After falling a single time to a negative value eight weeks ago, the Timing Outlook rose steadily, along with the market, to 9.0 last time, where it remains today. On the scale of 0-10, 9.0 is a very positive reading.
At the beginning of the year, I began noting weekly movements in the market, using this system of nomenclature: P = positive week, N = negative week, and 0 = no change. Here is what the market has done in 2010: P-N-N-N-N-P-P-0-P-P-P-P-P. That’s 5 consecutive up weeks (as of last Friday, April 1), and 7 of the last 8 weeks have been up. Overall, the year shows 8 P’s, 4 N’s, and a 0. The market went up 3% in the first week of the year, then fell 7% over the next 4 weeks. Since then (starting in early February), it has rallied 11%. Netted out for the year, the market is up 6% in 2010 and 75% since last March’s lowest point.
A new earnings season kicks off next week. This will be referred to as the Q2 earnings season, with companies reporting on Q1 results for the quarter that just ended on March 31. As discussed last time, the Q1 earnings season (with companies reporting on their final-quarter results from 2009) was excellent, with about 80% of companies beating earnings and revenue expectations, and year-over-year earnings and revenue changes for many companies turning positive.
In my own Capital Gains Portfolio, I have fully re-invested all of its cash after the 4-week down-trend (N-N-N-N) of January and early February caused my sell-stops to be hit. I just updated my Web site for April, so you can go here if you want to see the Portfolio’s performance through the end of March. As always, holdings in the Capital Gains portfolio are protected to the downside by sell stops, currently set at 6%. Since its inception, the Capital Gains Portfolio is far ahead of the S&P 500.
For a portfolio that does not utilize timing or sell-stops, but rather uses dividend-paying stocks and a buy-and-monitor approach, use the same link above to check out my Dividend Portfolio. For a description of the book on which the Dividend Portfolio is based, go to this page to read about THE TOP 40 DIVIDEND STOCKS FOR 2010: How to Generate Wealth or Income from Dividend Stocks. The e-book has been on a record sales pace since its release in January, with some readers reporting that they have purchased it all three years, and that it has helped them initiate or improve a dividend portfolio of their own.
2. Market Performance Since Last Outlook
(“now” figures are as of close Wednesday 4/7/10)
Last Outlook (3/21/10): 9.0 (positive)
S&P 500 last time (3/21/10): 1160
S&P 500 now: 1182 Change: +2%
S&P 500 at beginning of 2010: 1115
S&P 500 now: 1182 Change in 2010: +6%
S&P 500 at close 3/9/09: 677 (bottom of bear market and beginning of bull market)
S&P 500 now: 1182 Change since 3/9/09: +75%
3. Indicators in Detail
• Conference Board Index of Leading Economic Indicators: No new report since last time. That report showed the 11th consecutive monthly increase. The string of increases suggests an improving economy, which is usually good for the stock market. Positive. +10
• Fed Funds Rate: No change. The Fed Funds rate remains near zero, so this indicator stays positive. +10
• S&P 500 Market Valuation (P/E): Morningstar shows the current P/E of the S&P 500 based on operating earnings as 19.6, up slightly from 19.3 last time, still in the fairly valued, neutral zone. +5
• Morningstar’s Market Valuation Graph: This indicator has been slowly climbing along with the market since mid-February, while staying within the “fairly valued” band of 0.9 to 1.1. It currently stands at 1.07, up from 1.05 last time and 1.04 the time before that. Neutral. +5
• S&P 500 Short Term Technical Trend: The charts of all three indexes that I use (S&P 500, Dow Jones Industrial, and NASDAQ) have stayed in the same favorable configuration since last time: Index > 20-day SMA > 50-day SMA > 200-day SMA. This short-term technical indicator uses the index’s relationship with the 20-day and 50-day simple moving averages (SMA). The relationship is positive, with the index above the 20-day SMA, which is above the 50-day SMA. +10
• S&P 500 Medium Term Technical Trend: This medium-term indicator compares the index to its 50-day and 200-day SMAs. It remains positive, with the index above the 50-day SMA, which is above the 200-day SMA. +10
• DJIA Short Term Technical Trend: Positive. +10
• DJIA Medium Term Technical Trend: Positive. +10
- NASDAQ Short Term Technical Trend: Positive. +10
TOTAL POINTS: 90 NEW READING: 90 / 10 = 9.0 = POSITIVE
