Category Archives: Markets Views & Analysis

What is Volatility Telling us About Markets

Another factor in our Probable Return on Investment Index, PRO-II (pronounced Pro Eyes) Indicator is volatility. We look at two aspects: 1. Expectations for volatility for the next month vs. volatility 4 months from now. 2. Current level of volatility relative to recent trends (quarterly

What Does Market Breadth Tell Us About When We Buy The Dip?

All my valuation models are still off the charts extreme, which means that longer-term forward based returns are likely well below average and correction risks are elevated. Economic conditions overall are supported by massive expectations for more stimulus and central bank support. This factor could/should

Credit Markets Not Pricing Economic Risks Correctly

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

Liquidity Driven Market About to Have Less Liquidity

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

Speculation in Call Volume Hits All-Time Extremes

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 Suggests More Upside Likely

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,

Valuation for US Large Caps Has Never Been Higher

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

Strong November Rally is Stretched and Suggests Some Caution

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

The Quality of Earnings Growth Globally Remains Weak

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