Investors Keep Faith in U.S. Stocks as Dip Gives Buy Sign – Bloomberg 07-11-1

Salient to Investors:

  • Craig Hodges at Hodges Small Cap Fund said any slump in the market will be temporary and a buying opportunity as there is still a lot of money on the sidelines. Hodges is 10 percent in cash, and likes airlines.
  • Greg Taylor at Aurion Capital Mgmt said they are getting their buy tickets ready.
  • Raymond James says equities are vulnerable.
  • Citigroup is concerned about a severe pullback.
  • Douglas Ramsey at Leuthold said they are cutting stock holdings in tactical funds to 60 percent from 65 percent on expectation of a 6 to 8 percent correction this summer before the market resumes later in 2014.
  • Mark Luschini at Janney Montgomery Scott said over the long-term equities are supported by an expanding economy and improving labor market, and there is still too much sideline cash at too many under-invested institutional investors that would quickly put a floor under equities.
  • The S&P 500 is at 18 times earnings, the highest since 2010.
  • The S&P 500 put/call ratio is 2.1, the most since 2008. The VIX call-to-put ratio of 3.7 is the highest since before the financial crisis.
  • The median economists predicts half2 GDP will grow 3.1 percent.

Read the full article at http://www.bloomberg.com/news/2014-07-11/investors-keep-faith-in-u-s-stocks-as-dip-gives-buy-sign.html

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Defensive Trading Undone in $2 Trillion S&P 500 Rally – Bloomberg 07-07-14

Salient to Investors:

  • Rotating into defensive industries has been a losing strategy for the third straight year as personal spending, manufacturing and inflation have exceeded analyst forecasts.
  • The median projection says Q2 GDP grew 3.5 percent.
  • Inflows into health-care and utility ETFs exceed $3 billion in 2014 versus $580 million inflows for tech ETFs and outflows of $3.4 billion for consumer discretionary ETFs.
  • Jeff Korzenik at Fifth Third Bancorp said the jobs report is a clear sign of continued and accelerating economic strength, and says the cyclical leadership in many ways will become more pronounced.
  • Doug Ramsey at Leuthold Group said the very broad move to new highs generally means that the earliest the bull market would top out is 4 to 6 months out at a minimum.
  • Oliver Pursche at Gary Goldberg Financial Services is surprised that the overall risk-off attitude being reflected in fixed-income markets has not caused outperformance in high-quality, dividend-paying stocks.
  • Analysts estimate profits at semiconductor makers to increase 34 percent in 2014 versus 7.5 percent for the S&P 500.
  • Robert Pavlik at Banyan Partners expects a stronger market as consumers grow a lot more confident as the economy starts to show a slight improvement.

Read the full article at http://www.bloomberg.com/news/2014-07-07/defense-trade-coming-undone-in-2-trillion-s-p-500-rally.html

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Is an Aging Bull Market Seeking a Correction? – Bloomberg BusinessWeek 03-27-13

Salient to Investors:

InvesTech Research say it has been 18 months since the S&P 500 had a 10 percent correction. Leuthold Group said only 7 of the 22 bull runs since 1900 have lasted four years; of which 5 lasted at least an additional year. The 1920s bull rose 500 percent over 8 years before 1929.

Doug Ramsey at Leuthold Group said another month of gains might lure in more of the fence-sitters and set up a ‘Sell In May and Go Away’ scenario. Ramsey said we are in the Year of the Snake – the only one of the 12 animal years to historically post negative returns.

The S&P 500 is at 15.4 times earnings versus the average 19.9 in bull markets since 1962 and less than any record high since 1980. The cyclically adjusted P/E ratio, or CAPE, which predicted big downturns in 1929, 1999, and 2008, is at 23 versus a median P/E ratio of 16 since the late 1800s and 44 in 1999.

ICI says individual investors have added almost $20 billion to US stock funds in 2013 – 3.5 percent of their equity withdrawals since 2007.

Read the full article at http://www.businessweek.com/articles/2013-03-27/is-an-aging-bull-market-seeking-a-correction#r=rss

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