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.
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.
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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