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Eric Parnell, CFA  

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  • The Incredible Shrinking Earnings Forecast
    Today, 2:18 AM SPY, CVX, XLB 20 Comments

    Summary

    • Not very long ago at the start of the New Year, corporate earnings were forecasted to increase on a year-over-year basis by more than 20% in 2015.
    • But only a few weeks later, this robust earnings outlook has not only completely evaporated, but projections are now for earnings growth to turn negative starting in the second quarter.
    • If history is any guide, this developing and deteriorating outlook for corporate earnings bodes ill for the stock market in the months ahead.
  • Volatility: Up She Rises
    Yesterday, 2:34 AM SPY, VXX, DIA 14 Comments

    Summary

    • Volatility in the U.S. stock market is building.
    • While it may not be readily apparent in the headline readings, it is building under the surface in different ways.
    • The more this volatility builds, the more the sustainability of the long running post crisis bull market may be at risk.
  • U.S. Stocks: Oh Behave!
    Fri, Mar. 27 DXJ, EEM, EFA 19 Comments

    Summary

    • The U.S. stock market continues to behave remarkably well.
    • As long as the uptrend remains intact, investors are best served to respect it until warning signals emerge to confirm that definitive change in trend may actually be taking place.
    • Headwinds continue to accumulate with each passing week, so investors are equally well served to avoid becoming complacent as we continue through 2015.
  • The Fed Trade That's Money In The Bank
    Fri, Mar. 20 BAC, GLD, KRE 29 Comments

    Summary

    • Two key trading days in March have been informative in revealing how markets might react once the Fed finally raises interest rates.
    • Most capital market segments seem to detest the idea of Fed rate hikes.
    • But one select segment seems to be eagerly anticipating higher interest rates from a Fed.
  • Oil: Dallas Sellers Club
    Wed, Mar. 18 BOKF, CFR, CMA 18 Comments

    Summary

    • A notable disconnect has recently unfolded in the oil market.
    • Oil prices have rolled back over since early March to reach fresh new cycle lows.
    • But selected regional banks that had followed the oil price decline have continued to rise.
    • These banks may face renewed downside pressure in the near term, but some among the group may offer great long-term opportunity in the process.
  • Lessons From Another Tough Week And The Big Day Ahead
    Sat, Mar. 14 EEM, EMB, EWJ 32 Comments

    Summary

    • It was another challenging week for the market.
    • The U.S. Federal Reserve’s Open Market Committee is expected this upcoming week to set the table for raising interest rates in the coming months, adding to market anxiety.
    • Higher volatility is likely to continue into the spring and summer.
    • A number of investment opportunities remain attractive in the current and expected environment.
  • Beware Chasing QE
    Editors' Pick • Wed, Mar. 11 DXJ, EWG, EWJ 53 Comments

    Summary

    • Investors are rushing to the European side of the global stock market ship.
    • Beware of pouring into European stocks simply because QE is now underway.
    • ECB QE is not necessarily the same as Fed QE.
    • Recent history has shown that a QE program is not necessarily a sure-fire guarantee to send regional stock prices higher.
    • More attractive returns opportunities may eventually reside elsewhere as the program continues into the future.
  • Friday's Sell-Off: Assessing The Damage And Opportunities
    Sat, Mar. 7 BIL, BKLN, GLD 246 Comments

    Summary

    • Capital markets sold off broadly and deeply across asset classes following Friday's stronger than expected reading on U.S. employment.
    • Given the magnitude of the sell-off, it is worthwhile to assess both the damage and opportunities.
    • Most category uptrends remain intact, but risk levels are rising.
    • Selected opportunities are also now starting to be revealed.
  • Elevate My Market
    Wed, Feb. 25 SPY, DIA, QQQ 32 Comments

    Summary

    • It has been an extraordinary month of February for the U.S. stock market despite a steady stream of bad news.
    • The Fed also remains on track to raise rates, yet stocks want to go higher.
    • Intraday trading activity has been particularly notable during the recent rally.
  • Hawks Take Flight
    Sun, Feb. 22 SPY, TLT 22 Comments

    Summary

    • It appears that the market's dovish interpretation of the Fed's minutes may prove incorrect.
    • The Fed appears to remain intent on raising interest rates in June.
    • This underestimation of the Fed's intent by financial markets has the potential to result in increased near-term volatility and potential stock downside.
  • What, Me Worry?
    Wed, Feb. 18 CVX, OIL, SPY 37 Comments

    Summary

    • U.S. stocks have registered new all-time highs this week.
    • This latest advance has occurred in the face of markedly deteriorating fundamentals.
    • Investors should become increasingly cautious about simply looking past all worries as we continue through 2015.
  • Stocks At The Crossroads: Breakout Or Breakdown?
    Sun, Feb. 15 DXGE, DXJ, DXPS 25 Comments

