Hi Tom,
What are your charts and screens "telling" you?
I had noticed this on Monday when I installed the latest update from Value Line. My own screens, while not as bearish as in the March 2000 to December 2001 time period, are nonetheless negative and indicate something more than just mere "caution". That said, it does appear that Bernanke (and others) will be able to "jawbone" the markets higher for the near term future. At some point though, what goes up must come down..
marketwatch.com
MarketWatch First Take
Aug 17, 2009, 11:56 a.m. EST
Too much of a good thing?
Commentary: October 2000 was last time Value Line was more bearish
ANNANDALE, Va. (MarketWatch) -- Mae West famously once said that too much of a good thing is wonderful.
But historians assure us that she wasn't referring to the stock market.
And at least according to one top-performing newsletter, there's been too much of a good thing in the stock market since this rally began last March.
The newsletter is the Value Line Investment Survey, which is in a tie for first place for risk-adjusted performance over the three decades the Hulbert Financial Digest has been monitoring the investment newsletter industry.
In its Aug. 21 issue, which was emailed to subscribers early Monday, Value Line reduced its recommended equity allocation to the range of 60% to 70%.
This reflects a cautious to outright bearish posture on Value Line's part, since the firm has never lowered its recommended allocation to below 50%. The last time it was lower than it is now was October 2000.
Value Line's rationale for lowering its recommended equity allocation was not that the economic and financial news is about to take a big turn for the worse, however. Instead, the firm's concern is that the stock market has rallied so far, so fast, that it has gotten too far ahead of itself.
"The equity market's relatively high level assumes a lot of things going right within the economy," Value Line wrote in its issue received Monday morning. "If some of these things go wrong, the reaction could be swift and severe."
That was written before Monday's stock market rout, of course. But the market's sell-off would appear to be a good illustration of the phenomenon: The major reason given for the sell-off was not bad economic news but the mere fact that overseas stocks markets fell.
-- Mark Hulbert
EK!!! |
