Along with many others, I am pondering the latest employment numbers. Strong opinions are the norm. Many are steadfast in their interpretations, some critically so, especially Bondad who blasted Zero Hedge in a scathing attack "No Rick Santelli and Zero Hedge, One Million People Did Not Drop Out of the Labor Force Last Month."
More...]]> e4b347b21003566f33a53cdb4e3d28a1 http://advisorperspectives.com/dshort/updates/Gasoline-Update.php Feb 06, 2012 Doug Short 

Here is my weekly gasoline chart update from the Energy Information Administration (EIA) data with an overlay of West Texas Crude (WTIC). Gasoline prices at the pump, both regular and premium, increased 4 cents over the past week, continuing their steady increase since mid-December. Both are up 25 cents from the interim low in the December 19th EIA report. WTIC closed today at 96.91. It is 14.9% off its 2011 interim high, which dates from early May 2011.
More...]]> 66b175b263ca871cc765fb067a9caf34 http://advisorperspectives.com/dshort/updates/Current-Market-Snapshot.php Feb 06, 2012 Doug Short 

The S&P 500 dropped at the open on disappointing news from Europe and hit its intraday low, off 0.55% in the first 10 minutes of trading. But the index struggled upward through the day, despite the protracted Greek roadblock, and closed near its intraday high, off a mere 0.04% from Friday's close. The index is up 6.90% year-to-date and only 1.41% below its interim high at the end of April 2011.
More...]]> d2aff90627c83e07465d38c10abec885 http://advisorperspectives.com/dshort/guest/Lance-Roberts-120206-Not-in-Labor-Force-Analysis.php Feb 06, 2012 Lance Roberts 

There has been much debate over the weekend regarding the 1.2 million individuals who moved into the "Not In Labor Force" category in Friday's Bureau of Labor Statistics report, which included an increase to the total population of 1.5 million.... As economist Betsey Stevenson Twittered: "What happened was Census found a bunch of old people we had assumed died."
More...]]> 2716a803bbb3aa4f2d89a88e7868ada7 http://advisorperspectives.com/dshort/guest/Powerstocks-120206-Employment-Trends-Signals-Growth-Ahead.php Feb 06, 2012 Dwaine van Vuuren 

Everyone treats employment figures as co-incident indication of an economy's status but a very useful leading economic indicator that deploys a wide range of labor market data is the Conference Board's Employment Trends Index (ETI).
More...]]> 658ed1cd3e7e65e4a14f6528985fd7f9 http://advisorperspectives.com/dshort/updates/Sixteen-Real-Dow-Recoveries.php Feb 06, 2012 Doug Short 

Here is the latest look at the "Sweet Sixteen" Dow recoveries adjusted for inflation/deflation I've been illustrating from time to time over the past two years. The charts below compare the current Dow recovery since the March 2009 low with fifteen other major recoveries dating from the origin of this legendary index in 1896. (See the footnote for my selection criteria.)

At this point the Dow is 734 market days beyond the 2009 low. The index has moved up a notch to fourth place in our Sweet Sixteen competition with a real gain of 86.1% off the low.
More...]]> ca40b940b6787eee2d82494e053e365a http://advisorperspectives.com/dshort/guest/Forecasting-the-Market-Chris-Turner.php Feb 06, 2012 Chris Turner 

At the beginning of February with 70.2% of Q4 earnings reported, here is the latest update of my ongoing "thought experiment" for forecasting the S&P 500 price based on earnings fundamentals.

The chart below is based on the latest trailing twelve-month earnings (TTM) data published on the Standard & Poor's website as of February 2.
More...]]> 10aba738cb481028b1e310932c4823b1 http://advisorperspectives.com/dshort/guest/Jeff-Miller-Week-Ahead-120205.php Feb 05, 2012 Jeff Miller 

After last week's data and the recent market run, I sense that it might be time for a deep breath. There have been solid reasons behind the market rally, including all of the following:

� Improving economic reports
� Progress in Europe
� Reasonable growth in earnings
� A backdrop of low P/E multiple

More...]]> 78aa56ef9dbd60a806eedd19532bd565 http://advisorperspectives.com/dshort/guest/John-Carlucci-Best-Indicator-Ever-Update.php Feb 05, 2012 John F. Carlucci 

As we all know, the key to successful investing is very simple: "Buy low, sell high."

However, you enter a chaotic, fun-house world of uncertainty once you ponder the logical follow-up question: "When?"

The $OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to accurately forecast conservative entry and exit points for the stock market.
More...]]> 4ca9c2156ada8f5321101b6d8d5d051c http://advisorperspectives.com/dshort/updates/World-Market-Snapshot.php Feb 04, 2012 Doug Short 

The 2012 rally picked up steam last week with the average gain of our basket of eight markets approximately doubling the average of the previous week. Europe was home to the best gains. The DAXK (i.e., the DAX ex dividends) was the week's top performer, followed by the CAC 40 and FTSE 100. The S&P 500's 2.17% gain earned fourth place. The Asia Pacific markets populated the bottom half with the Nikkei 225 as the only index with a negative weekly close, and a tiny one at that.
More...]]> 41b27c5abbbd2fb2d44fc49e7e8c1e38 http://advisorperspectives.com/dshort/guest/Serge-Perreault-Weekend-Update.php Feb 03, 2012 Serge Perreault 

Here's the latest weekend update from Serge Perreault, a Chartered Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.
More...]]> a6f1e0a3291f66aaa634e35ff68ef899 http://advisorperspectives.com/dshort/guest/Shedlock-120203-Analysis-of-the-Unemployment-Rate.php Feb 03, 2012 Mike Shedlock 

Here are some quick notes about the today's announcement of a "falling" unemployment rate....

Some of those labor force numbers are due to annual revisions. However, the point remains: People are dropping out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low.
More...]]> 158111e98e38a948661abbea5549fe4d http://advisorperspectives.com/dshort/guest/Chris-Kimble-120203-Bouncing-Australian-Dollar.php Feb 03, 2012 Chris Kimble 

The S&P 500 and the Australian Dollar have shown interesting degree of correlation over the past couple of years. Over the past year several peaks in the 500 index coincided with peaks in the Aussie Dollar. Keep a close eye on the AUD$ to see how it acts at prior key resistance.
More...]]> ad5c102ee9891f96dd25ab467f90cf55 http://advisorperspectives.com/dshort/updates/ECRI-Weekly-Leading-Index.php Feb 03, 2012 Doug Short 

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) posted -5.2 in its latest reading, data through January 27. The latest public data point is a reduced contraction from last week's -6.6 (a slight downward revision from -6.5). This is the highest level (i.e., least negative) since late August. The underlying WLI increased fractionally from an adjusted 122.7 to 123.2 (see the third chart below).
More...]]> fe094955e66bee8c73c6d8d676129627 http://advisorperspectives.com/dshort/updates/Unemployment-and-the-Market.php Feb 03, 2012 Doug Short 

bNote from dshort: Today's release from the Bureau of Labor Statistics includes revisions as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2012 reflect updated population estimates.