    Summary

    • The U.S. stock market has once again arrived at a critical juncture.
    • Over the course of just two short weeks, the market has found its way from the bottom to the high end of its trading range.
    • It is reasonable to consider whether stocks will fail at current resistance or breakout to the upside.
  • A Cautionary Tale For Dividend Growth Investors
    Fri, Feb. 13 KO 232 Comments

    Summary

    • A key tenet of dividend growth investing is staying the course even following a major decline, as the growing dividend will compensate you for your wait.
    • But even high quality companies have endured periods lasting a decade or more before investors recover their value even when including dividends received along the way.
    • Many investors today may recognize this in theory, but may not be truly prepared for such an outcome in practice.
    • Coca-Cola provides a cautionary tale of investors from the past that are still struggling with this challenge even today.
  • The King Of Pain
    Wed, Feb. 11 COST, EEM, EFA 14 Comments

    Summary

    • King dollar is back on the throne.
    • How long its reign lasts this time around remains to be seen, but a number of indications suggest that it could last at least into the summer if not longer.
    • Whether the resurgence of the U.S. dollar is a positive sign for the U.S. economy and the stock market is subject to debate.
    • But its rise has certainly come with a vengeance across many asset classes.
  • Dangerous Liaisons: Banks & Oil
    Sun, Feb. 8 BOKF, CFR, CHCO 10 Comments

    Summary

    • This is how problems in an industrial sector spread across an economy.
    • It has been no secret that the energy sector has been under heavy pressure due to the precipitous decline in oil prices since last summer.
    • But the banking sector has more recently presented itself with its own set of related problems.
    • For what was once a fruitful and prosperous relationship between the energy sector and the banks has become increasingly precarious.
    • Investors that wish to manage their exposures to the oil sector either more aggressively or more conservatively can do so through evaluating the individual banks they own.
  • Did A Market Alarm Go Off On Friday?
    Sun, Feb. 8 SPY, TLT, VNQ 28 Comments

    Summary

    • The trading day seemed like most any other on Friday.
    • But when digging under the surface, the performance coming out of selected sectors may be tripping the alarm bells that more downside pressure may be soon to come.
    • Investors may be well served to monitor selected market segments in the coming week to determine whether a more pronounced pullback is starting to get underway.
  • Oil: Beware The Bounce
    Fri, Feb. 6 BBEP, CVX, LINE 87 Comments

    Summary

    • It looks like oil may have finally found its footing with a solid bounce in recent days.
    • This has resulted in a number of calls suggesting that the drop in oil prices is now over and a sustained rally higher is imminent.
    • If history is any guide, however, investors should proceed with caution before rushing back into the oil patch.
  • Gold Is In A Bull Market And Stocks Are In A Bear Market
    Fri, Feb. 6 GLD, GILD, SPY 69 Comments

    Summary

    • It may sound like a completely ridiculous statement, but it is true: gold is currently in a bull market, while stocks are in a bear market.
    • It is all a matter of perspective.
    • At this stage of the cyclical market cycle, investors would be well served to protect against recency bias and the reliance on extrapolation in their portfolio management process.
  • Gold: Will War Soon Be Over?
    Wed, Feb. 4 GLD 19 Comments

    Summary

    • The war rages on for gold.
    • It has been nearly three and a half years now since gold reached its cyclical bull market peak in September 2011.
    • Since that time, the price drop in the yellow metal has been almost unyielding.
    • But after a disastrous year for gold in 2013, it has been making slow and steady progress in working toward a bottom in the more than a year since.
    • Many challenges remain, but we may soon be approaching a final bottom in gold after several years of turmoil.
  • Time To Consider Regional Banks
    Mon, Feb. 2 BOKF, CFR, IWM 11 Comments

    Summary

    • Regional banks have stumbled out of the gate in 2015.
    • While the broader market is down roughly -3% to start the year, regional banks have fared far worse with a nearly -10% decline.
    • But while this market segment as a whole may remain under short-term pressure, it may be a good time to begin exploring through regional banks for potential investment opportunities.
  • The Bull In Winter
    Sun, Feb. 1 ACWX, DBA, DBB 24 Comments

    Summary

    • All good things must come to an end. This includes the current bull market in U.S. stocks.
    • A new bear market will eventually get underway. The only question is exactly when this change will take place.
    • But a number of forces are increasingly converging that suggest that the demise of the graying bull market may now be drawing close.
  • The Black Cloud Still Looms Large
    Wed, Jan. 28 ACI, ANR, BBEP 11 Comments

    Summary

    • The oil market continues to search for any signs of life.
    • The trend for oil remains definitively down.
    • This bodes ill for capital markets in general and the high yield bond market in particular.
  • What U.S. Investors Can Expect From ECB QE
    Sun, Jan. 25 AGG, DXJ, EWJ 37 Comments

