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Post by oldskeet on Apr 10, 2022 12:59:59 GMT
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Post by Fearchar on Apr 10, 2022 16:48:10 GMT
Just some random weekend market observations...
5 year TIPs are trading at -0.56%; a dramatic rise from the -1.3 to -1.6% floor that was established last year. 5 year TIPs with negative yields coincide with an expansionary monetary policy. I expect that they will eventually rise to near zero or slightly higher. Previous peak of 1.08% was reached during the Oct-Dec 2018 tightening. I suspect that our current economy will crack at lower levels. So, while I expect zero will be reached, I wouldn't hold my breath for much higher than that.
ICE BofA US High Yield Index Option-Adjusted Spread; my favorite indicator is at 3.54%. This is slightly elevated from 3.27 that was observed on April 5th, but is significantly lower than the peak of 4.21 reached on March 14th. That March 14th peak coincided with a S&P 500 low point. Normally, a reading over 5% or ideally over 7% is when the best prices can be found as the market is typically in a deep panic at those levels. So, it appears that such a buying opportunity will not present itself in the near future. The market is not priced for perfection, but then it's not a great deal either.
BBB yields appear to have steadied at the 4.1% level, which was first reached on March 15th. In contrast 30 year fixed mortgages rose slightly over last week to 4.72%. That's probably the most significant observation for the week. Mortgages rates have not been this high since Oct/Dec 2018 and it didn't last very long. Spring is a big time for home buyer and they are in for a shock. The housing market is very likely to slow down quick. However, 5-Year forward inflation rate has risen to 2.41%; tied with Oct 2021 high.
Fingers crossed, the coming housing slowdown will ease inflation and allow the FED to continue in their Dovish ways. On the other hand, if they continue rapid tightening, I expect some really tough times for both the markets and the economy.
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Post by xray on Apr 10, 2022 18:59:21 GMT
Chahta, Your: yogibearbull , so Branchflower and Bryson called the 2008 collapse and they believe that is where we are now? Interesting no one else is talking that way.
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My current data (single viewpoint) is that the recession is already starting. Only the stimulus money and supporting the war in Ukraine (here) is keeping us currently afloat. If we take notice, riots in other countries are starting and already happening over fuel and food prices. We should start to see the recession affects (coming here) by next summer. Some of us have adjusted our portfolio's to 33% cash currently and have again taken our current CapGains. We have completed our goals and objectives requirements (early) for the 2nd Qtr. Many of us are observing the current news and taking a somewhat "conservative" approach to the market for the rest of the year....
Good Luck to all of us.... Have a "GREAT" weekend....
Live Long and Prosper....
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Post by Fearchar on Apr 10, 2022 19:30:57 GMT
xray, He may be referring primarily to Europe, where recessionary concerns are significant. The Ukraine war has had a negative impact there.
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Post by Fearchar on Apr 11, 2022 11:24:02 GMT
Today is the last day of my 1st retirement.
According to JPM, S&P forward P/E is 19.17. That equates to 234.1, which is a 0.54% increase over last week. Or a 1.7% rise compared to 5 weeks ago and on track for a 17% y/y. Wow!
In my little market forecast spreadsheet, I compare earnings, growth rate and the yield on BBB bonds to calculate a sensible value for the S&P. BBB's are at 4.1% and that seems a fair assumption going forward.
If I plug in a 17% y/y growth rate in earnings, then I get a 4% return on the S&P. However, I don't believe 17% y/y is realistic. GDP is only growing about 2 or 3% /year.
So, while earnings may accelerate for a while as the economy recovers from COVID, my long term projection for earnings can't be much more than 3% plus inflation. So, even if inflation steadies out at 4% (which would be awful), then I'm only looking at a 7% growth rate in earnings which would mean the S&P needs to correct itself about 5% down to 4282.
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Post by Fearchar on Apr 15, 2022 11:50:42 GMT
The F&G index is at 42; FEAR
Noticed that 30 year Mortgage Rates just hit 5%. They have blasted over the 4.94% high set in November 2018.
So, they are now at the highest rate since February 2011. However, that rate above 5% did not last very long.
The last sustained period over 5% was between March-May 2010.
.... we are getting closer
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Post by Fearchar on Apr 15, 2022 11:55:52 GMT
Previous to the 2008/2009 market collapse, mortgages were typically over 6%.
Could we be headed back to a similar economy / monetary condition?
I doubt it, but then again, it does need to be considered.