Here is the lead paragraph from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:
More...]]> 88f773ac82967b0b52181ae711e7907f http://advisorperspectives.com/dshort/guest/Lance-Roberts-120202-Earning-Less.php Feb 02, 2012 Lance Roberts 

Working harder - earning less. That is what today's release of productivity and labor costs showed us. With that report also comes the suspicion that a lot more people would be reciting the classic prose of Johnny Paycheck's "Take This Job And Shove It" if they thought they had an option to find work elsewhere.
More...]]> 10755d0e518816e2c844dae56e27b6d6 http://advisorperspectives.com/dshort/guest/Chris-Kimble-120202-Groundhog-Day-and-Resistance.php Feb 02, 2012 Chris Kimble 

Note from dshort: This commentary from Chris Kimble instantly grabbed my attention. Yes, the technical analysis is interesting, but the movie connection was what resonated.

In the movie Groundhog Day, actor Bill Murray plays a weatherman who finds himself living the same day, Groundhog Day, over and over again. The 3-pack below suggests that many key markets are experiencing the same thing: Resistance.
More...]]> f45b7d8c5ab61e49fcde370ce774b6cd http://advisorperspectives.com/dshort/commentaries/SPX-Dow-Nasdaq-Since-Their-2000-Highs.php Feb 02, 2012 Doug Short 

The January Effect in 2012 was quite strong, and the US markets have continued the rally that began last October. But let's take a step back and review the performance of the major US indexes in the 21st century through the end of January 2012.

Here is a update in response to a standing request from professor David England. David wants to disprove the standard message of Wall Street, "Don't worry! The market will always come back." I furnished David with some charts, and I shared them with regular visitors to my Advisor Perspectives pages.
More...]]> ab8ae1416779aa8299e6bfc77ac93dbb http://advisorperspectives.com/dshort/updates/Market-Valuation-Overview.php Feb 02, 2012 Doug Short 

Below is a summary of the four market valuation indicators I regularly follow and updated yesterday through the January close. As I've frequently pointed out, these indicators aren't useful as short-term signals of market direction. Periods of over- and under-valuation can last for years. But they can play a role in framing longer-term expectations of investment returns.
More...]]> 814e100470d45da394abe63aea7cb706 http://advisorperspectives.com/dshort/updates/Weekly-Unemployment-Claims.php Feb 02, 2012 Doug Short 

The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 367,000 new claims is a 12,000 decrease from an upward adjustment of 2,000 for the previous week (379K, previously 377K). The less volatile and closely watched four-week moving average came in at 377,750, the twelfth week below 400K after 29 consecutive weeks above that benchmark. Here is the official statement from the Department of Labor:
More...]]> 3465d22d842336a395544282800c82c2 http://advisorperspectives.com/dshort/updates/Q-Ratio-and-Market-Valuation.php Feb 01, 2012 Doug Short 

The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It's a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies. Fortunately, the government does the work of accumulating the data for the calculation. The numbers are supplied in the Federal Reserve Z.1 Flow of Funds Accounts of the United States, which is released quarterly.
More...]]> e09c1fbf7827c1fca433751fc3dac92f http://advisorperspectives.com/dshort/guest/Chris-Kimble-120201-Golden-Cross-in-High-Yields.php Feb 01, 2012 Chris Kimble 

Numerous times over the past couple of years we have highlighted how the high yield mutual funds price action has been a quality leading indicator in bull and bear markets, and I remain of the belief that the price action of high yield mutual funds can be a useful leading stock market indicator for portfolio management. If you are a believer that the Golden Cross is a bullish sign, you will be delighted to discover that a cross is about to take place in these high yield funds.
More...]]> 9c0bffeafa7248be1f4169258936954c http://advisorperspectives.com/dshort/updates/Crestmont-PE-Ratio.php Feb 01, 2012 Doug Short 

The May 2011 article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling provided an overview of Ed's method for determining where the market is headed. His analysis is quite compelling. Accordingly I include the Crestmont data to my monthly market valuation updates.
More...]]> a07a17ac02a022e989d305295c93843f http://advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php Feb 01, 2012 Doug Short 

Here is a new update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly averages of daily closes for December 2011, which is 1243.32. The ratios in parentheses use the monthly close of 1,257.60. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.
More...]]> 62dd71a26f7b2b6bec34146b4418fa7d http://advisorperspectives.com/dshort/updates/Regression-to-Trend.php Feb 01, 2012 Doug Short 

About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis (see footnote below) to the question.
More...]]> 6bcac1892d5eb0290258bc7a444cdc7a http://advisorperspectives.com/dshort/updates/Ivy-Portfolio-in-ETFReplay.php Feb 01, 2012 Doug Short 

I've been posting a monthly moving average update for the five ETFs in featured in Mebane Faber and Eric Richardson's Ivy Portfolio since the spring of 2009, when I featured my review of the book. Investing strategies are not the primary focus of my website, and I don't personally track the performance of the Ivy Portfolio other than to highlight the monthly signals.

For ETF performance tracking and backtesting, I use ETFReplay.com, an excellent website for analyzing the performance of individual ETFs and ETF portfolios based on customized moving-average strategies.
More...]]> 950fa436c96ba366fbe2766588dc6707 http://advisorperspectives.com/dshort/updates/Monthly-Moving-Averages.php Jan 31, 2012 Doug Short 

The S&P 500 closed January with a gain of 4.36% from the December close. All three index signals indicated an invested position. See the specifics here.

The Ivy Portfolio

The table below shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio.
More...]]> d7a619a7d9f1e6357e50d3130b89217f http://advisorperspectives.com/dshort/updates/CPI-PCE-Comparison.php Jan 31, 2012 Doug Short 

Note from dshort: I've updated the accompanying charts with the latest Personal Consumption Expenditures price index from the Bureau of Economic Analysis. The annualized rate of change is calculated to two decimal places for more precision in the side-by-side comparison.

