The continued saga over the central bank printing press is creating a degree of moral hazard never seen before. In the S&P 500, there are about 10% of companies that do not earn enough to cover their interest payments and about 150 that are not
Basic economics is the analysis of supply and demand. For markets, we get the added layer of fear and greed or the emotional quotient. The emotional aspect is what causes the extremes. Liquidity analysis we are considering here is more about the quality aspect. For
With options expiry this week, we wanted to have a look at the impact it’s having on markets. IT’S HUGE. In the past week we have seen all-time call volume records challenged (viewers can follow the CBOE data here). Seems the new stimulus checks are
Strong breadth readings are generally bullish for the markets. The more stocks that are participating the better. We saw a massive breadth thrust around the US election and following the announcements of high efficacy on the vaccines. This week as part of our PRO-EYEs series,
Historically the last show of the year I do my fearless forecast for the coming year. This year it’s bleak from a pure valuation perspective. But from a liquidity perspective, it’s up, up, and away. Our first table shows the Street has an average 23.69
The next indicator in our PRO-II (Pro-Eyes) series looks at seasonality patterns. Like many indicators, they tend to be relatively short-term in nature and scope. Seasonality is one of them. This can be helpful for tactical trades or timing of potential entries into expected periods
The put/call ratio offers a good reading on shorter-term speculation. The standard is a one week average perspective to smooth out the day to day noise. We also look at a one month perspective, where we are seeing even stronger readings. It often takes weeks
Last week we discussed the extreme bullish readings in the AAII Sentiment survey. Statistically, the difference between the bulls and the bears was at the 95% confidence interval. Historically, this marks an extreme condition and on average, the probability of return over the next year
My approach to markets are mostly about understanding the probabilities of upside returns versus downside risks. In this regard, 2020 provides clarity with the benefit of hindsight. In a recession like we have experienced, this would be the first one since records began, where we
Over the past decade, outside of a handful of large technology companies, earnings per share (EPS) growth has, in part, been a function of financial engineering (by way of share buybacks). All this is made possible by low interest rates. As governments continue to pile