3 Bellwether Companies That Lead You To Lucrative Results

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Includes: AAPL, C, GE, SPY
by: Steven Bauer

My five bellwether companies have always provided me with reliable guidance. All of them are super-cap securities that have earned that status. Remarkably, these few companies represent the technology, financial and industrial sectors of the market, very well. They are all supported within the general market index ETF, SPDR S&P 500 (NYSEARCA:SPY). My current three bellwethers are: Apple, Inc. (NASDAQ:AAPL), Citigroup, Inc. (NYSE:C), and General Electric Company (NYSE:GE).

For me, it has worked well for over five decades. The research / analytic process is simple. I use a formula that says: Accurate Forecasts / Positive Confirmations = Profitable Results. ( F / C = R ).

My reasons for focusing on and sharing with you the three bellwethers are quite simple: There is more news, more data, more attention paid to these companies than perhaps a collection of one hundred other companies. In less than 15 minutes time per day reviewing these three companies, I gain a clear confirmation on the near-term direction of the marketplace.

When these companies are bullish (or bearish) many second- and third-tier companies will follow in the same suit. So, when the risk / reward ratio is equal or better, I naturally recommend the best (usually the lower-tier companies) to my clients.

Within my methodology for investing wisely, I evaluate a large number of companies looking for the best. The best may be bullish, or the best may be bearish, depending on the current status of the marketplace. You should know that the best companies to buy or to take short positions in are never neutral. That's one of my tricks for investing wisely that few investors take the time to consider.

I use these bellwether companies because I need a reference point. The indices and indexes of the general market are good, but this group of just three companies is excellent.

The table below is just a quick view of the valuations for these three companies. I suggest that there are two specific areas of analytics for you to take note. The first are the results of my fundamental valuation calculations and the second offers a technical perspective.

* While these valuations are just a couple of my calculations, you will note that my target prices are all (percentage wise) much more negative than positive. Currently, my divergences are also all in the negative zone. Perhaps your question is, or you would like to know - why? It is because my valuation work is the collection of data and doing calculations. At this time, in the marketplace, all are currently much more negative than positive. This happens to be coincident with the S&P Corp. and Haver Analytics current over-all valuation of the entire S&P 500 index.

* You will notice that I have embedded a hyperlink under each target price (chart ). You can click and get a current look at each company's price history for the past 20 years. For me, that is of critical importance. As for relative strength, is the company currently over-valued or over-bought, between or just the opposite? As for the trend or direction, is the company currently going to or coming from? Is the company out-performing or under-performing the SPY index? Shorter-term charts are also of vital importance to wise investing. However, and as you know, short-term charts can get you in big trouble very quickly.

I have mentioned in my recent articles that the signals were suggesting that overall company growth is slowing. There seems to be a flow of early warnings regarding revenue and earnings growth dropping off. Longer-term projections confirm that this negative trend may continue a year or more.

Conservative valuation analytics always anticipates the short-term direction of a company's share price. Technical analysis is nothing more than a fine-tuning of the richest or perhaps the poorest of the valuations.

Valuation Summary for: Apple, Inc.

Current Price:

$572.00

Comments: These are not bullish Valuations and Target Price Projections. The Valuation Divergence is currently negative.

My technicals are also currently "not bullish."

Consensus opinion is still very positive but this data is not ever going to be a leading indicator.

This suggests that AAPL will continue to follow the general market indices.

I do not recommend buying AAPL due my forecast of a general market bearish cycle.

Target Price:

(Click on chart to view my 20-year chart)

Plus 7+% / minus 22+% from the current price.

Valuation Divergence:

(minus) - 24+% from current the price.

Click to enlarge

Valuation Summary for: Citigroup, Inc.

Current Price:

$27.00

Comments: These are not bullish Valuations and Target Price Projections. The Valuation Divergence is currently negative.

My technicals are also currently "not bullish."

Consensus opinion is still very positive but this data is not ever going to be a leading indicator.

This suggests that Citigroup will continue to follow the general market indices.

I do not recommend buying Citigroup due my forecast of a general market bearish cycle.

Target Price:

(Click on chart to view my 20-year chart)

Plus 10+% / minus 22+% from the current price.

Valuation Divergence:

(minus) - 24+% from current the price.

Click to enlarge

Valuation Summary for: General Electric Company

Current Price:

$20.00

Comments: These are not bullish Valuations and Target Price Projections. The Valuation Divergence is currently negative.

My technicals are also currently "not bullish."

Consensus opinion is still very positive but this data is not ever going to be a leading indicator.

This suggests that GE will continue to follow the general market indices.

I do not recommend buying GE due my forecast of a general market bearish cycle.

Target Price:

(Click on chart to view my 20-year chart)

Plus 5+% / minus 22+% from the current price.

Valuation Divergence:

(minus) - 26+% from current the price.

Click to enlarge

Source of raw data: Finviz.

Click to enlarge

My criterion for taking a bullish position is that the company must have the prospect within its fundamental valuation and technical chart to outperform the general market, its sector, and industry group.

Market Status

My general market opinion is that the fundamentals are over valued; the technicals are over bought, and the consensus opinion is way too bullish. I am currently a bear because my valuations are convincingly negative, and we are in a bearish cycle; it's just that simple!

Further support for my guidance for the general market can be read in my weekly Instablog article "Wednesday - General Market Update & Commentary."

Summary

Currently, the above tables and charts present a clear and not-so-positive account of these five companies and the overall market indicators. It is a fact that, the stock market cycles endlessly both fundamentally and technically from bullish to bearish and then back to bullish again. Unfortunately, this is a pattern that is not well-understood or taken advantage of by most investors.

Within this present bearish time frame, there is nothing (longer-term) wrong with these companies. It is simply what happens when they turn bearish, and is just the ongoing "cycling effect" of the way the stock market works. I hope you understand and will continue to follow my work / analytics. It won't be long before I can offer you a bullish and upbeat forecast once again.

May I remind you to take a few minutes to study my 20-year charts? When buying or selling, taking a longer-term view of a security's price history is often the difference between profits and losses!

Conclusion

I am bearish on both the world economies and the general market. My more recent Instablog postings are focused on securities that should not be currently held in your portfolio. I suggest that it is vitally important for you to understand that holding cash during questionable time frames in the marketplace is a much wiser choice than holding your present positions. I can assure you that; this is definitely a "questionable" time frame!

Further and on-going support for some of these companies' current status will be posted this coming Saturday. My "Saturday Update" can be read weekly in my Instablog article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.