above is a weekly close for QLD.
QLD which is 2X Nasdaq 100 appears to have hit a plateau 2 weeks in a row 10/16 and then last few days.
last 4 trading sessions NASDAQ hit 3 distribution days – which is concerning.
On 5/29 week QLD closed 62.65, where as the MA 20 Weeks was 53.67 – 8.98 dollars difference! about 14 %. Then it dropped by 6.3 dollars (around 10%)
The situtation is not that bad now – the difference between the two (MA and the price ) is about 4 %
Now for the current scenario – the ATR 20 DAYS is 2.43.
So lets wait and see. No clear sell as yet
The Misery Index is 5.5% today. Historically, when the Misery Index has been this low, the S&P 500 P/E has ranged from about 15x to 35x with many instances of 25x and above. The all-time low of the Misery Index from 1960 through September 2017 was February 1966 at 5.28%. The all-time high was in 1975 at 18.56%.
A year ago, the Misery Index was 6.74%. The index is down roughly -18% in the past twelve months and the S&P 500 is up 21%. For now, the index is low and continues to decline which is constructive for further stock price advances. In the coming months, it will be interesting to see if the Misery Index is able to drop to new all-time lows.
Source : delta market sentiment
IBD has this – “When it comes to overall market health, what’s interesting to note is that the market has moved from a high distribution-day count in the S&P 500 and Nasdaq and overall healthy action in leading growth stocks to a low distribution-day count and suspect action in some leading growth stocks. Many leaders are still acting fine, while others have turned sluggish.”
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!
“The market can stay irrational longer than you can stay solvent.” – John Maynard Keynes