In my opinion the market is generally over priced. In a generally over priced market it should be easier to make money on the downside. There are two ratios used to value the overall market; the first compares the US GDP ( strictly it should be GNP but they are nearly the same ) to the sum total of all stock capital. The second one compares the Wiltshire 5000 to GDP both are Warren Buffet ratios. Check this article out https://www.advisorperspectives.com...dated-look-at-the-buffett-valuation-indicator We currently have a ratio around 120% indicating the market is over inflated by 20%. The only time it has been higher since the 1970's was in 2000 during the dot com boom when it was 140% - 150 %. Of course if we were to get some sharp rises in GDP everything could come back into balance, that is if the market failed to react by raising stock prices. The other thing that could happen is that there could be a market correction, but it would not fall 20% as there would be an over correction to between 50% and 80% of GDP so a drop of between 40% and 70%. It is obvious in a generally overpriced market the the average Earnings Report will disappoint. It should only be a matter of picking the failing companies out from the Earnings report calendar and shorting the stock.
February Worst Month of Post-Election Years Usually the weak link in the Best Six months, February tends to follow the current trend, though big January gains often correct or consolidate during the month of Valentines and Presidents as Wall Street evaluates and adjusts market outlooks based on January’s performance. Since 1950, January S&P 500 gains of 2% or more corrected or consolidated in February 62.1% of the time. In the 20 years that the S&P 500 gained 4% or more in January, 65.0% of the time the S&P declined or finished flat (less than 1% gain) in February. Since 1950, February is up slightly more than half the time and, depending on the index, up marginally on average. However, small cap stocks, benefiting from “January Effect” carry over; tend to outpace large cap stocks in February. The Russell 2000 index of small cap stocks turns in an average gain of 1.2% in February since 1979—just the seventh best month for that benchmark. February’s post-election year performance since 1950 is miserable, ranking dead last for S&P 500, NASDAQ, Russell 1000 and Russell 2000. Average losses have been sizable: -1.8%, -3.9%, -1.9%, and -2.0% respectively. February is eleventh for DJIA with an average loss of 1.4%. February 2001 and 2009 were exceptionally brutal.
Just a chart showing 6 of the last 7 times you will definitely be able to get better prices after the vix has hit the lows under 10.40 So much complacency in the market right now. Even if it is a couple percent, why are you buying right now??
great thread for a brand new baby bear have always been more of a bull but there is something to be said for the bears and i will be playing with them now, especially with the crap companies that rocket up only to come crashing down
Also pulled everything out of US stocks actually today, I'm short the Nasdaq and my 401k is in international markets likely for the next 6 months. Yes I am currently down lol
I think this February is going to be one to remember. The 2016 February bottom may be a 360 degree reversal marking the 2017 top. And that is if we make it there. I feel like this would be very normal price action over the next multiple month.
First 100 Days of New, Elected Administrations: S&P 500 Slumps in February Earlier in the year we examined the markets performance from Election Day to Inauguration Day and at the end of the first 100 days of newly elected presidential administrations. Since 1950 there have been nine elected new presidents, five were Republicans and four were Democrats. In the above chart, the average S&P 500 performance during new presidents first 100 days in office is plotted. Only Democrats, only Republicans, both parties and the Trump administrations (through today’s close) are compared. At the end of the first 100 days, new Democrats were accompanied by the greatest average S&P 500 gains. However, regardless of party, S&P 500 did reach an early February peak before moving lower through the balance of the month. S&P 500 performance during President Trump’s first week in office has been above average when compared to past Republican administrations, but is still lagging new Democrats.
Island Reversal. Seriously want to see a gap down tomorrow...oh that would be so so nice. Get the bulls scurrying in a hurry.
First 100 Days Update: Tracking Past Republican Administrations Including today, the market has completed thirteen trading days since President Trump was inaugurated into office. As of today S&P 500 has climbed a modest 1.03% since its close on Inauguration Day. This performance is slightly better than the 0.64% average gain of past newly elected Republican Presidents, but lags that of past Democrats by about 2.4%. Historically, it has been around this part of February when the S&P 500 retreated. A repeat of this pattern is not out of the questions given February’s poor performance in past post-election years and the S&P 500’s recent struggles with 2300.
Six for Six Feb 14, 2017 Before the open this morning when we saw the above headline, our natural inclination was to think that equity futures were showing a rather sizable decline. So we were surprised when we looked at the market and S&P futures were down just one point, even as fair value was down three points. In other words, despite the negative headline, futures were indicating a flat to positive open! This morning’s episode is just one more in the long list of examples where investors, pundits, and headline writers have been chomping at the bit to put the nail in this rally. It seems like every day, there’s a negative headline saying what’s wrong with the market, but by the time the closing bell rings, stocks finish in the green. Today’s rally has made it six straight days of gains for the S&P 500. Since the bull market began in March 2009, this is the 18th streak of at least six straight daily gains for the S&P 500. In the table below, we highlight each of these streaks. In each row, the date represents day six of the winning streak, and with each streak, we also show how long the streak lasted, how much the S&P 500 gained in the first six trading days, as well as how it traded the following day. As shown in the list, in the early years of this bull market, the S&P 500 had a hard time making it to lucky number seven as the first ten streaks ended at six trading days. Since then, though, the S&P 500’s record on day seven has been more evenly split with four gains and three losses. Overall, just four of the streaks during this bull market have lasted more than six days, and the longest streak was eight days. Finally, while the current rally has been fun for the bulls, the 1.8% gain is on the weak side. Overall, the average six trading day gain during prior streaks has been over 3%. Let’s not get greedy, though!
Presidents’ Day: Historically Bearish Day Before & After Page 88 of the Stock Trader’s Almanac 2017, points out Presidents’ Day as the poorest performing holiday of the eight holidays that are tracked. Unlike the others, the trading day before and the trading day after this three-day holiday weekend are both down on average over the past 34 years. Depending on how February lays out in a monthly calendar, the Tuesday after Presidents’ Day is either the first trading day of option expiration week or the week after options expiration week. In the tables below, the years when Presidents’ Day occurs in the week after option expiration are highlighted. This year, Presidents’ Day falls in the week after options expiration. Since 2011, the market’s performance around before and after the long holiday weekend has improved, most notably during the last three years. Some of this recent improvement could have been the result of sizable losses in January and the ensuing rebound rally. January was positive this year and the market has been storming higher into record territory, a long holiday weekend could be just the excuse traders need to trim long positions and book some profits.
If anyone is curious...yes I got mauled over by the bulls. Yes I sitll have half of my position after covering half for a big loss. I think we see lower in the coming months...I will wait for some confirmation to average in against these highs.
I price the market aroun 2100 right now. Gold is calling BS on this move. TLT hasn't fallen. This is euphoria...can I be wrong...sure...but what happens if these days are given back in 2 weeks?
End of February Can Disappoint Bulls Over the most recent 21-year time span the end of February has been tepid. The bulk of the weakness appears to land on the last trading day of the month or the penultimate trading day, but it can begin as early as the fourth to last trading day. This weakness has been evident in Februarys with a gain or a loss. Perhaps it is the winding down of earnings season that triggers weakness in some years. This weakness can be seen graphically in an earlier post titled “Mid-February Historically Stronger then Beginning or End.”
