Posts filed under “Technical Analysis”

Wall Street (Still) Lukewarm on Equities

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Merrill Lynch continues to point out that the Street remains unenthusiastic about stocks:

Sentiment ticks up to highest in 13mos, but still far from bullish
The Sell Side Indicator — our measure of Wall Street’s bullishness on stocks — ticked up just slightly in June to 49.8 from 49.6. The indicator has improved in eight of the last eleven months after hitting an all-time low of 43.9 last July, and is now at its highest level since May 2012, when it first flashed a “Buy” signal. The indicator still remains firmly in “Buy” territory, however, as Wall Street’s bearishness on equities remains at extreme levels relative to history. Given the contrarian nature of this indicator, we remain encouraged by Wall Street’s ongoing lack of optimism and the fact that strategists are recommending that investors significantly underweight equities at 49.8% vs. a traditional long-term average benchmark weighting of 60-65%. Even though the S&P 500 climbed 20% from when sentiment bottomed to its all-time-high in May, history suggests that strong equity returns can last for years after the indicator troughs.

Indicator’s expected 12-month total return is +24%
With the S&P 500’s indicated dividend yield above 2%, that implies a 12-month price return of 22% and a 12-month value of 1955. Although this is not our S&P 500 target, this model is an input into our target, which incorporates valuation, sentiment and technicals. Historically, when our indicator has been below 50, total returns over the subsequent 12 months have been positive 100% of the time, with median 12-month returns of +30%. Past performance is not an indication of future results.

A reliable contrarian indicator
The Sell Side Indicator is based on the average recommended equity allocation of Wall Street strategists as of the last business day of each month. We have found that Wall Street’s consensus equity allocation has historically been a reliable contrary indicator. In other words, it has historically been a bullish signal when Wall Street was extremely bearish, and vice versa. See our December report for more details on the Sell Side Indicator.

Very interesting stuff . . .

 

 

Source:
Sell Side Indicator: Wall Street Still Lukewarm on Equities
Savita Subramanian
Merrill Lynch Research, 01 July 2013

Category: Sentiment, Technical Analysis

Is Gold Overdue for a Bounce?

Back in my days as a trader, I would peruse the lists of 52 week lows looking for reversal candidates. The key was finding an intelligent entry that had a very tight stop, so it presented a good risk reward. I am happy to risk one dollar to make three. Slowly build the position over…Read More

Category: Currency, Gold & Precious Metals, Technical Analysis, Trading

50 Year Chart: Stocks, Bonds & Gold

Click to enlarge   Yesterday, in response to our post on how wrong the public was back in this 2011 Gallup poll, the following suggestion was made: Which asset performed best is dependent on your definition of “long term”. 2011-2013 is at best medium term. Long term to most people means decades, 20 years or…Read More

Category: Fixed Income/Interest Rates, Gold & Precious Metals, Investing, Technical Analysis

Equity Market Review for June 18th 2013

Click to enlarge Major U.S. indices such as the S&P 500 and the NASDAQ Composite have both recently stabilized and bounced for the second time off their respective 50 day moving averages.  Though historically June tends to be a negative month for stocks, with only 9 trading days left in the quarter we wonder aloud…Read More

Category: Technical Analysis, Think Tank

Equity Market Review for June 13 2013

Category: Technical Analysis, Think Tank

Major Asset Classes: 1850 – Present

Click to enlarge   I do not ever recall seeing all these in one place in one chart: S&P 500, DJIA, Gold, Silver, West Texas Intermediate, Total Debt as a % of GDP and the US 10yr to 1850. Many of these are at or close to all time highs. (Note the exception is the…Read More

Category: Cycles, Data Analysis, Technical Analysis

S&P500 Index to Profits at all U.S. companies

Click to enlarge     I have to admit: I have never seen this ratio before. Standard & Poor’s 500 Index to profits at all U.S. companies. Its a price to earnings ratio of the main US stock market against ALL US earnings. According to this little used, odd ratio, Stocks are much cheaper after…Read More

Category: Earnings, Technical Analysis, Valuation

Saut: Hindenburg Omen Is Just Hot Air

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Video

Source: Yahoo

Category: Technical Analysis, Video

Question: What Is Driving Hindenburg Omen Internals?

Source: Stockcharts     Definition: Hindenburg Omen is triggered when: (1) more than 2.2% of stocks on the NYSE are at 52-week highs AND more than 2.2% are at 52-week lows, (2) the 50-day moving average is trending higher, (3) the McClellan Oscillator is negative, and (4) new 52-week highs don’t exceed new lows by…Read More

Category: Markets, Sentiment, Technical Analysis

Why Do People Fear the Hindenburg Omen?

Not a track record to be proud of: Source: Moneybeat     Previously: Hindenburg Omen? Put a Fork In It.  (March 26th, 2011) The PermaBear to English Translation Guide (October 15th, 2010)

Category: Really, really bad calls, Technical Analysis