About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Monday, January 06, 2020

SPX -- Notes

SPX is positive but is overbought, overvalued and hyper-extended long term.

Primary monetary liquidity measures positive and accelerating.
Earnings indicators -- Currently flat to down. Forward view suggests return of positive profits
at some point in 2020.
SPX earning power in 2020 estimated at $170.
Fair value for SPX now 2800.
SPX is currently about 16% above fair value.
P/E premium is at 2.6 multiples above fair value.
Current P/E of 19.1x reflects market player expectations of moderate profits growth coupled
with continuing easy money and low inflation.
Inflation pressure gauges have turned up but only slightly so.
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Chart shows positive turn in important MACD longer range indicator (lower panel on chart).
SPX is at 8% + to 40 wk m/a. and is approaching heavy intermediate term overbought area.
Contrarian sentiment indicators (not shown) are just below too confident danger zones.
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Both 2020 presidential race and renewed US / Iran conflict are in phases that are too early
for sensible market commentary and are still too much subject to conjecture.

SPX Weekly Chart

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