While our contributors—and advisors in general—remain in the bullish camp, the sentiment (as you’ll see in our Advisor Sentiment Barometer) has turned a bit more bearish.
More Market Upside Still Possible
For now, this market remains on hold and we’re pleased equities have been a good bit resilient in the face of particularly soft oil and NYSE ARCA Oil & Gas Index (XOI) behavior. That’s a sign of a market totally willing to contemplate another upside try despite all the rhetoric out there arguing panic, disaster or bubbles bursting. Not trying to be complacent about this at all; just that’s the message of the market.
Gene Inger, The Inger Letter, www.ingerletter.com, March 13 2017
Trend Remains Up
Technically, the NYSE stock market remains unsettled although it’s beginning to firm up a bit from last week’s internal weakness. The new 52-week high/low differential has returned to being positive in the last two trading sessions, but there were still over 50 new 52-week lows on Monday. This makes more than a week that the number of new lows has exceeded 40, which reflects an increase in internal selling pressure. Most of that selling pressure is coming from two areas: retail stocks and bond funds. The extremity of internal selling pressure isn’t yet great enough to cause any major concerns about the health of the stock market’s intermediate-term uptrend. If the new lows don’t soon diminish, however, it could eventually cause problems for the interim trend.
Cliff Droke, Momentum Strategies Report, www.cliffdroke.com, 707-282-5594, March 13 2017
Beware (and Expect) Surprises
Back in the early 1960s, although not nearly as overvalued as today, the market traded at a high P/E. History suggests that complacency was widespread. In 1962, investors began to doubt our young President John F. Kennedy and his commitment to business. On April 11, 1962, the President described a hike in steel prices as “a wholly unjustifiable and irresponsible defiance of the public interest.” Though Kennedy made peace with business, the threat of real action drove the market down over 25% in April and May 1962, with most of the damage in a single day.
We can’t predict the timing of bolts from the blue. We can say, however, that with a market at least by some significant measures much more overvalued than in 1962, the potential for a major very sharp decline is very high. Candidates range from a European surprise, a move to shut down our government over taxes, a more aggressive than expected Fed, and so on. And yes, given the level of complacency and the ultra-high valuations the decline could be worse than 1962, maybe even approaching 1987.
Stephen Leeb, PhD., The Complete Investor, www.completeinvestor.com, 866-833-2070, March 13 2017
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THE NEXT Wall Street’s Best Investments WILL BE PUBLISHED APRIL 12, 2017