Market commentators are at something of a loss to explain the stock market's steady advance in 2012. Through January 26th, the S&P 500 Index is up 4.8 percent; this compares to its flat performance (0.0 percent) in 2011. Some contend the heady start in the New Year is simply a reversion to the mean. The problem with this explanation is many of the issues which hampered the market in 2011 are still unresolved, and look to remain unresolved for the foreseeable future.
More...]]> 966ef7fa81ad8164236e0b9759032ea7 http://advisorperspectives.com/dshort/updates/Conference-Board-Consumer-Confidence-Index.php Jan 31, 2012 Doug Short 

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through January 19th. The 61.1 reading is substantially below the consensus estimate of 67.0 reported by Briefing.com, which is the same as Briefing.com's own estimate. Are we seeing a reversal of the holiday optimism reflected in last month's 64.8 level (which was an upward revision from 64.5)?
More...]]> 857cef789145de19814b2e451d323ece http://advisorperspectives.com/dshort/updates/Monthly-Moving-Averages-Preview.php Jan 31, 2012 Doug Short 

Here is a preview of the monthly moving averages I track before the market opens on the last business day of the month. All three S&P 500 and three of the five Ivy Portfolio ETF monthly moving averages are signaling "invested". The S&P 500 10- and 12-month simple moving averages are a change from last month's cash position. The one Ivy change from last month is that VTI, the US total market index, has flipped to "invested" after five months of "cash" signal.
More...]]> fd1899208f6e2fec1edec6a7d03dfcae http://advisorperspectives.com/dshort/guest/Jeff-Miller-Week-Ahead-120130.php Jan 30, 2012 Jeff Miller 

In a sharp change from recent times, this week will be all about US economic data. With recession worries still prominent, each release will be subject to special scrutiny. This will be especially true of Friday's employment situation report. There will be continuing earnings news, although we have passed the peak of the season. The Greek default story has legs. Despite the headline potential from these sources, I see signs that there is less focus on Europe, and more attention (worry?) about the US economy.
More...]]> 0a0af9a8bce702d362af0a397e572045 http://advisorperspectives.com/dshort/updates/PCE-Real-Year-over.php Jan 30, 2012 Doug Short 

The latest release of Personal Consumption Expenditures, following Friday's release of the Advance Estimate of Q4 GDP, gives us an opportunity to analyze consumption at a monthly granularity, in contrast to the quarterly data in GDP. The US economy is mostly about consumption, which accounts for about 70% of Gross Domestic Product. In fact, if we study the quarterly reporting of GDP from its inception in 1947, Personal Consumption Expenditures (PCE) have ranged from a low of 60.5% in Q3 1951 to a high of 71.2% in Q3 2009. As of Q4 2011, PCE is an even 71% of GDP.
More...]]> 3c2d36df1b13fd2bd9af9c80f529f182 http://advisorperspectives.com/dshort/guest/Chris-Turner-120130-Fair-Value.php Jan 30, 2012 Chris Turner 

When searching for the perfect S&P 500 fair value metric, readers will encounter a wide range of methods for establishing the "correct" fair value. Most of us interested in this pursuit have conflicting views on the accuracy or applicability of these methods when viewed in the context of current state of our economy. Many believe earnings for the S&P 500 will continue to rise; others believe they are destined to fall. Some believe averaging earnings over a period of time helps smooth data.
More...]]> 052c637aa8aa1fa4e5e414c9725ca534 http://advisorperspectives.com/dshort/updates/PCE-Price-Index.php Jan 30, 2012 Doug Short 

The monthly Personal Income and Outlays report was published today by the Bureau of Economic Analysis. The first chart shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. I've also included an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The latest Headline PCE price index YOY rate of 2.40% is a decrease from last month's 2.59%. The Core PCE index of 1.85% is an increase from the previous month's 1.70%.
More...]]> 9916826cd8a3c6357685d0ec08099d03 http://advisorperspectives.com/dshort/guest/Dwaine-van-Vuuren-120129-The-New-CB-LEI.php Jan 29, 2012 Dwaine van Vuuren 

The much anticipated Conference Board LEI revision is out. Many people were fearing that the removal of M2 from the composite would plunge it into recession territory, but that is not the case. Our own investigations into this matter in the lead up to the announcement revealed as such, but it is comforting to receive hard confirmation now.
More...]]> cf34a65c6ebbf7bf1ed879be7b5546be http://advisorperspectives.com/dshort/guest/Lance-Roberts-120127-Q4-GDP-Prognosis-Still-Negative.php Jan 27, 2012 Lance Roberts 

Last month we posted our analysis of Q3 GDP after the release of the final revision. We stated then: "It is important to remind you that a bounce in economic growth, as we will likely see in the coming Q4 GDP analysis beginning in January, does NOT in any way offset the probability of recession. As we stated during our initial analysis of Q3 GDP it is not uncommon for GDP to tick up just prior to a recession. In fact, in almost every instance, as shown in the table, the economy has had a positive growth rate, and in some cases a very strong growth rate, just prior to recession.
More...]]> 592e581a5e40c8149b7dc4609f868b83 http://advisorperspectives.com/dshort/updates/GDP-Components.php Jan 27, 2012 Doug Short 

Note from dshort: The charts in this commentary have been updated to include the Q4 GDP Advance Estimate.

The chart below is my way to visualize real GDP change since 2007. I've used a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself.
More...]]> b5de2ceabd3018c271d2bdeff4ffb0f1 http://advisorperspectives.com/dshort/commentaries/Conference-Board-Leading-Economic-Index-Revisions.php Jan 27, 2012 Doug Short 

Yesterday the Conference Board released its latest Leading Economic Index (LEI) for the U.S., an announcement I haven't yet featured with a series of charts and commentary. Frankly, I'm still grappling with the major overhaul of the index, which includes extensive changes that extend to its earliest data in 1959. But here is a first effort at highlighting the changes.
More...]]> 73bb181aa41c0958f260b0d466a10557 http://advisorperspectives.com/dshort/updates/Michigan-Consumer-Sentiment-Index.php Jan 27, 2012 Doug Short 

The University of Michigan Consumer Sentiment Index final report for January came in at 75.0, a slight rise from the 74.0 January preliminary reading. Today's number was a tad above the Briefing.com's consensus forecast of 74.2. This is the best final number last February's 77.5.
More...]]> 0b2e1b104deb51925dbdf215ef008fe4 http://advisorperspectives.com/dshort/updates/Real-GDP-Per-Capita.php Jan 27, 2012 Doug Short 

Note from dshort: This morning we learned that the Advance Estimate for Q4 real GDP came in below forecast at 2.8%, with the general consensus ranging from 3.1% to 3.5%. The latest data does not significantly change the long term view of real per-capita GDP, but it did slightly decrease the recession warning implicit in the latest real GDP year-over-year percent change, now at 1.6% (rounded up from 1.56%) from 1.5% (rounded up from 1.46%) after the Third Estimate of the previous quarter.
More...]]> e18f74f96df6b1074f0b00e7fa4bbacb http://advisorperspectives.com/dshort/updates/GDP-Current-Release.php Jan 27, 2012 Doug Short 

The Advance Estimate for Q4 GDP came in at 2.8%, which is an improvement over the 1.8% Third Estimate for Q3 GDP, but below the general consensus. (Note: GDP for Q3 was initially put at 2.5%, with subsequent downward revisions to 2.0% and finally 1.8%). Here is an excerpt from the Bureau of Economic Analysis news release....
More...]]> b6e59d61bde6a405fff8a219f4dd4f10 http://advisorperspectives.com/dshort/guest/Chris-Kimble-120126-A-Pair-of-Flags.php Jan 26, 2012 Chris Kimble 