    Summary

    • The ECB is finally doing whatever it takes.
    • Investment markets immediately rejoiced on the news, but is this sustainable once the program actually gets underway starting in March?
    • Not all asset programs are created equal, and the ECB's QE program is not necessarily like the Fed's QE programs.
    • It is reasonable to consider exactly what U.S. investors can expect from the ECB’s QE program moving forward.
  • Will The ECB Kill The Gold Rally?
    Wed, Jan. 21 FXY, GLD, SLV 24 Comments

    Summary

    • The European Central Bank is expected to take the latest “extraordinary” step in global monetary policy by announcing its own quantitative easing program on Thursday.
    • Such aggressive monetary policy actions would presumably be positive for the gold price.
    • Recent history has shown that gold has performed very poorly in the wake of these extraordinarily accommodative monetary policy announcements.
  • Is The Market To Be Hanged In A Fortnight?
    Mon, Jan. 19 ACWX, DXJ, EWJ 22 Comments

    Summary

    • It is a fortnight filled with events that have the potential to meaningfully shape the future direction of the market.
    • Four separate episodes are set to play out that each have major implications on how capital markets are likely to perform in 2015 and beyond.
    • And unfortunately for investors, the risks associated with these events are currently tilted to the downside.
    • Investors should be prepared for increased volatility and proceed with caution as a result.
  • Expect The Unexpected
    Fri, Jan. 16 EWJ, FXE, FXF 32 Comments

    Summary

    • Global capital markets have become increasingly burdened by the capriciousness of human decision making by global policy makers and central bank leaders.
    • Despite its perceived benefit in recent years, such heavy management may ultimately serve as a great detriment to markets in the end.
    • Investors that not only expect the unexpected but anticipate it stand to benefit most as global capital market volatility continues to increase.
  • 2015 Outlook: Pain
    Editors' Pick • Dec. 31, 2014 ACWX, EDEN, EEM 381 Comments

    Summary

    • Market prediction for 2015: Pain.
    • U.S. stock market volatility is likely to increase notably with its relative outperformance over global stocks and other asset classes put to the test.
    • A variety of asset classes and strategies provide the opportunity for strong returns in the coming year.
  • Monitoring Global Market Hot Zones
    Dec. 28, 2014 EMB, GREK, NGE 2 Comments

    Summary

    • The world is not without risk as we enter 2015.
    • A growing number of countries are increasingly grappling with debt problems that have the potential to eventually lead to default.
    • It is worthwhile to monitor developments within these at risk countries to protect against both direct and indirect negative impacts from any future deterioration.
  • 2014's Trash Could Be 2015's Treasure
    Editors' Pick • Dec. 27, 2014 ACWX, DBB, EPP 141 Comments

    Summary

    • It has been another strong year for U.S. stocks in 2014.
    • But a number of more specialized asset classes and categories posted performance that notably outperformed the S&P 500 Index by a fairly wide margin this year.
    • In many cases, those categories that landed at the top of the leader board in 2014 were many of the same categories that languished at or near the bottom last
    • Thus, it is reasonable to consider those asset classes and categories that are limping to the finish line in 2014, for some might end up as winners in 2015.
  • Fires Still Burning In The Oil Patch
    Dec. 26, 2014 EOG, EXXI, HERO 41 Comments

    Summary

    • The massive decline in oil prices over the last several months has clogged the headlines with bullish and bearish views on how to proceed.
    • This can leave many investors feeling confused about what actions if any they should take in response going forward.
    • At times like these, it is often helpful to begin by taking the simplest approach, which is to look at what prices alone are telling us.
    • So far, they suggest that fires are still raging across the oil sector and that more challenges may lie ahead.
  • Can U.S. Stocks Four-Peat In 2015?
    Dec. 25, 2014 SPY, DIA, QQQ 33 Comments

    Summary

    • The U.S. stock market finds itself in rarefied territory as it enters 2015.
    • For only the sixth time in the past 150 years, the U.S. stock market has registered a double-digit annualized gain for three consecutive calendar years from 2012 to 2014.
    • Can the U.S. stock market score a four-peat in 2015 and register yet another year of double-digit annualized gains?
    • While the sample size is certainly limited, history suggests such a feat could be a tough one to pull off.
  • What Gift Will Santa Bring Stock Investors This Year?
    Dec. 24, 2014 SPY, DIA, QQQ 7 Comments

    Summary

    • The time for the Santa Claus Rally is upon us.
    • Stocks have historically performed famously well during the period between Christmas and New Year’s Day.
    • But exactly how well have stocks performed?
    • And what can we reasonably expect Santa to bring to stocks investors in terms of performance in 2014?