Chicken Little, meet CAPE

Posted on Mar 05, 2017 by .

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http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=0&mn=6&dy=0&id=p70142979615&a=266398464

The musical score of this market is furnished by chickens clucking.  Incessantly.  The more the sky doesn’t fall the more insistent the clucking becomes.  The P/E ratio is too high.  Cluck cluck.  S&P P/E 26.75 at the moment, against an average of 15.64 (median 14.65, minimum 5.31, maximum 123.73).  A good time for a teachable moment.  The P/E is not a definitive indicator.  It is a debateable tool in the never ending search for the philosopher’s stone — which ever flees before us like a holy grail.  And there is no known tool which reliably identifies the top.  Long term trendline breaks  are very useful, and even short term breaks are indicative.

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Holy Moly Batman. Market Rocket blasts off!

Posted on Mar 01, 2017 by .

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http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=0&mn=6&dy=0&id=p70142979615&a=266398464

Imagine waking up and discovering you are 1.3% richer in one day before breakfast.  303 points in the Dow, 32 points in the SPX — how much of this is due to Trump and how much to the technical structure of the market.  Of course there is no way to know definitively–that is the nature of the market.  Some of the jungle drums are attributing  today’s rocket to paniced short covering.  A very likely hypothesis.  Anyway unless you were already long you would have been chasing the train down the tracks

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