The health/condition of the broad market should not be overlooked but also not overstated. In "focusing" on the broadest measures of the stock market (the NYSE and Wilshire 5000), the chart below illustrates that they both remain inside of large flag/pennant patterns.
More...]]> b82134d94bb2fc852f8801b07ca6b8ea http://advisorperspectives.com/dshort/updates/Chicago-Fed-National-Activity-Index.php Jan 26, 2012 Doug Short 

According to the Chicago Fed National Activity Index, in December economic activity improved, but the current level remains slightly below its historical trend. Here are excerpts from the report:

Led by improvements in production- and employment-related indicators, the Chicago Fed National Activity Index increased to +0.17 in December from �0.46 in November. Two of the four broad categories of indicators that make up the index improved from November, and only the consumption and housing category's contribution remained negative in December.
More...]]> 17eead4f071a61f0704b344dfbc0b51f http://advisorperspectives.com/dshort/updates/Durable-Goods-Orders.php Jan 26, 2012 Doug Short 

The January Advance Report on December Durable Goods was released this morning by the Census Bureau. The new orders at 3.0 percent came in better than the Briefing.com consensus estimate of 2.0 percent, but Briefing.com's own estimate was spot on at 3.0 percent. The ex-transportation number of 2.1 percent far exceeded the consensus forecast of 0.7 percent.
More...]]> 37af52dffcdab7b93aedd70d337484e3 http://advisorperspectives.com/dshort/guest/Lance-Roberts-120125-Home-Prices-to-Fall-Further.php Jan 25, 2012 Lance Roberts 

There has been a deluge of articles recently about the upticks in the housing data. The consensus is that these data points are surely indicating, finally, a bottom in the depressing decline of real estate. Let me acknowledge that I do not dispute the improvement in the data regarding home starts, permits, pending sales, etc. However, let's be clear that all of these data points are still mired at very depressed levels. So, while optimism is certainly always a welcome thing, for the average American, the world is quite different.
More...]]> da3086641b3d31b13f84195cc5e358e6 http://advisorperspectives.com/dshort/updates/Four-Totally-Bad-Bears.php Jan 25, 2012 Doug Short 

Note from dshort: At the request of an investment professional in San Francisco, I've updated this snapshot of our totally bad quartet through the market close on January 24.

The chart series features an overlay of the Four Bad Bears in U.S. history since the market peak in 1929. They are: 1) the Crash of 1929, 2) the Oil Embargo of 1973, 2) The 2000 Tech bust and 4) the post-2007 Financial Crisis. The series includes nominal, real, total-return and real total-return comparisons.
More...]]> 14155342df019e95cea0eca37d0778cd http://advisorperspectives.com/dshort/guest/AI-120125-Taking-a-Breather.php Jan 25, 2012 Eric Schaefer 

Never let it be said that investors do not have unrealistic expectations. This is true in both bull and bear markets. In the former, they come to believe the sky is the limit; and, yes, this time things are truly different, negating the value of past lessons learned. In the latter instance, they believe the sky is falling and there is little that can be done to forestall calamity.
More...]]> 1c51061337196b007ed7f030e39619df http://advisorperspectives.com/dshort/updates/Gasoline-Sales.php Jan 24, 2012 Doug Short 

What is the relationship between retail gasoline prices and the volume of gasoline sales? The first chart below includes the latest data for U.S. Prime Supplier Sales Volumes, courtesy of the Depart of Energy's Energy Information Administration (EIA). The data is published monthly with about a two month lag. Because the numbers are highly volatile and have some seasonality, I've added a 12-month moving average (MA) to facilitate our understanding.
More...]]> 9a4dcd5179851a0c09e4d080e1397e82 http://advisorperspectives.com/dshort/guest/Chris-Kimble-120124-NYSE-at-Resistance.php Jan 24, 2012 Chris Kimble 

If one believes in building portfolios based upon the idea of "buying low and selling high," twice last year key support came into play in the broad based NYSE index, suggesting it was a time to "buy low on support."
More...]]> ceece303a302d24c1e2b2d642cde9147 http://advisorperspectives.com/dshort/updates/DOT-Miles-Driven.php Jan 24, 2012 Doug Short 

The Depart of Transportation's Federal Highway Commission has released the latest report on Traffic Volume Trends, data through November. Travel on all roads and streets changed by -0.9% (-2.1 billion vehicle miles) for November 2011 as compared with November 2010.

For a deeper understanding of this metric, we're going to adjust it for population growth.
More...]]> 90374c9a334d760abd04965995062105 http://advisorperspectives.com/dshort/guest/Lance-Roberts-120123-Complacency-Risk-Is-High.php Jan 23, 2012 Lance Roberts 

As I was writing this past weekend's newsletter "A Technical Review Of The Markets", it really dawned on me just how complacent investors have become on the economy, the markets, and risk in general. The mainstream media, and most analysts, are looking at recent improvements in the economic data as a sign that the economy has begun to make a turn for the better. This view is further supported by the rise of the stock market.
More...]]> a668a6b0c7266b2139401cd95100c602 http://advisorperspectives.com/dshort/guest/Chris-Kimble-120123-SPX-800-Pound-Gorilla.php Jan 23, 2012 Chris Kimble 

On January 11th a multi-year and multi-decade chart showed that heavy overhead resistance was in place a few percent above the market's price at that time. Today's chart is an update to the 800 pound resistance line, reflecting that the 500 is now up against the line as the VIX is reaching very low levels.
More...]]> 8f3a7881f238e0eda646b0e1870083b5 http://advisorperspectives.com/dshort/guest/John-Carlucci-120123-Silver-Trading-Opportunity-in-2012-2013.php Jan 23, 2012 John F. Carlucci 

Silver tends to form a very periodic, predictably shaped asset bubble. Silver is also relatively volatile compared to most assets like large cap stocks and gold. These two factors � predictability and volatility � offer a potentially very lucrative trading opportunity for silver. I believe that window is opening right now. In this article, we will examine silver's predictability and volatility in great detail so as to prepare for this trade.
More...]]> 8ddc2b9fdc1f5e37287adf4fd684d487 http://advisorperspectives.com/dshort/guest/Shedlock-120123-Debt-and-Deleveraging-Five-Pronged-Solution.php Jan 23, 2012 Mike Shedlock 

Citing the latest report on "Debt and Deleveraging" by the McKinsey Global Institute, Ambrose Evans-Pritchard proclaims a light at the end of the tunnel and that America overcomes the debt crisis as Britain sinks deeper into the swamp. However, there is a big difference between alleged "light at the end of the tunnel" and "America Overcomes Debt Crisis" as Pritchard claims. US consumers may be one-third of the way through, but US debt-to-GDP ratios are low only because unsustainable government spending has taken up the slack.
More...]]> d2ebce848c059d6989dbad0613f966f4 http://advisorperspectives.com/dshort/guest/Jeff-Miller-Week-Ahead-120122.php Jan 22, 2012 Jeff Miller 

