this bounce – and the sheep better do the same if they want to
keep some wool. (Don’t get carried away
though – the S&P 500 is only about 4% above the previous bottom of 1355 and
that could be the end of the “correction”.)
So far,
this correction has only been about 8% from the top to the lowest low. That’s not much of a correction. Still, I wouldn’t be surprised to get a buy
signal at the 1353 level. Nor would it
surprise me to see a continuation of the correction that would lead to some
uglier scenarios. The market seems
unusually conflicted.
MARKET RECAP
Tuesday
the S&P 500 fell about 0.2%, to 1407 (rounded). VIX rose about 3% to 17.12.
VIX has
been ticking up. If that trend continues
there will be more to the correction.
NTSM
The NTSM analysis remained HOLD Tuesday.
MY
INVESTED POSITION
Based
on the SELL signal, 7 November 2012, I moved out of the stock market at 1377 on
the S&P 500. Because of the extreme
negativity I have noted from Hussman and others, I am currently invested in a
range of near 15% invested in stocks and I am still holding short positions. 
