Exploring The Bear Case

By now, just about everybody on the planet knows the key tenets of the bull case. In short, our heroes in horns contend that stocks are discounting better days ahead for the economy, and in turn, earnings, less regulation, a "phenomenal" tax plan, and an economic stimulus package sprinkled in for good measure. And since the all of the above suggest that earnings are going to be better than expectations, stock prices can continue to move higher, we're told.

However, on the other side of the court, the bears too have a case. And while their voices have been quieted by the relentless rise seen over the past four months, our furry friends in the bear camp remind us that there are issues out there that investors will have to deal with - eventually.

Since being able to remain objective is the key to this business, I thought I put my bear hat on this morning and run down the bear argument - in a quick and easy-to-read, executive summary format.

Big-Time Overbought Condition

  • The major stock market indices are overbought - very overbought
  • One indicator suggests NASDAQ is most overbought since the late 1990's
  • This means stocks are "set up" to decline quickly if something negative comes out of the woodwork

Sentiment Is Not Exuberant, But...

  • Sentiment indicators have reached extreme levels
  • In and of itself, high sentiment readings do not cause market declines
  • High sentiment readings simply indicate that most of the money that wanted "in" has likely been spent
  • The key to a sentiment "signal" is for the indicators to reach an extreme (check) and then reverse
  • Thus, we need to be on the lookout for something to trigger traders to exit the market

Stock Market Indices Are Overvalued

  • We've been through this many times and nothing ...
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Let's Be Clear, The Table is Set...

Good Monday morning and welcome back. Now that all the Oscar hoopla and all the political commentary is behind us, we can return to our normal lives. So, let's start the week off with a review my key market models ...

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Worried About The Bull? Here's Something to Think About...

The current joyride to the upside in the stock market is apparently one for the ages. Exhibit A here is the fact that of Tuesday's close, the S&P 500 has gained 13.4% since the pre-election, November low. Next, the Dow's ...

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What's Your "Trump Contingency Plan?"

I recently had a conversation with a very smart, very experienced financial advisor who happens to be both an attorney and an accountant. Our advisor partner (my client) wanted to know what my "Trump Contingency Plan" looked like. He informed ...

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The Trend Is Your Friend, But...

Good Monday - oops, I mean Tuesday morning and welcome back. Although the drama in D.C. continues to build on several topics and I continue to be asked what my "Trump Contingency Plan" is in case of trouble (short answer: ...

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The Real Inflation Problem

Stocks spiked again on Wednesday with the S&P 500, DJIA, NASDAQ Composite, S&P Midcap, and Russell 2000 indices all finishing at new all-time highs. Once again, investors can thank Mr. Trump for the increased value of their brokerage accounts and ...

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Odd Behavior? Or...

It is a well-known fact that Janet Yellen is an uber-dove when it comes to interest rates. For those not schooled in the world of Fedspeak, the term "dove" means that the central banker in question errs on the side ...

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When Will It End?

With major stock indices finishing at new all-time highs for a third consecutive session, the question of the day would appear to be, when will it end?

The tenacious rally that began just before the November election, has now lifted ...

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Green Means Go, Right?

Good Monday morning and welcome back. Apparently all it took was one utterance of the word "phenomenal" by Mr. Trump in order to remind traders that tax reform hasn't been forgotten and that the plan is likely to be pro-business. ...

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The Bears Tell Us...

One of the big questions at this point in the game is, can stocks really go higher from here? After all, the S&P 500 is up 10% from the pre-election low and the NASDAQ Composite has added 12.6% since November ...

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An Old-School Indicator That Bears Watching - Even Today

I recently wrote a position paper entitled The Tactical Dilemma which explored the trials and tribulations that tactical managers have faced since 2011. In the report, I detailed the fact that many tried and true technical indicators, which had performed ...

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Where I Stand - Clarifying My Position

I've been saying for a while now that from a big-picture perspective, this is not a low-risk environment. Today I thought I would do some "esplainin" on my point of view.

First, let's dispel the idea that my position suggests ...

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