Investing Links of Interest – May 21, 2013
Raymond James‘ chief market strategist Jeff Saut recently delivered a bullish forecast at Minyanville and elaborates on his discussion with Rich Bernstein, who believes the bull market is only in the 4th or 5th innings. Saut doesn’t see the market correcting in the near-term, but later in the summer the potential exists for a decent pullback. Saut, who has been correctly bullish throughout the bull market, gave his reasoning on why stock market dips should be bought back in March [link].
Excerpt from the Minyanville article posted May 20th:
The negative nabobs that continue to call this rally just a “tactical rally” in an ongoing “secular bear” market, as they have for more than four years, should consider this: The equally weighted S&P 500 made a new all-time high in April 2011, and made another new all-time high in March of last year, and has been pointing the way higher ever since (see chart below). I, like Rich Bernstein, think this “bull” has a lot further to run. I do, however, think the equity market will become vulnerable to a decent pullback in the July/August time frame.
Thomas Furda, writing at Seeking Alpha, reports on the lackluster performance of emerging markets equities versus US stocks which may be attributable to a lack of dividend growth.
Investors may hear strategists arguing that emerging markets are ‘cheap’, but in terms of payback to shareholders via dividends, they are not.
Source: Seeking Alpha
Lance Roberts of Street Talks Live Blog, in a piece submitted to Zero Hedge, points out how statistically overbought the market currently is.
At the peaks of the “Internet Bubble” and the “Credit/Housing Bubble” the market never got significantly above 2-standard deviations. Today, we are encroaching well into 3-standard deviation territory.
The current level of overbought conditions combined with extreme complacency in the market leave unwitting investors in danger of a more severe correction than currently anticipated. A correction to the long term moving average (currently around 1350) would entail an 18.5% correction. A correction to 2-standard deviations below the long term moving average (which is most common within a mean reversion process) would slap investors with 33% loss.
Source: Zero Hedge
Mark Hanna at Market Montage finds the S&P 500 is hitting historical extremes on monthly and weekly charts.
Monthly – we’ve never been this far above the upper bollinger band in the S&P 500 during the last 15 years, and that includes the 1999 stock market bubble (which was more NASDAQ focused of course!)
Source: Market Montage