The Good News: Valuations Are Improving

Due to system maintenance, updates to several key data/models in our indicator boards were not available over the weekend. Thus, our weekly review of market indicators will be postponed until tomorrow morning. But as the title of this morning's missive indicates, there is some good news to report to start the week.

To be sure, the mood on Wall Street has soured lately. Instead of looking ahead to all the good stuff that is likely to occur in the next calendar year and enjoying the traditional year-end rally (aka the Santa Claus rally), traders are focused on the negative. And while things can certainly change in the markets, this has been the worst start to a December since... wait for it... 2008. Argh.

With all the talk about slowing global growth (lest we forget, Germany, Japan, and Switzerland all reported negative GDP results last quarter), slowing earnings, slowing job growth, the trade war, the political risks, peak iPhone, higher rates, the Fed, slower home sales, another big drop in oil, the end of the buy-the-dip era, and of course, when the next recession/crisis will hit the U.S., it is easy to see the market's glass as half-empty here.

However, there is some good news to consider. Valuations have definitely improved.

No, stocks are not cheap. But on a price-to-earnings basis, I'll argue that stocks are no longer extremely overvalued either. And from a macro perspective, this is indeed a good thing.

To be clear, P/E Ratios are not the only way to measure market valuation. And by other measures, such as Price-to-Sales, stocks remain at nosebleed levels. However, the granddaddy of valuation metrics, the Price-to-Earnings ratio, has been getting better.

If you think about what has transpired over the past year or so ...

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All's Well That Ends Well, Right?

The financial press reported that stocks remained "volatile" on Thursday. But since the Dow ended the day with a loss of "only" 79 points and the S&P 500 fell just 4, the attitude appeared to be, all's well that ...

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Tariff Man Set The Stage, Then The Machines Took Over

I opined after Monday's "relief rally" that the move had been a bit underwhelming and that uncertainty appeared to have crept back into the market. By Tuesday morning, traders began to realize that Trump may have over-tweeted the trade ...

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Is Uncertainty Back In The Mix So Soon?

While it may sound strange, perhaps the best word to describe the market action on Monday is, disappointing. Yes, the Dow Jones Industrial Average popped 288 points. The S&P 500 gained 1.1%. The NASDAQ 100 surged 1.5%. And ...

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The NEW Daily Decision for 12.3.18 - Fears Fading Away As Santa Loads His Sleigh


The State of the Markets:

Unless you've been living in a cave or don't have access to a TV, computer, smart phone, or even a newspaper, you likely know that Presidents Xi Jingping and Donald Trump laid the ...

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Fears Fading Away As Santa Loads His Sleigh

Unless you've been living in a cave or don't have access to a TV, computer, smart phone, or even a newspaper, you likely know that Presidents Xi Jingping and Donald Trump laid the groundwork for a trade deal ...

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The NEW Daily Decision for 11.30.18


Today's Portfolio Review

The G20 meeting presents a quandary here. While this week's clarity from the Fed represents a significant improvement in the near-term environment, the potential for bad news from the Trump/Xi dinner could easily push ...

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The NEW Daily Decision for 11.29.18 - One Worry Removed


The State of the Markets:

It didn't take the news-reading algos long to find what they were looking for in Jerome Powell's speech yesterday. And to his credit, the Fed Chairman didn't make it difficult for either ...

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One Worry Removed

It didn't take the news-reading algos long to find what they were looking for in Jerome Powell's speech yesterday. And to his credit, the Fed Chairman didn't make it difficult for either the computers or mere mortal ...

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Is Some Hope Creeping In?

Don't look now fans, but there might be some hope creeping into the stock market. With just 23 trading days left in the year, there seems to be some hope that we've seen the bottom of the recent ...

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2018: A Tough Row To Hoe

For most investors, 2018 is turning out to be a tough row to hoe. Suddenly, nobody is talking about global synchronized growth, low inflation, the benefits of tax cuts, and 20% earnings growth. No, all that is now so 2017 ...

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Near Term - It's All About The Headlines. Longer-Term - It's About...

A busy few days of entertaining family in Colorado provided a reprieve from the keyboard and the markets over the weekend. Thus, I'm going to let the indicators do most of the talking to start this holiday-shortened week.

Briefly ...

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