Are Stocks Over-Priced? If Yes/No, Does It Matter?

SYNOPSIS

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We’ll be happy to get September over with once and for all. After all, it is historically the worst month of the year to be invested in stocks in the S&P 500, Dow Jones Industrial Average, Nasdaq Composite Index or the S&P/TSX Composite Index. This September it has been a see-saw of up and down weeks, occasionally punctuated with new record highs and geopolitical nonsense. Bring on October. It’s #6 or #7 for most major indexes. Then we have the best months of the year… November, December and January. Does that make “complete sense” so far?

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) declined to 41% from 50% a week earlier. The S&P 500 APAR and the S&P/TSX Composite Index APAR both rose to 20%+.

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Last Week in the Major Indexes… Almost all of the major North American indexes that we track rose again this past week. Nasdaq Composite Index and S&P/TSX Venture Index experienced small losses.

Last Week in the Sectors… Energy stocks continued to improve trend-wise, including both US and Canadian stocks in that sector. Among S&P/TSX Composite Index stocks, the Consumer Discretionary group is starting to look interesting.

PTA Perspective… Are Stocks Over-Priced? If Yes/No, Does It Matter?

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Everyone seems to be concerned these days about whether stocks may be “too expensive” to jump in now; or conversely, whether it might be a good time to take some money off the table, before there’s correction or market crash. As usual, most of this is the business media just filling space and air time, and keeping people tuned in instead of tuning out. Nonetheless, we take a look this week into how value is assigned to stocks and whether it makes any sense. Hint: The share price of a stock has almost nothing to do with its value. We run through a number of valuation metrics, and draw some conclusions about which ones you should be paying attention to, if any! Enjoy!

The Joy of Selling!

SYNOPSIS

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Isn’t it ironic that Trump has done nothing to improve the US economy, yet claims credit for the Dow and S&P reaching new highs since he took office? He apparently isn’t aware (or is ignoring) the fact that the stock markets of over 30 countries are outperforming the S&P 500 since he took office. More gains in North America this past week, but small gains. Don’t be fooled by small nudges to new highs.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) picked up some speed last week after the 18% reading a week earlier. The S&P 500 APAR and the S&P/TSX Composite Index APAR were also up… to 19% and 7% respectively.

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Last Week in the Major Indexes… All of the major North American indexes that we track gained last week… several over +2%.

Last Week in the Sectors… Not much too add this week. Some gains in Energy (shortages via hurricanes?) and perhaps an early set on the seasonally favourable period for Information Technology.

PTA Perspective… The Joy of Selling!

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No, we’re not telling you to sell all your stocks right now! But we would like to remind you that you should have a rock-solid sell plan in place for all of your investments. You should have a specific sell point set for every stock you own, relative to the highest point each stock has achieved. We’ll remind you how to do that this week.

Trades between Trends

SYNOPSIS

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In spite of a number of North American indexes still near record highs, our analysis of the broader market is telling us that we’re moving sideways to moderately down. It’s a stand-off between bulls and bears; and it’s very annoying! We’re still beating the market benchmarks with our own investments, but not by as wide a margin as we’d like.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) retreated again to 18% from 32% a week ago. The S&P 500 APAR and the S&P/TSX Composite Index APAR also declined to 6% and 3% respectively.

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Last Week in the Major Indexes… Most of the major North American indexes that we track fell quite a bit last week… many in the -1% to -1.5% range.

Last Week in the Sectors… We’re still seeing reasonably good performance among Health Care stocks in the US, while Materials (mining stocks) are the only sector of interest in Canada. Keep in mind though, that while the seasonally attractive period for Health Care extends well into October, the positive period for the media-embellishing segments of Health Care — Biotech and Pharmaceuticals — ends September 13.

PTA Perspective… Trades between Trends
Since, markets can move sideways for extended periods of time, our minds start wandering to how we can make money when, well, the markets are going nowhere. We discuss two of those this week… a relatively safe conservative ploy, and a highly experimental exercise, where our money is on the line!

Seasonality Effects Heading into Fall 2017

SYNOPSIS

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As August rolls into September, there is a feeling in the air that fall may be coming soon… which is true by the calendar, but not always by the weather. So this week, our coverage leans toward seasonality in trading. August is always a low volume month with people enjoying the end of summer before kids head back to school, and summer work hours (for those who have them) come to an end. It’s time to get back to heavy duty investing again!

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) revived from 3% a week ago to 32% now. The S&P 500 APAR and the S&P/TSX Composite Index APAR improved also to 9% and 14% respectively from near zero levels a week before.

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Last Week in the Major Indexes… Most of the major North American indexes that we track rose quite a bit last week… several by 2.5%+.
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Last Week in the Sectors… There was definitely some sector rotation happening last week, as Utilities lost it’s spot at the top of the trend rankings. We now have Information Technology, Health Care and Materials in the lead. Not in a big way yet, but a definite improvement.

Featured Chart… Seasonality Effects Heading into Fall 2017
This week we’re once again updating our coverage of the best calendar effects to keep in mind for the next six weeks or so.

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These are just three of them… 13 more in the full edition of TrendWatch Weekly. While our buy/sell decisions are still primarily based on the current results from our relative trend analysis™ (RTA) methodology, we continue to believe that seasonal patterns can be relevant to keep trend data in a broader historical context.