Category Archives: Market Commentary

The Three Things that Move the Market

Posted on August 29, 2013 by

The equity market seems complex, but it is really much simpler than you think.  There are only three things that move the market.  The following article will identify the three cause and effect relationships and use this framework to examine … Continue reading →

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Posted in Economic Indicators, Fundamental Analysis, Market Commentary, Market Sentiment, Market Timing, Strategy Development | Tagged , , , , | Leave a comment

April 2013: Most Extreme Investor Leverage Since 2001 Bubble

Posted on June 13, 2013 by

In a recent article “Earnings-Price Divergence Always Followed by Negative Returns,” I noted that every extreme divergence (-20% or lower) between year-over-year corporate profits and equity prices in the past 50 plus years was followed by negative year-over-year equity returns.  … Continue reading →

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S&P 500 Overvalued Based on Price to Sales Ratio

Posted on May 23, 2013 by

In a recent article “Earnings-Price Divergence Always Followed by Negative Returns,” I noted that every extreme divergence (-20% or lower) between year-over-year corporate profits and equity prices in the past 50 plus years was followed by negative year-over-year equity returns.  … Continue reading →

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Posted in Economic Indicators, Fundamental Analysis, Market Commentary | Tagged , , , , , | 1 Comment

Earnings-Price Divergence Always Followed by Negative Returns

Posted on April 14, 2013 by

I recently wrote about the extreme divergence between earnings and equity prices, but did not have access to comprehensive historical earnings data until recently.  In the article above, I referenced the past few years of earnings data, which was provided … Continue reading →

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Posted in Economic Indicators, Fundamental Analysis, Market Commentary, Market Timing | Tagged , , , , | 5 Comments

Deposits No Longer Safe in EU

Posted on March 28, 2013 by

After the initial proposal to confiscate 6.75% of all deposits up to EUR 100,000 and 9.9% of all deposits above EUR 100,000, the final plan will instead take as much as 100% of deposits (in excess of EUR 100,000) at … Continue reading →

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Posted in Market Commentary | Tagged , , , | 3 Comments

Cyprus Deposit Confiscation Destabilizes Banking System

Posted on March 18, 2013 by

The EUR 10 billion bailout of tiny Cyprus should have been a global non-event.  Instead, ineptitude on the part of the European Central Bank (ECB), the European Commission, the International Monetary Fund (IMF), and the Cyprus authorities has threatened the … Continue reading →

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Use Relative Strength to Confirm Trend Direction

Posted on February 28, 2013 by

In previous articles, I explained how to make market timing decisions with relative strength and how to use relative strength to identify market trends. Both of these articles used relative strength to forecast trend changes in the equity market and … Continue reading →

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Posted in Market Commentary, Market Timing, Relative Strength, Security Selection, Technical Analysis | Tagged , , , , | 8 Comments

Extreme Divergence: Earnings and Equity Prices

Posted on February 20, 2013 by

Earnings are the ultimate driver of stock prices and the divergence between earnings expectations and equity prices has become even more extreme.  Given that the market is technically overbought, implied volatility is extremely low, the CBOE Skew Index is over … Continue reading →

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Posted in Economic Indicators, Fundamental Analysis, Market Commentary | Tagged , , , , | 3 Comments