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Post by FD1000 on Jan 24, 2021 13:17:48 GMT
( link) We present a number of long-term charts featuring several indicators whose bullish signals have consistently been followed by a year or so of rising equities. I have to add that none of them are perfect, so there are no guarantees. A typical example is featured in Chart 1, which compares the KST for the ratio between the S&P and the 30-year bond price with the S&P itself. When this smoothed momentum indicator crosses above its MA, it signals that the odds favor stocks outperforming bonds for an extended period. It also indicates that stocks are likely to rise in their own right. The reason lies in the fact that a liquidity injection at the beginning of the cycle drives both stocks and bonds higher. However, when the ratio between them reverses, it means that stocks realize that the economy has the momentum to grow on its own, with little or no help from the central bank. This rotational concept is explained here. In most business cycles, the transition in relative performance develops early on, hence the tendency for a year or more of rising equities following such signals. Attachments:
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Post by Chahta on Jan 24, 2021 14:02:36 GMT
Interesting that KST looks similar to MACD, but seems to lag somewhat.
Everyone wants to be the first to call a bear market. The epitome of human nature is to be negative.
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Post by Norbert on Jan 24, 2021 14:38:23 GMT
It's one thing to call for a correction. It's another to book some of 2020's amazing profits as the charts go parabolic (apologies to Chang).
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Post by uncleharley on Jan 24, 2021 15:21:40 GMT
Even the old Dow theory is projecting a continued bull market in domestic stocks. Of course we will have corrections.
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Post by Chahta on Jan 24, 2021 15:54:30 GMT
It's one thing to call for a correction. It's another to book some of 2020's amazing profits as the charts go parabolic (apologies to Chang). Then we are back to "how to time the market"..... |
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Post by yogibearbull on Jan 24, 2021 15:57:27 GMT
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Post by Capital on Jan 24, 2021 16:28:32 GMT
As I have said in the past my crystal ball has few clouds when looking at the past; however, they all seem to congregate where you look to the future. I would agree that stock prices look high when compared to the past. I'm just not sure that they are expensive when looking to the future. How far in the future I do not know; however, at some point in the future today's stock prices will look cheap. Of that I have a relative amount of confidence. I do not try to time the market. I have lost plenty of money in my younger days thinking that I could. Corrections will occur. For my money they are just a part of the natural ebb and flow of the Market; and, in their own way make it possible for the market to go up again. Traders once they buy will need to sell. I just have no way of trying to time when they will do either.
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Post by Chahta on Jan 24, 2021 16:48:05 GMT
I started investing at Dow 800. Man is the market high now!
These articles point out the reasons to have a plan, AA and stick to it.
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Post by Chahta on Jan 24, 2021 16:51:02 GMT
YBB, what dies it mean "But there aren't people around to talk about it anymore."? |
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Post by yogibearbull on Jan 24, 2021 17:13:36 GMT
YBB, what dies it mean "But there aren't people around to talk about it anymore."? There used to be a handful of Dow Theory newsletters, and its proponents would be in the media. What I mean is that some of them literally got old/tired or died. New generation of strategists don't seem to utilize Dow Theory and there are only passing mentions of it. Dow Theory uses DJ Transportation index to confirm new highs or lows. Its signals are often quite late. Nature of DJ Transportation index has also changed a lot. But the general idea of Dow Theory is that if DJIA is doing well [or poor], it should also affect movement of goods and that should be reflected in DJ Transportation index also doing well [or poor]. What about online retail or e-commerce? Well, after the order is in, the goods also have to shipped somehow. |
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Post by FD1000 on Jan 24, 2021 18:09:31 GMT
From the same article... The Correction?
I have often argued that trying to call a correction in a bull market is a mugs game. That said, there are some things that worry me about the near-term outlook, not from a bear market point of view, but more in the way of a sideways correction. I guess what I am saying is that all bull markets are temporarily interrupted by corrective action, and now might be as good time as any to expect digestion of recent gains. Tom Bowley, another charist is probably my favorite charist at stockchart. He has been saying for months that the bull market is just starting and will go much higher. See ( article) |
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Post by Deleted on Jan 24, 2021 19:17:07 GMT
I started watching markets in 2008. And every year, including 2010 there were always some well known investors who were bullish and some who were bearish. Seth Klarman, a well known value guy, has been bearish since 2010. A few bears (like Prem Watsa, a value investor from Canada) turned very bullish in 2016 when Trump won. I see more and more bear value investors turning bullish every day.
Many somewhat conservative investors now own Tesla and Nio.
Only data I can rely on so far is that around 80% of time markets go up. And as r48 said if you are in accumulation phase you will be likely investing in rising markets. And it is really hard to predict short term market moves.
But people say upcoming recession usually shows in data though timing is uncertain and if it becomes really easy to make money in market, ie. everyone is easily making money then it is time to turn cautious.
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Post by Chahta on Jan 24, 2021 19:30:01 GMT
From the same article... The Correction?