Normally the State of the Union Address would be the focal point for the week's events. In a general sense this is still true, but our focus in this weekly series is much narrower: What will influence markets? This SOTU speech is unlikely to have a big market effect. The political lines have been drawn. We can all hope for initiatives that will generate some compromise, but I am not hopeful. I expect themes related to the major national problems -- housing and jobs.
More...]]> f48610fa82c627cf99c0d89e8ef898c4 http://advisorperspectives.com/dshort/commentaries/Trading-Volume-in-the-SPX-120120.php Jan 20, 2012 Doug Short 

The S&P 500 is off to a great start for 2012, up 4.52% in the first 12 days of trading versus a 1.93% gain over the same timeframe in 2011. But what about volume? I've seen a number of comments about the light volume of our "January Effect" rally. So let's do a comparison with last year. First, here is a snapshot of the index with the volume shown below along with its 50-day moving average
More...]]> bb17967c22c25cfc4a77bb3411d55ad7 http://advisorperspectives.com/dshort/updates/Profit-Margins-and-Inflation-Risk.php Jan 20, 2012 Doug Short 

The accompanying charts offer clues for evaluating the risk of profit margin squeeze in the current economy. One is the ratio of crude to finished goods in the Producer Price Index. The other is an indicator constructed from two data series in the Philadelphia Fed's Business Outlook Survey through yesterday's release. It is the spread between the Philly Fed's prices paid (input costs) and received (prices charged) data.
More...]]> e9df6334cfa1fd857f926ab15b7c64d7 http://advisorperspectives.com/dshort/updates/Inflation-Since-1872.php Jan 19, 2012 Doug Short 

Note from dshort: I've added a 10-year moving average to the first chart below, which further highlights the volatility of this data series.

The January 2011 Consumer Price Index for Urban Consumers (CPI-U) released today puts the December year-over-year inflation rate at 2.96%, which is a full percent below the 3.96% average since the end of World War II. Let's take a step back and look at the history of inflation over the past 140 years.
More...]]> 845d79c2c99ef120aace0a02e2d7f583 http://advisorperspectives.com/dshort/updates/Inflation-X-Ray-View.php Jan 19, 2012 Doug Short 

Here is a table showing the annualized change in Headline and Core CPI for each of the past five months. I've also included each of the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation.

We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.
More...]]> e2b4ce6e56fb0eddcac017e7104d8488 http://advisorperspectives.com/dshort/updates/Philly-Fed-Business-Outlook.php Jan 19, 2012 Doug Short 

Before we look at the latest Philly Fed Business Outlook Survey, let's first have a look at the substantial revisions to the data released earlier this week. The revisions are discussed in detail in the January 12th press release, which includes links to the historical revisions in Excel format. For a quick look at the degree of change and how far back the revisions extend (farther than you might guess), I've created a simple before-and-after animation.
More...]]> ae838e4cba82be890b3bd48ec84904c6 http://advisorperspectives.com/dshort/guest/Chris-Kimble-120119-the-Euro-and-Portfolio-Construction.php Jan 19, 2012 Chris Kimble 

The Euro created bullish falling wedges in early 2009 and mid-year 2010. How did the S&P 500 index perform after the Euro broke to the upside of these bullish patterns? Each time the 500 index rallied at least 20% in price, and the 2009 rally was much bigger!
More...]]> 5f62ee8ffe7d2ac1c44138720a6aac24 http://advisorperspectives.com/dshort/updates/CPI-Category-Overview.php Jan 19, 2012 Doug Short 

Let's do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart below illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U, which I'll refer to hereafter as the CPI.
More...]]> d4e3097cc5205026cb84e015d8268b7b http://advisorperspectives.com/dshort/updates/CPI-Headline-and-Core.php Jan 19, 2012 Doug Short 

The Bureau of Labor Statistics released the CPI data for November this morning. Year-over-year Headline CPI came in at 2.96%, which the BLS rounds to 3.0%, down from 3.39% last month. Year-over year-Core CPI came in at 2.23%, which the BLS rounds to 2.2%, up from 2.15% last month.
More...]]> 9ec1b74eeb8632de8900461114fa6abe http://advisorperspectives.com/dshort/guest/Lance-Roberts-120118-Industrial-Production-Confirming-Changes-To-LEI.php Jan 18, 2012 Lance Roberts 

For the last several months I have been scratching my head about the Leading Economic Indicator Index (LEI), as published by the Conference Board, due to the divergence between it and other leading indicators that we watch. The LEI has risen sharply while real indications of the economy such as changes to employment, industrial production, incomes and personal consumption expenditures have not. But now, we learn, the Conference Board will soon release a significant revision to the LEI.
More...]]> f733cf0db6c4d1dc6b077f7fe9fdce1d http://advisorperspectives.com/dshort/guest/AI-120118-Whither-Rates.php Jan 18, 2012 Eric Schaefer 

It is that time of the year again: that brief moment when we confess that 2012 is the year for those overdue changes we now vow to see through. Not surprisingly, the resolutions we make annually are pretty consistent from person-to-person. Shed those ten pounds, save by forgoing the daily latte, spend more time with family or quit gripping and seek a better job -- all will recognize these ambitions since we all share the same foibles.
More...]]> 8b74a7931bc1539c41f0782f6655f5c3 http://advisorperspectives.com/dshort/guest/Chris-Kimble-120118-Portfolio-Construction-Tip-from-TIP-ETF.php Jan 18, 2012 Chris Turner 

A New Year has started, yet many of last year's financial debates remain the same. Will Inflation or Deflation be the major theme in 2012? Will the Currency winner will be a stronger Dollar or Euro as a rising wedge has formed? Will Global falling resistance hold or break? Flag/Pennant patterns in the broad stock market will be resolved to which side? Is TLT facing resistance at the 2008 financial crisis highs? Can TLT rally in 2012 like it did in 2011, up over 25%?
More...]]> 5fafcb20215eb285f5831cd359485ebd http://advisorperspectives.com/dshort/updates/PPI-Headline-and-Core.php Jan 18, 2012 Doug Short 

Today's release of the Producer Price Index (PPI) for December shows a month-over-month decline in headline inflation pressures. The seasonally adjusted finished goods number was down 0.1% MoM and up 4.8% year-over-year, down from last month's 5.9%. The interim YoY high was 7.1% in July. Core PPI (ex food and energy) was up 0.3% MoM and 3.0% YoY, an increase from last month's 2.9% and the highest YoY Core PPI since June 2009. Briefing.com had posted a MoM consensus forecast of 0.1% for both Headline PPI and Core PPI.
More...]]> e1c15cec65ffaa4b9bc0063483fb186d http://advisorperspectives.com/dshort/guest/Shedlock-120117-Fed-Effort-to-Increase-Bank-Lending.php Jan 17, 2012 Mike Shedlock 

