Thursday Outlook: Market Cynicism

June 3, 2009



Some have predicted a “Zombie Summer” which might be right as investors await proof that a real economic recovery is in the offing. But, just when you thought they might break this camp job they’ve been working on we got the obligatory “stick save” into the close.

Evidently job losses were “worse than expected” and some noted bulls thought the market was expensive which is pretty funny since most of the financial media still report PEs incorrectly. Bloomberg, which should know better, has PEs at 15 for the S&P 500 by using operating earnings which omits unusual items (losses and writedowns?) making stocks look cheaper than they are vs. just using GAAP trailing earnings. The latter would put PEs at astronomical levels greater than 30. So as things go it’s however The Powers That Be want to spin it.

Volume continues to be light and breadth today was negative.

click to enlarge




I usually just post the above chart measuring ultra-short-term conditions. You might find the longer-term “Summation Index” more meaningful. As you can see it’s overbought at over 1000.

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