I have often argued that trying to call a correction in a bull market is a mugs game. That said, there are some things that worry me about the near-term outlook, not from a bear market point of view, but more in the way of a sideways correction. I guess what I am saying is that all bull markets are temporarily interrupted by corrective action, and now might be as good time as any to expect digestion of recent gains. Tom Bowley, another charist is probably my favorite charist at stockchart. He has been saying for months that the bull market is just starting and will go much higher. See ( article) Never say never, but thinking logically about the 11 year bull market bogles the mind to think how much higher it could go. But I know long after I am gone the Dow will be 100,000. Only took 43 years from 800 to 31,000, 39 times. That would be Dow 1,209,000 in the future from here. |
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Post by Chahta on Jan 24, 2021 19:34:16 GMT
YBB, what dies it mean "But there aren't people around to talk about it anymore."? There used to be a handful of Dow Theory newsletters, and its proponents would be in the media. What I mean is that some of them literally got old/tired or died. New generation of strategists don't seem to utilize Dow Theory and there are only passing mentions of it. Dow Theory uses DJ Transportation index to confirm new highs or lows. Its signals are often quite late. Nature of DJ Transportation index has also changed a lot. But the general idea of Dow Theory is that if DJIA is doing well [or poor], it should also affect movement of goods and that should be reflected in DJ Transportation index also doing well [or poor]. What about online retail or e-commerce? Well, after the order is in, the goods also have to shipped somehow. Drone stocks for the future! |
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Post by Karen on Jan 24, 2021 19:57:09 GMT
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Post by FD1000 on Jan 24, 2021 20:20:38 GMT
I started watching markets in 2008. And every year, including 2010 there were always some well known investors who were bullish and some who were bearish. Seth Klarman, a well known value guy, has been bearish since 2010. A few bears (like Prem Watsa, a value investor from Canada) turned very bullish in 2016 when Trump won. I see more and more bear value investors turning bullish every day. Many somewhat conservative investors now own Tesla and Nio. Only data I can rely on so far is that around 80% of time markets go up. And as r48 said if you are in accumulation phase you will be likely investing in rising markets. And it is really hard to predict short term market moves. But people say upcoming recession usually shows in data though timing is uncertain and if it becomes really easy to make money in market, ie. everyone is easily making money then it is time to turn cautious. Of course, it'w worth being a bull. In the last 40 years the SP500 was positive about 80%, see ( here). |
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Post by chang on Jan 24, 2021 22:01:45 GMT
It's one thing to call for a correction. It's another to book some of 2020's amazing profits as the charts go parabolic (apologies to Chang). Many charts are climbing more rapidly than "parabolic". Maybe quartic ... or even exponential ... or factorial ... or possibly Ackermannic! en.m.wikipedia.org/wiki/Ackermann_function |
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Post by retiredat48 on Jan 24, 2021 22:55:33 GMT
...I would agree that stock prices look high when compared to the past. I'm just not sure that they are expensive when looking to the future. How far in the future I do not know; however, at some point in the future today's stock prices will look cheap. Of that I have a relative amount of confidence. .. Interesting post, capital...and I agree. I have posted often i see Dow 55,000 in the cards within seven years. I'll give one reason. In the 1950's (yes, a long time ago), the stock market typical yield for a stock was 5%. Bonds 2%. Then came a stock bull, as investors realized you can get a better yield, and great chance for price growth, in stocks. Due the market's rise, dividend yields fell to about 2.5%. Many said, can't last because "this time it won't be different", and return to the mean will happen. It did not happen. Dividend yields stayed at 2.5% (brief bear market period in 1974 went back up a lot). Now consider stocks and bonds today. Many bonds are getting close to zero percent yield. I submit stocks will likely keep going up until yields get to 1%. That higher price simply lowering the dividend yield. But stocks will still be the better buy, as you get the current dividend, a good chance the dividend will grow over time, and business growth should keep up at least with population growth, put at 2%...thus NAV price advances. There are also some very advanced arguments that even the non-dividend paying stocks (like high tech) are still way undervalued as to long term total returns. That the USA and world are in a very momentous change in how society economies work, incorporating high tech into it..and the upcoming age of the robots and AI. R48 |
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Post by FD1000 on Jan 24, 2021 23:52:07 GMT
I don't think it has to do much about the dividends. It's mostly about the high tech revolution/boom since the end of the 70". These companies are where you find the most advances, higher growth/earnings and the winner takes it all and without any (or low) dividends. Since the high tech is the leader and take a higher % of the top, dividends have been going down. Then, you add more companies buying back their own stocks vs paying dividends and again dividends don't matter as much which lead me to the obvious conclusion: never use higher dist as your first primary indicator when you are looking to buy single stocks.
From www.investopedia.com/articles/investing/123115/4-reasons-why-investors-buybacks.asp
-A stock repurchase, or buyback, occurs when a company uses cash on hand to buy and retire some of its own shares in the open market.
