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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (16316)	2/15/2003 11:46:33 AM
From: Alex MG	Read Replies (1) \| Respond to of 19219

Surely there would be a knee-jerk euphoric rally if somehow war with Iraq was averted, but I'm amazed at the overwhelming consensus of a War rally once "the first shot is fired" and the constant comparison to '90-91 "...it is assumed that the stock market has adequately “priced in” a war, implying that equities are now trading at a discount. This is false. Price to earning multiples for the S&P 500 are near historic highs at 29 times actual earnings, double what the index traded in January 1991, when the war began. The difference becomes even more apparent when including the cost of under-funded pension plans and the implicit subsidy in options, which corporations do not expense but can deduct from taxes, thereby boosting reported earnings. Using the S&P’s newly devised “core” earnings, which include these costs, the index is now trading at a lofty 40 times trailing earnings. ...Not only is the market’s current valuation grossly overoptimistic but sentiment is also at polar extremes when compared between January 1991 and today. Bearish sentiment pervaded the market in 1990, topping out above 55% at three separate times in the run up to war. In contrast, bearish sentiment on stocks is now trading near all time lows in the 20%-30% range according to Investor’s Intelligence..." forexnews.com