“Busch [Andrew Busch, editor and publisher of The Busch Update] thinks Schiller, Fink, and Icahn have 20/20 hindsight vision. "I think these guys are looking in the rearview mirror and they keep seeing 2008," says Busch. "What they don't understand is that we keep getting farther away from it…It's really hard for bubbles to happen and crash and burn unless you have a slowing economy," says Busch. "I just don't see it happening right now."
“…the presence of the skepticism and absence of euphoria as we push out to these fresh all-time highs suggest to me that upside remains." Video and summary story at…
http://finance.yahoo.com/blogs/talking-numbers/why-shiller-wrong-market-bubble-strategists-200709940.html
The above article is a little curious.
Shiller has said he is worried about a bubble now, but I would argue
there was no stock-market bubble in 2008.
Rather than a stock-bubble in 2008, we had a financial crisis and a
recession fueled by high gas prices and falling housing prices. The last stock-bubble was 2000 and it
collapsed after the Federal Reserve raised short-term interest rates three
times. It was not caused by a “slowing
economy.” There is euphoria now as
measured by my sentiment readings and other measures of sentiment. Valuations based on operating earnings are
about 10% higher than they have been over the last 10-yrs, but that is hard to
interpret. The Cyclically Adjusted PE
(or PE10, or Shiller PE) is very elevated and that is why Shiller is concerned
about a bubble.
GOOD FOR A LAUGH (ZeroHedge)
Here’s a video link from the 1999 Nightly Business Report on PBS of four
well-known, professional money-managers all bullish to the max…31 December 1999..shortly
before the crash. Story at…http://www.zerohedge.com/news/2013-12-02/birinyi-sonders-rukeyser-celebrate-magical-stock-market-environment-1999
WHAT WORRIED ART CASHIN TODAY (CNBC)
Art Cashin (UBS) said that he was concerned that much of the selling
today was in the cyclical stocks and that might be an indication that the rest
of the world’s economy was deteriorating.
Video/Story at…http://www.cnbc.com/id/101243404
The Morgan Stanley Cyclical Index was down more than 1% today – about three
times as much as the S&P 500. Over
the last month the cyclical index has slightly under-performed the S&P 500,
but that is due more to the S&P’s good performance rather than the
cyclicals falling. At this point, there
is little cause for concern from under-performance by cyclicals.
MARKET REPORT
Tuesday, the S&P was again down about 0.3% to 1795 (rounded), but there was some late day buying.
VIX was up 2%
to 14.55. That’s not much so the options
players are not concerned about this “selloff” as the media is calling it. Tuesday, the S&P was again down about 0.3% to 1795 (rounded), but there was some late day buying.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing remained at
49% at the close Tuesday. (A number below
50% for the 10-day average is generally bad news for the market.)
New-lows outpaced new-highs Tuesday (reversing the prior
trend), leaving the spread (new-hi minus new-low) at minus-33 (it was +81 Monday). The 10-day moving average of change in the
spread was minus 29. In other words over
the last 10-days, on average, the spread has decreased by 29 each day.
This trend following indicator is negative on the market
in the short term.
Market Internals are a decent trend-following analysis of
current market action, but in 2013 (so far), if I had been buying the positive
ratings and selling negative ratings I would have under-performed a
buy-and-hold strategy.
NTSM ANALYSIS
SENTIMENT remains EXTREME
negative at 74%-bulls for the 5-day indicator.
(Three out of four investors in Rydex/Guggenheim funds I track are
betting long.) Overall, NTSM is neutral.
(I am mostly out of the market already.)
MY INVESTED POSITION (NO CHANGE)
I remain about 20% invested in stocks as of 5 March
(S&P 500 -1540). The NTSM system
sold at 1575 on 16 April. (This is just
another reminder that I should follow the NTSM analysis and not act emotionally
– I am now under-performing my own system by about 6%!) I have no problems leaving 20% or 30%
invested. If the market is cut in half
(worst case) I’d only lose 10%-15% of my investments. It also hedges the bet if I am wrong since I
will have some invested if the market goes up.
No system is perfect.
I still lean toward getting back in, after a pullback, to
speculate on a final ride to the top.
NTSM did give several buy signals over the weeks of 14 and 21 Oct, but
the market just looks too frothy to rush back in…we’ll see if the market will
pullback so I can join the insanity. If
not, cash is fine.
