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As we noted Thursday, the American Association of Individual Investors reported a further decline in its bullish sentiment reading. The reported level of 31.6% is near a level indicative of overly bearish investor sentiment. Further confirmation of this bearish sentiment is seen in Friday's equity put/call ratio which is reported at .80. As with the AAII bullish sentiment reading,  the equity put/call ratio is most predictive at extreme levels or above 1.0. Nonetheless, overly bearish investor s...  Read more...

Investors Less Bullish As Market Nears Oversold Level

Posted by David Templeton on Thursday, March 12, 2015 in Wealth Management | Comments (0)
The American Association of Individual Investors reported an 8.2 percentage point decline in bullish investor sentiment to 31.6% this morning. This is the lowest bullishness level since bullish sentiment was reported at 30.89% in early August of 2014.From The Blog of HORAN Capital AdvisorsSource: AAIIThis decline in bullish sentiment has occurred at a time when the S&P 500 Index appears to be nearing an oversold level. As the below chart shows, the technical stochastic indicator has fallen to an...  Read more...
A common occurrence in equity bull market cycles is the fact that a company's valuation, or P/E multiple, expands. This so called multiple expansion is one factor that contributes to overall equity returns during bull market phases. The downside to multiple expansion is it does not occur ad infinitum. As the below chart shows, the P/E multiple for the S&P 500 Index has expanded by 64% by increasing to 17.3x earnings versus 10.6x earnings at the start of the current bull market.From The Blog of H...  Read more...
In prior post over the past year I have highlighted the current market advance as it relates to prior bull markets. This information has been prepared by Chart of the Day and the below chart and commentary updates the comparison for the Dow Jones Industrial Average. The most recent commentary for the S&P 500 Index is included in the post, Current Stock Rally Below Average In Magnitude."The Dow just made another all-time record high. To provide some further perspective to the current Dow rally, a...  Read more...
Near the end of October last year the S&P 500 Index moved into a sideways trading range that has seen the market move back and forth between 1,975 and 2,093. Then on December 19, a spike in up volume occurred that created the top of this trading range. Subsequent to this capitulation buying the market has struggled to recapture this December high mark with the market trading action forming a rising bearish wedge pattern. A rising wedge pattern tends to resolve itself with a market that breaks to...  Read more...
The US Dollar has been on a strengthening trajectory since early 2011 and more so since mid year last year. This move in the Dollar has been a headwind for U.S. domiciled multinational companies earnings, with many firms citing this as a reason for earnings disappointment during this earnings reporting season.From The Blog of HORAN Capital AdvisorsOne belief is investors can avoid this negative currency impact within their investment portfolio by focusing more on small company stocks since small...  Read more...

The S&P 500 Index Nearing A Technical Bounce Level?

Posted by David Templeton on Sunday, February 01, 2015 in Wealth Management | Comments (0)
The month of January was not kind to U.S. equity investors. The S&P 500 Index ended the month down 3.00% and the Dow Jones Industrial Average was down 3.58%. The small cap and mid cap indices did not fare much better. On the surface, European equities appeared to be a bright spot with the S&P Europe 350 Index up 7.27%. However, for a U.S. investor not hedging the Euro/Dollar currency exchange, virtually all of this gain was lost in the currency translation back to the Dollar. The S&P Europe 350 ...  Read more...

How To Profit From An Increase In Oil Prices When It Occurs

Posted by David Templeton on Thursday, January 29, 2015 in Wealth Management | Comments (0)
One investment vehicle that may seem appropriate for participating in an eventual rise in crude oil prices is to invest in an ETF that directly tracks crude oil itself. One such ETF is the United States Oil ETF, ticker USO. There are many others that can be found here. However, investors should be aware that many of these ETFs gain crude oil exposure using futures contracts. Consequently, the ETFs using futures will not track oil prices directly. Several key points investors should be aware of r...  Read more...

Investor Letter Winter 2014: Expectations In The Coming Year

Posted by David Templeton on Saturday, January 24, 2015 in Wealth Management | Comments (0)
We recently published our final Investor Letter for 2014. In the letter we take a look at the market and economy in 2014 and our outlook for 2015. As we comment in the newsletter, investors will be faced with a number of issues in 2015, oil price volatility, currency issues, stimulus programs around the world, just to name a few factors. January has already started with market volatility that me be unsettling to investors. For further insight into our views for 2015, our Investor Letter can be a...  Read more...

Bullish Sentiment Declines But Not At An Extreme Level

Posted by David Templeton on Thursday, January 22, 2015 in Wealth Management | Comments (0)
The American Association of Individual Investors released their Sentiment Survey results for the week ending 1/21/2015. Bullish sentiment declined nine percentage points to 37.1% with all of the change going to the bearish camp. Bearish sentiment increased 9+ percentage points. As the below chart shows, this places the bullish sentiment near the average for this reading. Investors should keep in mind this contrarian sentiment indicator is most predictive of future market direction when readings ...  Read more...
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