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Post by FD1000 on Apr 15, 2022 21:23:56 GMT
Previous to the 2008/2009 market collapse, mortgages were typically over 6%. Could we be headed back to a similar economy / monetary condition? I doubt it, but then again, it does need to be considered. There is no one indicator or two that will tell you this. Even if you find something that will tell you months in advance, would you be in cash? When everybody knows it, it's too late. This is why I post so many times about this subject. 1) Most of these indicators and what you read are not why markets go down. 2) Each time it's unique, 1987, 2000-2003, 2008-9, 2018, 2020. 3) You can't be a good trader one day. You got to do it. 4) You must think big picture. You must think ST. Is it different this time? 5) You must take action. Selling 5-10% is meaningless. 6) You must be in cash, I don't use shorting, are you willing to be in cash? Do you care to miss out? 7) Got to know when to stay out 3 days, 3 weeks or 3 months. 8) Realize that losing is faster than gaining. Missing bad days is better than missing the good days ( link). 9) I read many opinions but I find very little help. You should realize by now that most articles are obsolete, recycled, not detailed enough, too detailed without any clear recommended actions and want you to click and how they get paid. 10) Train yourself to know what is real and possible and what is not. Try to find only 2-3 analysts that you like and their calsl were pretty accurate over the years (hint: it ain't Prof Siegel) If you don't have a clear answer to every question, stay the course, you are not ready.
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Post by steadyeddy on Apr 16, 2022 0:00:05 GMT
Previous to the 2008/2009 market collapse, mortgages were typically over 6%. Could we be headed back to a similar economy / monetary condition? I doubt it, but then again, it does need to be considered. collapse is a very strong word but considerable blood would be on the (wall) street during summer/fall of 2022. Till then the slow/steady grind downward of the stock market will continue while the bonds have seen most of the carnage they would see. My crystal ball is brilliantly shiny.
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Post by Capital on Apr 16, 2022 0:16:50 GMT
Previous to the 2008/2009 market collapse, mortgages were typically over 6%. Could we be headed back to a similar economy / monetary condition? I doubt it, but then again, it does need to be considered. collapse is a very strong word but considerable blood would be on the (wall) street during summer/fall of 2022. Till then the slow/steady grind downward of the stock market will continue while the bonds have seen most of the carnage they would see. My crystal ball is brilliantly shiny. steadyeddy , mine shines too - but - it blinds me. LOL LOL
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Post by Deleted on Apr 16, 2022 0:38:01 GMT
My buy and hold crystal ball says keep looking at prices and TRY to approximate below fair market value in a Fed still-propped up market; it talks to Steady's crystal ball at lunch and also sees a slow grind downward as P/Es continue to adjust. My standby crystal ball (Siegel) was way ahead of the other soothsayers and said cut off your right hand before buying BND or BIV! My Sara crystal ball, supported by my standby one, says there is no telling what will happen in the short term.....everything is possible, including collapses like 2008....or not. Diversification, fair prices, compounding, stay the course, throw off enough dividends to have some fun. Very cheap crystal ball - built from materials that have not become obsolete or overpriced.
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Post by steadyeddy on Apr 16, 2022 12:40:35 GMT
My buy and hold crystal ball says keep looking at prices and TRY to approximate below fair market value in a Fed still-propped up market; it talks to Steady's crystal ball at lunch and also sees a slow grind downward as P/Es continue to adjust. My standby crystal ball (Siegel) was way ahead of the other soothsayers and said cut off your right hand before buying BND or BIV! My Sara crystal ball, supported by my standby one, says there is no telling what will happen in the short term.....everything is possible, including collapses like 2008....or not. Diversification, fair prices, compounding, stay the course, throw off enough dividends to have some fun. Very cheap crystal ball - built from materials that have not become obsolete or overpriced. @slooow, I enjoyed reading the humorous blurb above on crystal balls. 😜
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Post by uncleharley on Apr 16, 2022 14:27:39 GMT
Obviously I need a crystal ball to replace my charts. My charts indicate the S&P is in a consolidation pattern with some support nearby while various sentiment indicators indicate the sky is about to cave in. Do crystal balls come in a warm, fuzzy variety? I think I need a hug.
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Post by Fearchar on Apr 18, 2022 23:11:40 GMT
The F&G index picked up a tick and is now to 45: Neutral
Meanwhile, JPM reports that Friday's S&P NTM P/E was 18.72. That works out to earnings of 234.6, which is a 0.22% rise over last week and a 1.7% rise from 5 weeks ago.
I've been assuming an 8% growth rate in earnings and beginning to wonder about that assumption.
Headline CPI is 8.5% y/y. A 2 - 3% real growth rate on top of that would be 10.5 to 11.5% growth rate.
Assuming 11% growth with BBB's at 4.3% implies a -1% return. Which implies market is fairly priced +/-1% right now.
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Post by Fearchar on Apr 21, 2022 23:55:59 GMT
Rather brutal day! The F&G index has slid back to 37; "Fear" money.cnn.com/data/fear-and-greed/Probably a good thing that I've returned to work and hence not following the market as closely. Noticed that 30 year Fixed Mortgage rates have continued to climb; now 5.11% One has to go back to the 80's to find a similar rate of rise. However, the jump in rates back then was from a much higher base level. What we are now living with on an relative basis has no parallel. 3.05% back in December 2021. (5.11-3.05)/3.05 = 0.675 or 67.5% increase in mortgage payments.
