Wednesday, July 19, 2017

Are Stocks Overpriced and Ready For A Correction?

The Matrix shows us that many of the US indices are out-of-alignment in July. This suggests at least profit-taking and consolidation.  While many highly skilled traders are expecting a pullback that tests critical support, all be the best continue  to be proven wrong sentiment longer term.

The average bull and bear annualized returns for the sentiment model are 30% and -10% in 2017, respectively.  This dwarfs the buy and hold return of 7%.  These number improve significantly risk is adjusted for upside and downside alignment of price and volume.

Headline: Here's why the stock market is not overpriced

The state of the markets as earnings season begins: are we really overpriced?

Earnings season begins this week in earnest, with reports from Bank of America, IBM and Visa, among others. But there is a growing chorus of voices insisting that the market is topping out. The worries revolve around four main complaints: 1) The bull market is eight years old, few bulls have lasted longer and it is reaching the end of its lifespan, 2) The Fed will have a tougher time than anticipated managing the reduction of its balance sheet and increasing rates, 3) Political developments (lack of progress on tax cuts) are already slowing the advance of the markets and 4) The stock market, particularly technology, is overpriced.



Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.