Week Ahead Magazine: September 21, 2014

Posted by David Templeton on Sunday, September 21, 2014
A fairly eventful week last week with the Fed's policy decision essentially leaving rates unchanged and retaining the "considerable time" language in its rate announcement. Alibaba's (BABA) IPO was one for the record books in terms of size. Before investors jump in to buy the stock they should read Aswath Damodaran's commentary on the corporate structure of BABA. With those two items now in the rear-view mirror, the market managed to generate mostly positive returns last week. The one segment of...
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The Myth Of High Structural Unemployment

Posted by David Templeton on Sunday, September 21, 2014
It has been almost a year since taking a look at the Beveridge Curve. In the earlier posts we noted the curve compares the unemployment rate with the job vacancy rate. The job vacancy measure we have used in prior posts is the data from the Job Openings and Labor Turnover Survey or JOLTS report. The limitation of the JOLTS report is data only began to be collected in December 2010. The importance of the Beveridge Curve analysis is the graph provides insight into potential structural unemployment...
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Implications Of A Strengthening Dollar And Foreign Sales For S&P 500 Companies

Posted by David Templeton on Saturday, September 20, 2014
In a recently released report by S&P Dow Jones Indices and authored by Howard Silverblatt, Senior Index Analyst, an analysis is provided for the sales generated outside the U.S. for S&P 500 companies. Although the reporting of foreign sales data is less than complete, S&P's report provides detail on the 239 companies that do provide foreign sales data. The report provides a comprehensive discussion on the companies used in the analysis with a snapshot provided below.From The Blog of HORAN Capita...
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Week Ahead Magazine: September 14, 2014

Posted by David Templeton on Sunday, September 14, 2014
Although much of the economic news last week came in on the positive side, the major U.S. indices were unable to move to the upside. As we noted in our earlier post today, September And Beyond, investors seem focused on the Fed meeting this week and the Fed's viewpoint on the economy and timing of interest rate increases. In spite of the market pullback last week, the S&P 500 Index is down only 1.1% from the high reached on September 5th.Potential market moving economic news in the coming week:I...
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September And Beyond

Posted by David Templeton on Sunday, September 14, 2014
Taking a look at some technical and fundamental data points that have evolved in September, below we provide insight into our thoughts on the market over the next few quarters.We look at a number of technical indicators, i.e., charting technicals, in an effort to gain some insight into investors' trading sentiment. A number of recent technical indicators have, what we would call, rolled over, which is a negative from a short term market direction point of view. As the below chart indicates, both...
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Risk Versus Volatility

Posted by David Templeton on Sunday, September 07, 2014
Howard Marks, Chairman of Oaktree Capital Markets released his most recent client letter, Risk Revisted. As Marks notes in his letter, he dedicated three chapters of his book, The Most Important Thing, on the subject of risk. In his client letter, he expands on risk and discusses 24 different forms of risk. A couple of highlights from his client letter:There’s little I believe in more than Albert Einstein’s observation: “Not everything that counts can be counted, and not everything that can be c...
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Week Ahead Magazine: September 7, 2014

Posted by David Templeton on Sunday, September 07, 2014
Last week's holiday shortened trading saw fractional gains in most major U.S equity indexes except for the small cap Russell 200 Index. The small cap index declined .4% on the week and only remains up .6% for the year. Small caps continue to lag the broader S&P 500 Index which is higher by 8.6% year to date through Friday's close. The one piece of weak economic news reported last week was the +142,000 increase in non-farm payrolls. The consensus estimate prior to the release was an anticipated i...
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Individual Investors Not Overly Bullish

Posted by David Templeton on Thursday, September 04, 2014
This week's sentiment survey from the American Association of Individual Investors notes bullish sentiment declined 7.25 percentage points to 44.67%. Two thirds of the decline went into the bearish category while the other one third went into the neutral category.  A less volatile measure is the 8-period moving average of the bullish sentiment reading and it rose to 38.3% from last week's 37.4%. The 8-period moving average is not indicating either an overly bullish sentiment or an overly bearish...
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Current Stock Rally Below Average In Magnitude

Posted by David Templeton on Wednesday, September 03, 2014
"With the S&P 500 trading above 2,000 for the first time in history, today's chart provides some perspective to current rally by plotting all major S&P 500 rallies of the last 82 years. With the S&P 500 up 91% since its October 2011 lows (the 2011 correction resulted in a significant 19.4% decline), the current rally is slightly below average in magnitude above average in duration. In fact, of the 23 rallies plotted on today's chart, the current rally would rank 7th in duration."Notes:- A major ...
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Dividend Payers' Return Lags Non Payers In August

Posted by David Templeton on Tuesday, September 02, 2014
The equal weighted return of the dividend payers in the S&P 500 Index continues to lag the return of the non payers in August. As a consolation though, the payers equal weighted return is ahead of the cap weighted S&P 500 Index on a YTD and 12-month basis.From The Blog of HORAN Capital AdvisorsSource: S&P Dow Jones IndicesThis equal weighted outperformance of the non-payers has carried over into the performance of Guggenheim's equal weighted S&P 500 Index (RSP) versus the cap weighted S&P Index ...
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