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Post by FD1000 on Apr 22, 2022 21:10:20 GMT
Rather brutal day! The F&G index has slid back to 37; "Fear" money.cnn.com/data/fear-and-greed/Probably a good thing that I've returned to work and hence not following the market as closely.Noticed that 30 year Fixed Mortgage rates have continued to climb; now 5.11% One has to go back to the 80's to find a similar rate of rise. However, the jump in rates back then was from a much higher base level. What we are now living with on an relative basis has no parallel. 3.05% back in December 2021. (5.11-3.05)/3.05 = 0.675 or 67.5% increase in mortgage payments. If you planned right, you should prepare for this. I follow markets very closely, but I only act based on my plan. Actually, if stocks lose another 50% from here, I will start dancing. Same old stuff for me, I only make decisions in real time based on current market. I don't have an idea if it's 1-4-8 or 24 weeks.
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Post by Fearchar on Apr 30, 2022 0:44:35 GMT
28 "Fear"
Stock Price Breadth: Greed
Safe Haven: Neutral
Market Volatility: Fear
Market Momentum: Extreme Fear Stock Price Strength: Extreme Fear Put/Call Options: Extreme Fear Junk Bond Demand: Extreme Fear
Last weeks reading was at 40, which was also in the Fear range. This weekend's reading though is a significant drop from then.
The S&P has broken thru March lows. However, notice that there remains a Greed aspect within the markets breadth.
Meanwhile, my own favorite indicator ICE BofA US High Yield Index Option-Adjusted Spread is at 3.83, which is not indicative of undue stress.
However, 5 Year Tips are trading at -0.53%. With normalization of monetary policy they will eventually rise to a slightly positive value. At least 30 year TIPs are positive; 0.29%, which is nearly exactly where they traded in late January 2020.
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Post by Fearchar on May 22, 2022 14:27:56 GMT
Fear and Greed index is at 11; extreme Fear. Last week it was at essentially the same level; 12.
So, we are now at the most extreme level of despair in quite a while.
All components are in Extreme Fear except Market Volatility; which is neutral.
My other market gauge ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) is at 4.92. That's also a high since November 2020, but not at the level that initiates my Buying logic trigger.
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Post by yogibearbull on May 22, 2022 15:04:42 GMT
Sentiment indicators are mixed now.
Several investor sentiment surveys are very negative, including AAII Sentiment Survey and advisor and institutional sentiments.
But others are not negative - put-call ratio (of volumes) is not high, SKEW (relative pricing of puts vs calls) is almost normal, fear gauge VIX is not very high (but oil "VIX" OVX is of course very high), etc.
There isn't any throwing-in-the-towel moment yet.
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Post by uncleharley on May 22, 2022 17:14:55 GMT
Sentiment indicators that are based on surveys are usually contrarian indicators. Those which are based data are usually not contrarian. We might be in for a week or so of consolidation. That is not a call, just an opinion.
EDIT: A look at the trading pattern for the USD implies it is poised for a 5% or so correction. This would give some support to many stock prices if it continues to develop. I am becoming a bit uncomfortable with my short positions.
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Post by anitya on May 22, 2022 19:37:51 GMT
Which of the SP 500 are reporting earnings this week?
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Post by Fearchar on May 22, 2022 22:30:27 GMT
anitya , Here is a link to the companies reporting this week: www.marketbeat.com/earnings/latest/However, every week, updates are provided by a few different firms that compile all the earnings and do the math. On Monday; JPM reports for the past week. On Friday; the WSJ reports On random dates, Yardeni provides updates. JPM and Yardeni appear to be reasonably aligned with each other. The WSJ however, is off from JPM and Yardeni and is inconsistent with itself from week to week. So, I use JPM numbers, but check them against Yardeni. I've given up on the WSJ.
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Post by anitya on May 23, 2022 0:47:20 GMT
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Post by anitya on May 23, 2022 22:11:55 GMT
Any idea why broad indices are down in the evening (after) market session?
QQQs gave back all the gains accrued during the regular session and are now trading at $288.50
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Post by richardsok on May 25, 2022 19:58:02 GMT
Barron's excerpt:
"..... Overwhelmingly bearish sentiment, along with the exodus from developed-world equities, speculative-grade corporate and emerging market debt, and deteriorating technical barometers, place their indicators in “unambiguous contrarian buy territory.”
Yet based on history, there probably are a few more months of pain ahead for the bulls. The BofA team looked at 19 U.S. equity bear markets over the past 140 years and found an average price decline of 37.3% lasting 289 days. If past is prologue, this bear should bottom on Oct. 19 with the S&P 500 at 3000—coincidentally the same downside target predicted by former Barron’s Roundtable member Felix Zulauf here last December.