-Buybacks tend to boost share prices in the short-term, as the buying reduces the supply out outstanding shares and the buying itself bids the share higher in the market.
-Shareholders may view buybacks as a signal of corporate health and optimism from company managers that their shares are under-valued.
-There's been a large rise in buybacks over the last decade, with some companies looking to take advantage of undervalued stocks, while others do it to artificially boost the stock price.
Below is a chart of SP500 vs the tech sector since 1976 (chart).Attachments:
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Post by yogibearbull on Jan 25, 2021 0:02:42 GMT
I don't think it has to do much about the dividends. It's mostly about the high tech revolution/boom since the end of the 70". These companies are where you find the most advances, higher growth/earnings and the winner takes it all and without any (or low) dividends. Since the high tech is the leader and take a higher % of the top, dividends have been going down. Then, you add more companies buying back their own stocks vs paying dividends and again dividends don't matter as much which lead me to the obvious conclusion: never use higher dist as your first primary indicator when you are looking to buy single stocks.
Below is a chart of SP500 vs the tech sector since 1976 (chart). Site default font is 10 pt, #2. But your use of 12 pt, #3 looks good. Do you have to select font size each time you post or the site remembers your choice next time? BBBBB [10 pt, #2] BBBBB [12 pt, #3]
BBBBB [14 pt, #4] |
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Post by Deleted on Jan 25, 2021 0:25:48 GMT
two companies that do lot of buybacks are IBM and Berkshire. IBM to maintain its EPS and Berkshire because it has lot of cash and nowhere to use it.
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Post by chang on Jan 25, 2021 0:45:52 GMT
This is a little unusual. Infer from it what you will. From T. Rowe Price "Historical Performance" page: www.troweprice.com/personal-investing/tools/fund-research/historical-performanceSome funds have a dagger † next to the 1Y return (e.g., PRMTX, PRGSX, etc.), which refers you to this footnote: † Investors should note that the fund’s short-term performance is highly unusual and unlikely to be sustained.Now isn't it interesting that the fund company is "warning you" not to chase recent returns? Again, infer from it what you choose. |
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Post by chang on Jan 25, 2021 1:10:34 GMT
It's one thing to call for a correction. It's another to book some of 2020's amazing profits as the charts go parabolic (apologies to Chang). Agreed. The only people calling for corrections are Hussman, Grantham, etc. and they are always calling for corrections. I don't think I've seen any (or many) members here doing that. (I referenced elsewhere a case involving a poster on M*.) You cannot be criticized for doing a little bit of rebalancing. I've been "letting it ride" from March 2020 all the way until now. Only now have I started skimming just a bit off the top. Edit: I'm still a buyer even at the top—not US equity now, but focused on targeted foreign and EM. |
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Post by yogibearbull on Jan 25, 2021 1:54:30 GMT
Hussman, Grantham, etc  Permabears may be right someday. There was a poster recently whose screen picked up Hussman but he didn't know its sad history. |
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Post by uncleharley on Jan 25, 2021 13:32:16 GMT
A review of this thread seems to indicate that most posters are now bullish.
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Post by Norbert on Jan 25, 2021 14:11:25 GMT
A review of this thread seems to indicate that most posters are now bullish. That's not good. Most posters we're bearish last March, right before the massive rally got started.  |
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Post by Chahta on Jan 25, 2021 14:52:03 GMT
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Post by uncleharley on Jan 25, 2021 16:42:13 GMT
Good earnings reports are good reasons for a bull market, of course good earnings also mean increased economic activity which also leads to inflation, which also leads to higher interest rates except this time , since the fed no longer cares about inflation. Oh Gee!!! I think I'll just follow the trend until the trend changes. I never was much of a leader or a pioneer.
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Post by FD1000 on Jan 25, 2021 20:59:49 GMT
I don't think it has to do much about the dividends. It's mostly about the high tech revolution/boom since the end of the 70". These companies are where you find the most advances, higher growth/earnings and the winner takes it all and without any (or low) dividends. Since the high tech is the leader and take a higher % of the top, dividends have been going down. Then, you add more companies buying back their own stocks vs paying dividends and again dividends don't matter as much which lead me to the obvious conclusion: never use higher dist as your first primary indicator when you are looking to buy single stocks.
Below is a chart of SP500 vs the tech sector since 1976 (chart). Site default font is 10 pt, #2. But your use of 12 pt, #3 looks good. Do you have to select font size each time you post or the site remembers your choice next time? BBBBB [10 pt, #2] BBBBB [12 pt, #3]
BBBBB [14 pt, #4]Yes, that's exactly what I did, and I wish it was the default, I have to do it each time. |
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Post by FD1000 on Jan 25, 2021 21:22:01 GMT
A review of this thread seems to indicate that most posters are now bullish. See attached from AAII sentiment survey and published by YBB. Currently, it's not far from the averages. Bullishness is going down while the bear crowd is going up. Attachments:
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