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« October 2010 | Main | December 2010 »
We have always considered the rush hour traffic on I-95 to be an excellent economic indicator, but with Black Friday famous for heavy volumes, slow roads and no parking, the modern shopper is increasingly working from home. The graph below clearly shows that so called "Cyber Monday" has doubled in popularity over the five years. In other words, the strength of online retail stocks is probably warranted.
There are still more bulls than bears in this week's poll.
Blogger Sentiment Poll Participants:
24/7 Wall St (-) Carl Futia (+) Dash of Insight (N) Elliot Wave Lives On (+) Fallond Stock Picks (+) In the Money Learning Curve (-) MaoXian Millionaire Now (N) Peridot Capitalist (N) Quant Investor (+) StockAdvisors.com Smart Money Tracker (-) Wall Street Folly Wishing Wealth (+)
So far this year large cap stocks which garner at least 60% of their total revenue from international markets have outperformed more domestically focused companies.
The 22 members of the S&P 100 with at least 60% of their total revenue coming from international sources, are up on average 19% year-to-date and 68% of those stocks are outperforming the index.
With economic growth expected to be more robust outside the US in 2011, it might be prudent to consider a company's international exposure when picking stocks.
The majority of bloggers remained bullish this week.
Blogger Sentiment Poll Participants:
24/7 Wall St (+) Carl Futia (+) Crossing Wall Street Dash of Insight (N) Elliot Wave Lives On (+) Fallond Stock Picks (-) In the Money Learning Curve (-) MaoXian Millionaire Now (N) Peridot Capitalist (N) Quant Investor (+) StockAdvisors.com Smart Money Tracker (+) Traders-Talk (-) Wall Street Folly Wishing Wealth
Back in 2008 and 2009 Birinyi Associates and several other firms and publications took a significant amount of flack for the way that the S&P 500's P/E ratio was reported. One person even made the claim that we were "lying" about the P/E ratio of the index. At Birinyi we typically calculate a P/E ratio using fully diluted earnings from continuing operations. Using this methodology the P/E ratio for the S&P 500 on 3/9/09 was 9.99. Around the same time, Standard and Poors was reporting on their website that the P/E using as reported earnings was closer to 120.
The problem with these earnings figures were the significant losses reported in the fourth quarter of 2008 along with weak earnings in the preceding and following quarters. Together these three quarters drove the rolling annual S&P 500 EPS to an unrealistically low level. Using as reported earnings, the S&P P/E ratio was 5x higher than the long-term average when the index was presenting the best buying opportunity in the last ten years. Currently that same figure is closer to 15.9. So using that methodology the S&P 500 - on a valuation basis - is significantly cheaper now, despite the fact that it has risen 80%.
The "as reported earnings" clearly failed, which is why most sophisticated equity investors use earnings from continuing operations. Below we highlight the S&P 500 index and its P/E ratio. Currently at 15 stocks are slightly more pricey than they were in August, but the relative value indicates that as stocks have rallied so have earnings.
The long-term (20yr) average P/E ratio for the S&P 500 is 23.13. Even for much of the 80s and 90s the P/E fluctuated between 15 and 20. To put this into perspective, based on trailing 12mo EPS of $79.72 a P/E of 23.13 places the S&P 500 at 1,844.39! That's 54% above current levels!
For an explanation of money flows, please visit Birinyi.com.
The market pulled back a bit last week, falling 2.2% over the course of the week. Even with this decline, the S&P 500 remains overbought.
The S&P 500 is still 0.2% above the upper band of its TE. Most of the sectors have fallen back with in their trading ranges.
The energy, consumer discretionary and materials sectors are overbought. Energy is still within 2% of the most overbought level it has been in the past 12 months. The utility sector is 0.2% below its trading envelope, therefore is oversold.
There are more bulls than bears in this week's poll.
Blogger Sentiment Poll Participants:
24/7 Wall St (N) Carl Futia (+) Crossing Wall Street Dash of Insight (+) Elliot Wave Lives On (+) Fallond Stock Picks (+) In the Money Learning Curve (-) MaoXian Millionaire Now (N) Peridot Capitalist (N) Quant Investor (N) StockAdvisors.com Smart Money Tracker (-) Wall Street Folly Wishing Wealth
Don't miss out on the recommended portfolios in our newsletter. All of our portfolios are outperforming the S&P 500 YTD and so far this month!
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Blogger Sentiment Poll Participants:
24/7 Wall St (+) Carl Futia (+) Crossing Wall Street Dash of Insight (+) Elliot Wave Lives On (+) Fallond Stock Picks (+) In the Money Learning Curve (-) MaoXian Millionaire Now (N) Peridot Capitalist (N) Quant Investor (+) StockAdvisors.com Smart Money Tracker (+) Wall Street Folly Wishing Wealth (+)
The Ticker Sense Blogger Sentiment Poll is a survey of the web's most prominent investment bloggers, asking "What is your outlook on the S&P 500 for the next 30 days?" Conducted on a weekly basis, the poll is sent to participants each Thursday, and the results are released on Ticker Sense each Monday. The goal of this poll is to gain a consensus view on the market from the top investment bloggers -- a community that continues to grow as a valued source of investment insight. © Copyright 2015 Ticker Sense Blogger Sentiment Poll
Ticker Sense was founded and developed by analysts at Birinyi Associates. Birinyi Associates continues to own and manage all content.
