The Keystone Speculator
The SPXA150R is one of Keystone’s favorite indications. When it goes above 85 and 90, you can wager the farm on the short side. When the purchase price drops below 20%, you can typically bet the farm on the long side. This year For, the SPX makes a higher high in price as the SPXA150R makes a lower high.
Is this divergence identifying the multi-year top? Pundits will cite great data and a relaxing geopolitical picture as reasons to choose the long side. Obviously these money managers and analysts are pumping and hyping stocks because they’re distributing stocks to the retail sucka’s now showing up to buy (pump and dump).
In truth, the financial data remains smooth and wage inflation is not taking place thus overall inflation will not occur capturing the Fed’s programs for ongoing rate hikes in the feet. Most importantly, a downturn will hit at anytime and you’ll see the overall economy and markets drastically deteriorate in a matter of weeks and a few months once it starts. The stock repurchase programs are a computer virus that has joined markets. The buybacks take advantage of the Fed’s easy money, and company cash reserves, to buy back stock (which is not the best idea with prices at record highs).
30% and more. The PE percentage, generally around 18 and 19 for the broad stock market is deceivingly low because of the buybacks. If none of the buybacks experienced occurred over the last few years, the PE proportion would be well beyond 20 (small caps have been above 20 for the last three years). Looked at another way, the earnings at, say 130/share right now would be at least -30% lower or even more. A 130 revenue and 18.5 PE gets you SPX 2400 right where we are in with the broad stock market. Earnings are only boosted because shares are disappearing from the buybacks.
- Tax (14)
- 7 years ago from jogjakarta
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- Other resources: network, available information publicly, etc
If the buybacks never happened, cash flow may be around 90 or 100 which would mean 1765-1850 on the SPX. This are certain to get everyone’s attention when it likely occurs sooner or later over the next couple years. When everyone looks back a couple or more years from now, they will say how could the impact is missed by us of substantial stock repurchase programs that went on for years?
The 18-12 months secular routine has been stated often by Keystone. This is an extremely reliable stock routine. The currency markets is in the secular bear cycle from 2000 to 2018 therefore the last couple years roughly should play out adversely for stocks considering the modern times of upside pleasure.