As 2017 winds down and 2018 gets ready to begin, now is the perfect time to reflect on how you did this year and how you can improve upon that next year. Even though the market kept going up and up, not all stocks went along for the ride. There were plenty of stocks that underperformed the market. In fact, more than half of the stocks in the S&P underperformed this year. And nearly 25% actually went down and lost money! Hard to believe in such a spectacular year. But it's true.
-- Kevin Matras, Profit from the Pros
Thursday, December 28, 2017
Thursday, December 21, 2017
market most overbought in 22 years
It's proved to be a major market theme this year: Stocks are hitting all-time high after all-time high in what appears to be an unstoppable juggernaut of an equity rally. Many say that's cause for concern, as the broader market has seen so few pullbacks this year amid virtually no volatility.
According to one analysis, however, the market's historically overbought condition is no reason to press the sell button.
The S&P 500 is the most overbought in 22 years, as measured by its 14-week relative strength index, said Ryan Detrick, senior market strategist with LPL Financial. The classic overbought/oversold indicator is historically elevated, above 80.
But Detrick found that when the S&P 500 has become this overbought (in 13 times since 1950), the market has risen the following year all but once, seeing an average annual move higher of 11 percent.
"In other words, really strong returns going forward, even after we are so overbought, which is one of those rare times that maybe this could be a continuation of the bull market. Things still look pretty good, even though we are still historically overbought here," Detrick said Wednesday in an interview with CNBC's "Trading Nation."
This is just another stunning statistic to pile into a record year for records. This year has also produced the longest daily streak ever without a 3 percent pullback, and the most all-time high records for the Dow Jones industrial average.
According to one analysis, however, the market's historically overbought condition is no reason to press the sell button.
The S&P 500 is the most overbought in 22 years, as measured by its 14-week relative strength index, said Ryan Detrick, senior market strategist with LPL Financial. The classic overbought/oversold indicator is historically elevated, above 80.
But Detrick found that when the S&P 500 has become this overbought (in 13 times since 1950), the market has risen the following year all but once, seeing an average annual move higher of 11 percent.
"In other words, really strong returns going forward, even after we are so overbought, which is one of those rare times that maybe this could be a continuation of the bull market. Things still look pretty good, even though we are still historically overbought here," Detrick said Wednesday in an interview with CNBC's "Trading Nation."
This is just another stunning statistic to pile into a record year for records. This year has also produced the longest daily streak ever without a 3 percent pullback, and the most all-time high records for the Dow Jones industrial average.
Monday, December 18, 2017
TINAA
[from Liz Ann Sonders]
There are myriad metrics which can be used to value stocks individually; or the market overall. It’s admittedly difficult to decide which valuation metrics are the most relevant at any point in time. I keep a running tab of 13 of them—some of which are quite common, and others likely less well-known. As you can see in the table below, I’ve arrayed them in descending order, from those which declare the market to be inexpensive to those which declare the market to be extremely over-valued. The metrics at the top are interest rate- and/or inflation-based; and given today’s still-easy financial conditions, stocks still look fairly reasonably-priced.
But I want to call out one metric in particular—the S&P 500 dividend yield. I was fooling around with a number of charts and data points last week, and had my research assistant put together a simple chart comparing the 2-year U.S. Treasury yield to the S&P 500’s dividend yield, as you can see below. Just last week, the former moved above the latter for the first time in about a decade.
My friend Jason Trennert at Strategas Research Partners wrote about this indirectly last week in a research post. He’s been calling the environment in which we’ve been investing since the financial crisis “TINA” (there is no alternative). What’s meant by that acronym is that investors have been forced out the risk spectrum and into equities due to the paltry yields offered on safer fixed income securities. Last week, Jason added an “A” to TINA; because “there is now an alternative” (TINAA), with even shorter-term government debt now yielding more than stocks.
There are myriad metrics which can be used to value stocks individually; or the market overall. It’s admittedly difficult to decide which valuation metrics are the most relevant at any point in time. I keep a running tab of 13 of them—some of which are quite common, and others likely less well-known. As you can see in the table below, I’ve arrayed them in descending order, from those which declare the market to be inexpensive to those which declare the market to be extremely over-valued. The metrics at the top are interest rate- and/or inflation-based; and given today’s still-easy financial conditions, stocks still look fairly reasonably-priced.
But I want to call out one metric in particular—the S&P 500 dividend yield. I was fooling around with a number of charts and data points last week, and had my research assistant put together a simple chart comparing the 2-year U.S. Treasury yield to the S&P 500’s dividend yield, as you can see below. Just last week, the former moved above the latter for the first time in about a decade.
My friend Jason Trennert at Strategas Research Partners wrote about this indirectly last week in a research post. He’s been calling the environment in which we’ve been investing since the financial crisis “TINA” (there is no alternative). What’s meant by that acronym is that investors have been forced out the risk spectrum and into equities due to the paltry yields offered on safer fixed income securities. Last week, Jason added an “A” to TINA; because “there is now an alternative” (TINAA), with even shorter-term government debt now yielding more than stocks.