Bernanke is trying every way he can to get banks to lend (printing coupled with a multitude of lending facilities and Fed programs). It's easy enough to prove the printing: Base money supply is up about $1.8 trillion since the start of the recession. The charts below offer a stunning narrative of the Fed\'s efforts and the results to date.
More...]]> 19dee9aa1fb14551adf92d2d3c3f8f66 http://advisorperspectives.com/dshort/guest/Peter-Williams-120117-Dow-Historical-Perspective-Update.php Jan 17, 2012 Peter Williams 

Following on from my overall summary chart of 110 years of the Dow Jones Industrial Average (DJIA) published here last week, further detailed analysis serves to demonstrate that volatility has been reliably consistent for the past 110 years, and now is no different. Leading on from last week's DJIA summary, I discovered on the 10base LOG chart that there was an approximate 16.6 year bounding box with 43% depth that could be repeatedly applied throughout the entire DJIA price history � stacked vertically and added horizontally. I have since discovered this was no accident....
More...]]> e5e52a80cd9f27d95d01ed555aa27475 http://advisorperspectives.com/dshort/guest/Bruce-Carman-Real-Final-Sales120116.php Jan 16, 2012 Bruce Carman 

With the release of the Advance Estimate of Q4 2011 GDP less than two weeks away, the economists surveyed by the Wall Street Journal are forecasting accelerating growth for the US economy and generally discount the odds of a recession in the next 12 months. With this optimism for context, let's take a step back and look at some interesting correlations between components of GDP and the onset of recessions.
More...]]> ef7a77e075a0428f8463b03df4b1b25a http://advisorperspectives.com/dshort/commentaries/WSJ-Economist-Survey-on-GDP-Jan-2012.php Jan 16, 2012 Doug Short 

On Friday of next week (January 27th) we'll get the Advance Estimate for Q4 GDP from the Bureau of Economic Analysis. Meanwhile, the Wall Street Journal's January Survey of economists is now available. Let's see what their crystal ball is telling them about Q4 GDP.

First, some context: The BEA's Final Estimate for Q3 GDP came in at 1.8 percent, a downward revision from the 2.0 percent Second Estimate, which was a downward revision from the Preliminary Estimate of 2.5 percent.
More...]]> cd78cd7472f4db5ccbd22e020cc37a9a http://advisorperspectives.com/dshort/guest/Jeff-Miller-Week-Ahead-120115.php Jan 15, 2012 Jeff Miller 

Earnings season starts in earnest this week. There are a number of key questions. As I write this on Saturday, with a three-day weekend ahead, I know that the news from Greece will dominate on Tuesday. Whatever I write tonight could look silly, but I have been there before:) By Thursday, we'll all be talking earnings. I will discuss how to play this in the conclusion. First, let us do our regular review of last week's news.
More...]]> 5af61e9f3b21b928a22ef0d180c29fab http://advisorperspectives.com/dshort/guest/Chris-Kimble-120113-NDX-Twelve-Years-Later.php Jan 13, 2012 Chris Kimble 

Post bubbles can be painful! The Nasdaq 100 (NDX) hit its all-time high back in 2000, yet 12 years later this key tech index has been unable to rally above its 38% Fibonacci retracement level.
More...]]> 91989b91582edbdc384f69a9169e6652 http://advisorperspectives.com/dshort/updates/Treasury-Yield-Snapshot.php Jan 12, 2012 Doug Short 

Note from dshort: The weekly Freddie Mac update released today shows the 30-year fixed rate mortgage at the historic low of 3.89%. The goal of Operation Twist to lower long-term rates appears to have had an impact on mortgage rates.


More...]]> 3ae861d516210a3e37ce93aec81265ff http://advisorperspectives.com/dshort/commentaries/Demographic-Headwinds-Decline-of-Peak-Spenders.php Jan 12, 2012 Doug Short 

Demographer Harry Dent was recently a featured guest on Bloomberg TV in an interview that was promoted with the frightening tease "S&P 500 to Fall 30-50% in 2012." See the video clip below for the complete interview.

The rationale for Dent's grim forecast is primarily based on the demographics of the peak spending years, an age cohort he refers to in the interview as ages 46 to 50. If we use the Census bureau five-year data groupings, the cohort in question is Age 45-49 (which is the range Dent normally refers to in his publications).
More...]]> 837b341868e97e6643e3a8893fa10d53 http://advisorperspectives.com/dshort/updates/Retail-Sales-in-Review.php Jan 12, 2012 Doug Short 

The Retail Sales Report released this morning shows that retail sales in December were up 0.1% month-over-month (but the Census Bureau notes that the statistical confidence range is �0.5%). That was well below the Briefing.com consensus forecast of 0.4% and Briefing.com's own expectation of 0.5%. The more positive year-over-year change was 6.5%. The first chart shows the complete series from 1992, when the U.S. Census Bureau began tracking the data. I've highlighted recessions and the approximate range of two major economic episodes.
More...]]> 3c1b9b1bb8753b8b0a08a385c4d9343e http://advisorperspectives.com/dshort/updates/Pulse-of-Commerce-Index.php Jan 11, 2012 Doug Short 

The latest Ceridian-UCLA Pulse of Commerce Index (PCI), a measure of the economy based on diesel fuel consumption, is now available. The published report highlights the 0.2% increase in December with some interesting speculation on the apparent disconnect between the PCI and economists' forecasts for Q4 GDP.
More...]]> 1fe27b06637049c2a4de4c41671c7680 http://advisorperspectives.com/dshort/updates/Philly-Fed-ADS-Index.php Jan 11, 2012 Doug Short 

Note from dshort: In response to a reader's request, I've updated my chart series on the Philly Fed's ADS index.

The Philly Fed's Aruoba-Diebold-Scotti Business Conditions Index (hereafter the ADS index) is a fascinating but little known real-time indicator of business conditions for the U.S. economy, not just the Third Federal Reserve District, which covers eastern Pennsylvania, southern New Jersey, and Delaware. Thus it is comparable to the better-known Chicago Fed's National Activity Index, which is updated monthly (more about the comparison below).
More...]]> 2d71e08237ded70bae78581936ce1004 http://advisorperspectives.com/dshort/guest/Chris-Kimble-12011-SPX-800-Pound-Gorilla.php Jan 11, 2012 Chris Kimble 

From a multi-year perspective, heavy resistance remains in place around 3% above yesterday's closing price. At the same time the S&P 500 index is nearing this resistance, a few sentiment indicators are getting a little long in the tooth, one of them being the Citigroup Economic Surprise Index.
More...]]> 393a6976e7db309331666ed0aa7a8444 http://advisorperspectives.com/dshort/guest/Lance-Roberts-120110-Consumer-Spending-May-Dissapoint.php Jan 10, 2012 Lance Roberts 

All eyes have been watching the retail sector as of late hoping for a resurgence of the American consumer. After all, consumer credit rose sharply in the most recent report by $20 Billion, even as the personal savings rate fell to 3.5%. So, while there is much less money in the bank, it did mean more money flowing into the economy. Those two data points bode well for a stronger 4th quarter GDP report coming this month, which we estimate should come in closer to 2.5% versus 1.8% in the 3rd quarter and 1.3% in the 2nd. That's the good news.
More...]]> 0b2283bba36e5e0a2bf4219705c56b79 http://advisorperspectives.com/dshort//guest/John-Carlucci-120110-The-Great-Repression-Update.php Jan 10, 2012 John F. Carlucci 

Note: This article has been updated to incorporate some supporting research published by the San Francisco Federal Reserve.

