Inside The Stock Market ...trends, cross-currents, and outlook
Answering Client Questions
Many of the questions in this month’s issue came from December’s client meetings in Chicago.
Short Interest....NASDAQ Hits Record High Ratio, As December Volume Plummets
This month’s ratio increased to 3.54 from 2.72, marking the highest ratio ever recorded.
Is The Stock Market's Current P/E Dangerously High?
It is possible for new bull markets to emerge from high P/E levels. Earnings are cyclical, so when earnings decline in a recession, it can mark a very good buying opportunity despite high P/Es.
View From The North Country
Valuation tools comparing stock earnings yields to bond yields (i.e. the Fed Valuation Model) are worthless. History shows they don’t perform very well at all.
Volatility Update…..S&P Volatility Highest Since 1938
Volatility in the S&P came down in November and December, but for the entire year the S&P 500 was unusually volatile.
2002 Dreams And Nightmares….A Look At What Might Have Been
An examination is made of the previous year’s leaders and laggards to see if success could have been attained by buying last years big winners (or the big losers).
The Year That Was
Remain bullish on the stock market, but don’t expect Main Street to be a major stock market factor in 2003. Today’s bull market expectations for the DJIA, S&P, and NASDAQ.
December Mutual Fund Flows & 2002 Recap
December proved to be a fitting end to what is now the first net redemption year since 1988. Plus, a preview of the cash flow trends for all major asset categories (using our own December 2002 estimates).
Secular Bear Market Damage
Biggest losers from the March 2000 market peak.
Playing The Bounce Update: Big Bounce In October/November
It has so far been a great period for the October bounce stocks (with a big boost for the market itself).
Short Interest...Still High Despite October And November Performance
While short interest has retreated slightly, it still remains quite high, indicating there may be more upside pressure from short covering.
Answering Client Questions
Many of the questions in this month’s issue came from November’s client meetings in San Francisco.
Steve The Technician
Last month, we had a request for technical readings on the major market indices. Being a long time card carrying member of the Market Technicians Association, I decided I should oblige.
Consumer Confidence & The NASDAQ…..Who Leads Who?
A closer look at the relationship between Consumer Confidence and the NASDAQ over the last three years.
Valuations…..Most Bear Markets End Around Median P/E Levels
Earnings are rebounding strongly. S&P operating earnings estimates are up 21% from 2001 to 2002, and up 23% from 2002 and 2003. Severe cost cutting may not be fully factored into analyst estimates. Look for upside earning surprise.
November Mutual Fund Flows
November’s moderately positive cash flow ends five consecutive months of net redemptions.
The VLT Momentum Indicators…..New Buy Signals On S&P 500 & DJIA
VLT Momentum, a long term technical measure, recorded buy signals on S&P 500 and DJIA. This is a very reliable indicator.
Insider Block Measures....Bullish
You may notice we have raised the buy and sell zone going back to 1997. The reason for this adjustment becomes pretty clear when you look at how the dollar volume of big block net selling has been trending upward since 1997.
View From The North Country
Thermal pollution time again. Leuthold’s New Year predictions for 2003.
Eight Weeks Up....Now What?
Assessing Market Risk. We see minor or minimal risk from the economy, inflation, and earnings. But, terrorist attacks and valuations could be more significant risk. Iraq is a moderate short term risk.
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