Published July 17, 2020
A few miscellaneous notes this week that describe the current market outlook, foggy though it be. Starting at the highest level with the wide range of earnings projections for the S&P 500. Currently, the S&P 500 index trades around 3200. If we look at the chart below, we see a 2021 earnings per share for the S&P 500 range of $135-170. At $135, the S&P 500 is trading at price-earnings ratio of 23, on the high end of “normal”.
Published July 10, 2020
The Wall Street Journal’s excellent daily blasts: The Daily Shot and Real-Time Economics provide a quick overview of economic and market trends and data. We were struck by a set of charts in one of this week’s blasts from those sources. Coinciding with the news that the Chinese government had notably expanded measures aimed at supporting the Chinese stock market, these charts could be read as a broader initiative by China to sort of take global market share while the U.S. pulls back on the global stage. We are very far from geopolitical experts, of course, but we are pretty good at seeing trends (being trend-followers!). This looks like a trend in the making to us (or continuation of a bigger trend, depending on your time frame). Herewith are a series of China-related charts. May be the start of something bigger and longer-lasting.
Published July 3, 2020
At TimingCube our focus market index is the Nasdaq 100, traded under the symbol QQQ. The Nasdaq 100 contains the 100 largest non-financial companies listed on the Nasdaq stock exchange, a purely electronic exchange that was founded in 1971. This focus on non-financial companies has served the index well over the past 30 years, a period dominated by growth in technology and electronic commerce. (more…)
Published June 26, 2020
Subscribers new to TimingCube may not be aware that we have a treasure trove of articles available in our Knowledge Base. To find these articles go to the Resources tab at the top of the page. Many of the articles are briefs about our investing approach and how to best use our service. As you peruse those articles you will note that we talk often about emotions. We believe that understanding and controlling our emotions is the key to successful investing. We propose doing this by relying on long-standing market models. These models remove much of the emotion of investing, the fraught decisions over when and what to buy and sell. For more about the emotional aspect of investing, we offer below one of the articles from our Knowledge Base. (more…)
Published June 19, 2020
A recent commentary by Blaine Rollins of 361 Capital offered a good selection of charts explaining why the stock market continues to believe that the worst is behind us and sunnier skies are ahead. (more…)
Published June 12, 2020
Maybe the bear market is, or will be, alive and well. This week’s market action reminded investors that we are in an economic recession, and that it has just begun. There are still 20 million people, at least, unemployed, and likely will be half that many unemployed for months to come. And the government support checks might be drying up in a few weeks. The torrid run in the previously lagging groups, like financials, energy, and small-caps gave up almost all of their two week party (all of June’s gains) in a mere two days. Investors were reminded that in a dicey market environment it pays to be careful. (more…)
Published June 5, 2020
Stocks have just unleashed their all-time best 50-day performance in history. Some think it might be due for a break. The support for that argument comes as the Nasdaq 100 (QQQ) has run right up to its prior high point – e.g. it’s on the verge of an all-time high price. Usually, there is some resistance to buying at an all-time high price (who wants to pay the highest price ever for something?). That resistance eventually gives way as new information supports paying more. But initially, there is some balking. We find ourselves at that point this week. (more…)
Published May 29, 2020
Bullish markets are characterized by sector rotation. There are always sectors that consistently lead the way. But investors can only push a single stock or sector’s valuation so high. To keep the bullish fires burning bright, they eventually have to find other sectors attractive enough to invest in. This week we saw a couple of powerful days of sector rotation. The stocks that had been beaten down the most suddenly became the stars of the show. The stocks that had been favored got sold off, at least for a few hours. (more…)
Published May 22, 2020
The stock market has rallied hard off the March 23rd bottom, surprising almost everyone in the strength and lift of the move. This rally has brought the Nasdaq 100 (QQQ) back to positive on the year, a stunning development given the dire economic situation. That positive year-to-date print for the Nasdaq reflects the seeming fact that Covid-19 has served to accelerate trends which benefit these top companies of the digital economy – e.g. Amazon, Facebook, Google. That the Russell 2000 small-cap index remains down almost -20% year-to-date, while the equally-weighted version of the S&P 500 is down -16%, is perhaps a better stock market gauge of the overall economy’s troubles. (more…)
Published May 15, 2020
Many articles are being written trying to make sense of a stock market that has roared back from the depths while economic data continues to deliver abysmal news. Part of the explanation focuses on which parts of the stock market have actually rebounded most strongly. It has been the new digital economy stocks that have driven the rebound while the ‘old economy’ stocks have lagged. (more…)