In this article we will analyze the long term S&P chart developed by Doug Short (Figure 1), using it as a reference to "tease out" some very specific predictions of future trends. The estimates and scenarios are based on an unbiased interpretation of data derived from this chart. By following the cold data where it leads us, we arrive at some unnerving predictions which I will collectively refer to as The Great Repression.
More...]]> 738f4f02d4692b90af89f2d5e444428b http://advisorperspectives.com/dshort/commentaries/Twin-Peaks-of-Unemployment.php Jan 10, 2012 Doug Short 

Unemployment rates off their recent highs but still a matter of concern. Yesterday my friend Francois Gadenne, the Chairman and Executive Director of the Retirement Income Industry Association (RIIA), sent me some interesting commentary on historical unemployment rates by age cohorts. His email prompted me to investigate four Bureau of Labor Statistics (BLS) unemployment rate series, which date from 1948 to the present: Age 20 and over, Age 20-24, Age 25-54, Age 55 and over.
More...]]> c42e0c11eced97a3b2eae594bee40b6e http://advisorperspectives.com/dshort/guest/Chris-Kimble-120110-Dollar-Commodity-Conundrum.php Jan 10, 2012 Chris Kimble 

Are you old enough to remember the game show "To Tell the Truth?" The show would have three people on a panel, one would be telling the truth about themselves and two would not be. The chart below is one I shared with Premium Members yesterday, reflecting that the CRB index and the US Dollar were both facing key resistance at the same time. One of these charts is "not telling the truth!"
More...]]> df214365f1610567b87850da18988675 http://advisorperspectives.com/dshort/updates/NFIB-Small-Business-Optimism-Index.php Jan 10, 2012 Doug Short 

The latest issue of the NFIB Small Business Economic Trends is out today (see report). The January update for the December data is the highest level for the Small Business Optimism Index since February of last year. It is only fractionally below the level prior to the last recession.
More...]]> d3d6ce8fb7024332f3a55f02ec714a77 http://advisorperspectives.com/dshort/commentaries/DAX-verus-DAXK.php Jan 09, 2012 Doug Short 

I\'ve received several emails regarding my switch from the DAX to the DAXK for my weekly world markets update. The substitution was suggested by Joerg Willig, a finance professional in Germany, who pointed out that the more widely recognized DAX is a total return index whereas DAXK is a price-only version of the same index. Thus the substitution gives us an "apples to apples" comparison with the other world indexes.
More...]]> c58279e8234cec4297429f8d39de115d http://advisorperspectives.com/dshort/guest/Chris-Turner-Equities-as-a-Matter-of-Belief.php Jan 09, 2012 Chris Turner 

Sure, Adam Smith coined the phrase "All money is a matter of belief." Perhaps his description fits with equities as well. Lately, financial pundits tout the undervaluation of the S&P 500 "based on forward P/E." Readers may benefit from understanding some simple math and seeing a pair of charts to assist in ascertaining relative valuations. Catch phrases like "generational buy opportunity" entice investors, but let's consult the charts to evaluate those claims.
More...]]> 03f08268e72af849332d59cdab7b5117 http://advisorperspectives.com/dshort/guest/Shedlock-120109-Structurally-High-Unemployment-for-a-Decade.php Jan 09, 2012 Mike Shedlock 

Since 2008 I have been stating the US would have "Structurally High Unemployment for a Decade". Indeed, based on historical trends in labor force growth, the expected unemployment rate for the number of jobs created during the recovery would be well north of 11%. Yet, the unemployment rate is currently an artificially "low" 8.5% (not that 8.5% is anything to brag about).
More...]]> b979a783f4243bd12c8830f717dfc263 http://advisorperspectives.com/dshort/guest/Jeff-Miller-Week-Ahead-120108.php Jan 08, 2012 Jeff Miller 

The theme has been the same for many weeks: Reasonable US data, bad news from Europe.

We start each trading day looking at the latest headline and how the Euro is trading. While the US economy has shown improvement, the European story is a huge overhang. This is mostly because no one knows how to quantify the possible impacts. The story plays in three different ways:
More...]]> 1f6575b9b0277158211d6a97eaf298c1 http://advisorperspectives.com/dshort/guest/Peter-Williams-120108-Dow-Historical-Perspective.php Jan 08, 2012 Peter Williams 

My long-term historical perspective on the Dow illustrates how many periods of sideways range-bound movement had the same volatility. It showed the 2007-2009 peak to trough was the same in each instance of 1915, 1940, 1975. The real kicker was discovering the trough of 1932 to peaks in 1966 and 1973 lead to repeating ranges in 2008, and 'possibly' higher into 2015. The first range of 33.5 years was near enough to exactly repeat itself (hit the value, but peaked slightly early). The second range of 40.5 years is looking promising to date with an upside target of 14090 on/before May 2015.
More...]]> 103416558c4039837a323f939d8842bc http://advisorperspectives.com/dshort/guest/Lance-Roberts-120107-Employment-Situation.php Jan 07, 2012 Lance Roberts 

In this month's update of the "real" employment situation we will dig down behind the headlines and look deeper into this morning's release of the Employment Situation report from the Bureau of Labor Statistics. On the positive side there were 200,000 jobs created in the previous month and the unemployment rate fell from an upwardly revised 8.7% to 8.5%. Furthermore, while October was revised higher by 12,000 jobs, November was revised lower by 20,000. Now it is time to dig behind the headlines.
More...]]> 3eb13434ff40a87d0f979b8cf3030950 http://advisorperspectives.com/dshort/commentaries/Conference-Board-ECRI-Leading-Indicator-Smackdown.php Jan 06, 2012 Doug Short 

Periodically I update a series of overlays comparing the ECRI Weekly Leading Index (WLI) and the Conference Board's monthly updates of its index of Leading Economic Indicators (LEI). The most recent LEI update was published on December 22 (data through November), and today we have the latest WLI, based on data through December 30th. As we will see in the charts below, the two indicators continue to exhibit a major divergence.
More...]]> 3258169a28409db67fd8388bf6cde10f http://advisorperspectives.com/dshort/guest/Shedlock-120105-Hungary-Hyperinflation-Path-What-About-the-US.php Jan 05, 2012 Mike Shedlock 

