"With the disappointing initial GDP releases for Q42012 from Europe out, the "world" as defined by 41 OECD countries across the globe, has plunged into recession. We define "recession" through two alternative definitions for our comparison, either the presence of a single negative quarter-on-quarter growth or the more traditional two consecutive negative quarterly growths.
Whichever way you look at it, the number of counties in expansion plunged dramatically between 3Q2013 and 4Q2012" - Dwaine Van Vuuren
Posted as a “Guest” on dshort.com, Advisor Perspectives. Doug has a link to the original article on his website at…
http://advisorperspectives.com/dshort/guest/Dwaine-van-Vuuren-130215-World-Recession.php
WARNING FROM A STOCK TRADER BOARD
“Weekly sentiment as reported by Barrons is about as extremely bullish as at any time in the past. In the past (and of course history never repeats itself) this has led to bear markets, or at the very least, a correction within 3 months which drops the markets below where they were when the extreme readings happen. So buying now, unless you are a short term trader makes no sense. Obviously, price action says higher highs ahead, and I am sure we get at least one more rally to new highs after the next 5 to7% correction, but long term investors should be selling, not buying now.”
HUSSMAN – “GREAT LEAPING LIZARDS! HOLY COW, BATMAN! GREAT CEASAR’S GHOST!”
No, John Hussman didn’t say any of those things, but I think it is implied in his commentary this week. I’ve excerpted some comments below (with permission):“In recent weeks, market conditions have established an overvalued, overbought, overbullish, rising-yield syndrome in a mature bull market; conditions that uniquely marked the peaks of advances in 1929, 1972, 1987, 2000, 2007, and 2011...
...Given the extent and maturity of the recent advance, it’s very odd that analysts are now beginning to toss around the idea that stocks have entered a secular bull market...Unfortunately, secular bull markets do not begin simply because stocks have gone nowhere for a long while or because the market breaches some trendline. They begin at the point that valuations become so depressed - again, about 7 on the Shiller P/E - that strong and sustained long-term returns are baked in the cake.”
My Comment – Clearly Bull markets begin with extreme low valuation. Further, from the chart below, also taken from Hussman Funds at http://www.hussmanfunds.com/, the PE is now at extreme highs (by several measures) not bear-market lows.
PICKING UP JOHN HUSSMAN’S COMMENTARY...
“...As a side note, we’re quite aware of the seemingly “reasonable” valuation of the market, on the basis of the forward operating earnings estimates of Wall Street analysts, at least on the basis of simplistic “price/forward earnings” multiples. Unfortunately, these estimates reflect profit margins that remain about 70% above historical norms, and are primarily driven by unusually large budget deficits and depressed private savings.” – John Hussman, Phd, 18 Feb 2013 Weekly Market Comment from Hussman Funds at...
http://www.hussmanfunds.com/
"’If you kept this cut, you're back to $500 billion a year. I find it hard to get that worried about it,’ Korb said, noting that this was still vastly more than any other country spends on its military.” -The Huffington Post. Full story at…
http://www.huffingtonpost.com/2013/02/14/sequestration_n_2690860.html
MY INVESTED POSITION
Based on a BUY signal 7 of 9-days, and more importantly, consecutive closes above the prior high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14 January. I am currently invested in a range of near 50% invested in stocks.
“...As a side note, we’re quite aware of the seemingly “reasonable” valuation of the market, on the basis of the forward operating earnings estimates of Wall Street analysts, at least on the basis of simplistic “price/forward earnings” multiples. Unfortunately, these estimates reflect profit margins that remain about 70% above historical norms, and are primarily driven by unusually large budget deficits and depressed private savings.” – John Hussman, Phd, 18 Feb 2013 Weekly Market Comment from Hussman Funds at...
http://www.hussmanfunds.com/
John Hussman, PhD, (Stanford, Economics) presents a lot more information
and supporting charts (as well as covering other points) in his weekly market
commentary. See the link above for
Hussman Funds to get the full picture.
SEQUESTRATION WARNINGS MAY BE OVERBLOWN (Reuters)
“While the measures do indeed threaten jobs and the economic recovery,
experts say government agencies are overplaying the effect of the $85 billion
‘sequestration’ cuts to jolt lawmakers into halting them... ‘Somehow, the idea
that if we go back to 2007 military funding levels we're going to be a
second-rate power, well that's overdoing it,’ said Lawrence Korb, a senior
fellow with the Center for American Progress and a former U.S. assistant
defense secretary."’If you kept this cut, you're back to $500 billion a year. I find it hard to get that worried about it,’ Korb said, noting that this was still vastly more than any other country spends on its military.” -The Huffington Post. Full story at…
http://www.huffingtonpost.com/2013/02/14/sequestration_n_2690860.html
MARKET RECAP
Tuesday, the
S&P 500 was up 0.7% to 1,531 (rounded).
VIX was down 1.2%, to 12.31.
NTSM
Tuesday, the NTSM analysis switched to BUY at the close.
That doesn’t mean this is a great time to buy (I think we
are near a short-term top); but it’s an indication that the market trend is
strongly up.
NTSM sentiment is 64%-Bulls as of Friday’s close.
If we get a big move up, say in the range of 1%, I’ll
take a big short position. Otherwise, it’s
watch and wait.
MY INVESTED POSITION
Based on a BUY signal 7 of 9-days, and more importantly, consecutive closes above the prior high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14 January. I am currently invested in a range of near 50% invested in stocks.
