|Written by Rob Goldman|
Ugly market, a major bellwether losing fans, indices breaching death crosses, 6 straight down days for the Dow Jones Industrial Average, and we are nearing a corrective phase for small caps.
I love this market! Well, within reason. See why all these and other factors foretell good tidings ahead and cement the fact that we are in a stock picker’s market which is good for you and in our wheelhouse as we head into the fall.
With the current circus political atmosphere and jittery investment environment I think we all would like to see something different. So this week’s Guide offers a change of pace with “12 Things I’d Like to See” in popular culture and politics. It is sure to give you a chuckle or ten. Think of it also as a series of “What If’s?”
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THE REAL MISSION IMPOSSIBLEYes, the latest installment of the Mission Impossible move series (Rogue Nation) took the top spot again at the box office. The real mission impossible is trying to film a bull charging at you and getting out of harm’s way. Or so some schmuck in Toledo, Spain learned as he was gored to death.
Of course with the lousy market last week, some investors may feel that it is impossible to properly gauge the market direction or sentiment. While equally frustrated I think too many pros are missing the forest for the trees. Here’s why:
12 Things I’d Like to See
Clearly all of the current negativity bodes well for the fall. Barron’s is now recommending investors buy gold and oil Me? I think it is too early. We were early a few months ago and it seems that until prices stabilize, particularly oil (Iran deal, anyone?) spending will not be strong. From the stock perspective, it is a hard pill to swallow when the darling (NASDAQ—AAPL) is taking it up the gas pipe while we near correction territory in small caps. All that means is that it is truly a stock picker’s market and valuations will start to look very nice sooner than you think. We just have to grin and bear it until some of the nervousness shakes itself out. To help out in that regard, here are 12 Things I’d Like to See while we wait for the things to turn.
⇒ Tim Tebow and Arian Foster on the same team
⇒ Elon Musk and Richard Branson collaborate on a new transportation project
⇒ Sean Hannity and Jon Stewart stuck in a car together for an hour
⇒ A DNA test on James Holmes and John Lydon
⇒ More righteous indignation about the country’s direction from the other Republican candidates and some substantive ideas from Donald Trump
⇒ Lois Lerner and Hillary Clinton share email practices
⇒ Nationwide mandate for mounted body cameras on cops
⇒ The IQs of WEtv reality programming viewers
⇒ If Bill Belichick and Tom Brady can resist the urge to cross a line in their path
After last week’s rough market, Republican Presidential candidates debates and other news, it is time to look at news that is at the top of the food chain and under the radar.
Wall Street Journal
Just the Stats!
AAII Sentiment Survey (courtesy of AAII.com, figures rounded)
Unlike last week which saw a big swing for Bears, the Neutral category rose while Bears declined. Look for more volatility this week as Apple and other bulls find excuses to prop up the stocks after the selloff of late. The poll below shows increases in Bulls and Bears but reduction in Neutral. Huh? Shows the paralysis and lack of convictions.
Just the Stats, II!
How ugly is it out there? Well, the Russell 2000 Index is down 6.9% from its high, nearing the 10% corrective territory. Only 1 out of the four major indices we track is above its 200 DMA. That is the NASDAQ and any hits to it would drop it below that mark.
Conversely, it really won’t take a whole lot to change the fortunes of these indices. By the way, the Russell 2000 forward 12 month P/E is 19.3, below the NASDAQ 100 while the S&P 500
P/E, at 17.8x, is reasonable but not table-pound worthy.
4.8: The weekly percentage decline in Apple. At $115, it is 5 points below the $120 DMA-200 and at its lowest point since early 2015. I think you can get $20 in it in the next few months with bulls getting behind the stock. It trades 11.8x FY16 EPS.
6: The number of days in a row the DJIA has declined.
10: Biotech and health care funds have enjoyed 10 straight weeks of fund inflows though you would not know it judging by recent trading. Are retail investors crossing out institutional ones with more carnage in the cards?
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