There is a laundry list of reasons to be negative, in addition to the bear market, with Evercore ISI noting the drop in the Conference Board’s Index of Leading Indicators, falling existing-home sales, weakening sentiment among home builders, slipping truck orders and purchasing managers’ indexes, an uptick in unemployment claims, and a widening in corporate credit spreads, plus the drop in real retail sales after inflation."
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Post by Fearchar on May 25, 2022 21:05:53 GMT
ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) usually tops out over 7.5 during a bear market. Recent exception was Nov/Dec 2018 when it topped out at only 5.33.
Today it's at 4.94.
So, yes there is room for more pain...
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Post by FD1000 on May 25, 2022 22:13:03 GMT
ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) usually tops out over 7.5 during a bear market. Recent exception was Nov/Dec 2018 when it topped out at only 5.33. Today it's at 4.94. So, yes there is room for more pain... Let's repost again. On 1/22/2022( link)..." the Fear & Greed Index is far from being accurate. In 2021, it signaled 3 times extreme fear, which is close to 20. The SP500 had one of the best years for performance at 28.7% + SD=11.15 which is an excellent risk-adjusted performance" On 3/23/2022( link)..."Let's analyze buy when BAMLH0A0HYM2>7. Look at the chart below. Each number in the chart correlate to what is below. 1) 10/2000 thru 03/2003: The SP500 had a terrible performance in these years 2) 02/2008: it started at 7 and kept going up while stocks had a terrible performance of losing 50% from the top. 3) 08/2011: 2 months later, the SP500 lost 20% 4) 01//04/2016: the indicator passed 7. That was just 1% from the top. The SP500 lost more than 10% after that and rebounded. Another bad timing 5) 2020-03-12: the indicator passed 7. From that point, the SP500 lost another 16% IMO, this indicator DOES NOT have a good timing.
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Post by Fearchar on Jun 3, 2022 16:45:05 GMT
Overall Index: 27 "Fear"
Safe Haven: Neutral Market Volatility: Neutral
Put/Call Options: Fear Stock Price Strength: Fear
Stock Price Breadth: Extreme Fear Market Momentum: Extreme Fear Junk Bond Demand: Extreme Fear
This is a signifianct advance from last weeks reading of 17: Extreme Fear
The market had entered the Extreme Fear range in late April and has been mostly stuck at that range until this week.
Meanwhile, my favorite indicator ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) has fallen from a high of 4.94 on May 24th to 4.15 yesterday. This indicator needs to exceed 7 to initiate "Buying" logic. Notice, hitting 7 is not an immediate "Buy" signal, but instead indicates when a deep seated panic has thoroughly gripped the market from which one may begin to initiate long term buys.
It's best to view our current market as one that is still susceptible to significant sell offs.
A soft landing is being attempted and it could possibly be successful. However it's a tighter economy and one that will be put to the test within the next year.
30 year mortgages have recently relaxed from a high of 5.30%, but at 5.09% we have not lived with similar rates since 2010!
BBB corporates are at 4.63%. Lower than last week 4.78% peak. While slightly higher rates were briefly recorded in Nov 2018, one has to go back to 2010 for a prolonged period with such high rates.
So, we have not crashed, but the brakes are being firmly applied.
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Post by Fearchar on Jun 10, 2022 14:00:12 GMT
Overall Index: 29 "Fear"
Stock Price Strength: Greed
Market Volatility: Neutral
Put/Call Options: Fear Safe Haven Demand: Fear
Stock Price Breadth: Extreme Fear Market Momentum: Extreme Fear Junk Bond Demand: Extreme Fear
While the overall index has risen slightly from last week, what's interesting is that there is now a Greed component; Stock Price Strength. It's only one of several signals, but recently there have been many more new highs than lows. A Bullish signal, which also illustrates an island of greed remains in a sea of fear.
My favorite indicator, ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) is off considerably from the peak in May. So, no indication of true Fear in this market.
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Post by Fearchar on Jun 18, 2022 0:08:08 GMT
Overall Index: 14 "Extreme Fear"
Stock Price Strength: Fear Market Volatility: Fear
Put/Call Options: Extreme Fear Safe Haven Demand: Extreme Fear Stock Price Breadth: Extreme Fear Market Momentum: Extreme Fear Junk Bond Demand: Extreme Fear
As most market followers are aware, there was a rout this past week and accordingly, the Fear and Greed index has slide back into the Extreme Fear range.
Stock price strength has slide as well. This indicator went negative way back in the end of November and has been solidly negative other than a brief stretch near zero in January.
The McClelland volume summation index (Stock Price Beadth) has hit another low while Put and Call Options has reached an new high (both indicators of Extreme Fear).
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