A view to a kill!

COMP SHOT JULY 24TH 2017

what’s more at the top? More of the top.

Last week all the indices hit all time high.  How far is far enough?

when P/E is constant, then the risk premium is constant.

P/E has been hovering for S&P Index around 20.5 for the last and half year (DEC 2015 to June 2017) .   earning increased from 100 dollars to 116 dollars around 16%

So mostly the gain in S&P came from the gain in real earnings of the companies!

So assuming just the earning to grow by 10% (very reasonable..just the growth %) and P/E = 20.5 as constant

then S&P would be (116+10% of 116)  * 20.5= 2615 – a gain of 144 points from today.

the leading economic indicators – % change has been positive for the last 10 months!

around 65 % of stock market is about its 75 days moving average.

Now value of companies according to the theory is based on discounted value of the cash flow. because of low interest rates companies can borrow much with little interest paid. Hence expansion, hence earnings growth!

Happy trading!

“The market can stay irrational longer than you can stay solvent.” –  John Maynard Keynes

 

 

Entered into new position this morning

Good Morning.

As i said in last post, market is in correction. I have entered into 1 new position – ultra short of QQQ.

The ticker is QID. It is not a short position, but long (bought) position.

It is double the reverse of nasdaq.

Reason for entering : It just crossed above the 75 day SMA, and market is in correction

Does valuation matter for our style of trading?

Good Morning

this morning i read this in yahoo finance (note the 20/20 vision looking at the past) – “To those poor souls Trennert suggests backing up and remembering that valuation always matters. Corrections lead to selling that takes down blue chips as well as garbage names.”

I am not a poor soul, I did not get into the market. Because the market is still in correction (How long or how short time will tell).

Let me again empathize the fundamental difference. I trade based on one and only one thing – Price.

I have one and only one signal – 75 day Simple Moving Average.

DMSI, and IBD big picture help me a lot in confirming my signal.

So valuation based on opinions don’t matter in my style of trading.

Happy trading.