As I watch political events in Hungary, I cannot help but think Hungary is on a path towards hyperinflation. Please consider Der Spiegel report 'Democracy Is Being Trampled On in Hungary' and see if you agree
More...]]> 4baf87935f53a6c0a1ad8df5c9679342 http://advisorperspectives.com/dshort/commentaries/Fed-Intervention-Update.php Jan 05, 2012 Doug Short 

Fifteen weeks, about 3 1/2 months, have passed since the latest Federal Reserve intervention, Operation Twist, was officially announced on September 21. We've now seen several bouts of aggressive Fed attempts to manage the economy following the collapse of the two Bear Stearns hedge funds in mid-2007 about three month before the all-time high in the S&P 500.
More...]]> eaa1fe2e8691a467be942556b7149043 http://advisorperspectives.com/dshort/updates/Total-Return-Roller-Coaster.php Jan 04, 2012 Doug Short 

Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that ten years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? Brace yourself: The purchasing power of your investment has grown to $10,298, a rather disappointing annualized real return of 0.29%.
More...]]> 87363fadaf9cac71d0de31c0e2500500 http://advisorperspectives.com/dshort/guest/AI-120103-Meet-the-Millennials.php Jan 03, 2012 Eric Schaefer 

In a country riddled with divisions, there is one which may come to dominate all of the others. Ironically, it is the schism most neglected by the chattering classes; one which receives scant attention from business pundits and political savants, right and left. It is the new generation gap. There is a growing wedge between the concerns of the electorate's youngest members and the interests of its oldest.
More...]]> a24330d86b220168ebe832adc567b29c http://advisorperspectives.com/dshort/guest/Jeff-Miller-Week-Ahead-111231.php Jan 02, 2012 Jeff Miller 

The investing community goes back to work on Tuesday for a short week that could see plenty of action. Everyone is doing a review of 2011, so I tried to do something really different -- The Year that Wasn't! Please take a look at what might have happened (but didn't) and offer your own take. I think the theme is worth consideration, so I might do it again if there is interest.
More...]]> 36e3b3cd1a25ab77fa8bdf8ce9b3bfed http://advisorperspectives.com/dshort/updates/Real-Mega-Bears.php Jan 01, 2012 Doug Short 

It's time again for the weekend update of our "Real" Mega-Bears, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high.
More...]]> 31ce0ad1e6ac8312a3703d08e3c5241a http://advisorperspectives.com/dshort/updates/Secular-Bull-and-Bear-Markets.php Jan 01, 2012 Doug Short 

Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Without crystal ball, we simply don't know. One thing we can do is examine the past to broaden our understanding of the range of possibilities. An obvious feature of this inflation-adjusted is the pattern of long-term alternations between up-and down-trends.
More...]]> d175cbb6a760f99273dca0625a5a0dbb http://advisorperspectives.com/dshort/guest/Chris-Kimble-111230-DOW-SPX-Big-Picture.php Dec 30, 2011 Chris Kimble 

As we close out the year, a common tradition is to look back over the past 12 months for a sense of how the market is doing. Instead, let's take a broader perspective and examine the big picture over the past few decades. The chart below illustrate that the Dow and S&P 500 continue to be influenced by key falling channels and resistance lines.
More...]]> 771db458b62b85617e717e6ed5f3d780 http://advisorperspectives.com/dshort/guest/Jeff-Miller-Week-Ahead-111225.php Dec 26, 2011 Jeff Miller 

In the absence of fresh bad news from Europe, stocks managed some solid gains last week. Our trading model, Felix, reflected greater confidence than most traders and investors (including me). As noted last week I plan to focus on year-end matters, as well as enjoying time with family and friends. This is a somewhat abbreviated version of the regular weekly update. I want to provide continuity on the indicator updates, as well as capture important events in real time.
More...]]> f4ace6d2069e44a162c3fef873cee794 http://advisorperspectives.com/dshort/updates/DPI-Monthly-Update.php Dec 23, 2011 Doug Short 

Earlier today I posted my monthly update of the year-over-year change in the Bureau of Economic Analysis (BEA) Personal Consumption Expenditures (PCE) price index since 2000. My focus was on the PCE index as a measure of inflation. Now let's look at the PCE data to understand what the latest numbers are telling us about a key driver of the U.S. economy: "Real" Disposable Income Per Capita.
More...]]> c943e1cdcb1f19c68e1d223154bca5bf http://advisorperspectives.com/dshort/guest/Rebalancing-Resurrected-03.php Dec 23, 2011 Adam Butler and Mike Philbrick 

Prologue: This is a 'Canadian-ized' version of an article we published on Monday, December 19, 2011, which featured a study of US equity and fixed-income markets. As we are located in Canada, we were motivated to see how well the same techniques work in our home market using the S&P/TSX Composite. As expected, it turns out that they work quite well.
More...]]> a6dcfdc83a4ba0205e0fbfd848fcf9e9 http://advisorperspectives.com/dshort/updates/Durable-Goods-Real-Per-Capita.php Dec 23, 2011 Doug Short 

Earlier today I posted a commentary on the November Advance Report on October Durable Goods Orders. This Census Bureau series dates from 1992 and is not adjusted for either population growth or inflation. Here is a chart of the same data shown with two adjustments, the red line shows the goods orders divided by the Census Bureau's monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Producer Price Index, chained in current dollars. This gives us the "real" durable goods orders per capita.
More...]]> 656a0df5742dc8e9a53a80bc7090fb52 http://advisorperspectives.com/dshort/updates/Conference-Board-Leading-Economic-Index.php Dec 22, 2011 Doug Short 

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.5 percent in November to 118.0 (2004 = 100), following a 0.9 percent increase in October, and a 0.1 percent increase in September. Here is an excerpt from the press release: "November's increase in the LEI for the U.S. was widespread among the leading indicators and continues to suggest that the risk of an economic downturn in the near term has receded.
More...]]> 1ca645d9a7ff93aef1d3f49b6dbf2ed4 http://advisorperspectives.com/dshort/guest/AI-111221-The-Middle-Class-Welfare-State.php Dec 21, 2011 Eric Schaefer 

The Federal budget and budgetary process has its own lexicon. Most are familiar with some of the more common terms bandied about by the press and politicians as they debate how to bring the deficit under control. To the vocabulary of earmarks, discretionary and mandatory spending, and on- and off-budget, readers will be introduced in 2012 to the phrase "tax expenditures".

The subject of tax expenditures will prove as contentious as entitlement spending; and tax expenditure reform will be as critical as entitlement reform to fixing the nation's finances.
More...]]> c8eab54aee0a46c434f25fe41b481bc1 http://advisorperspectives.com/dshort/guest/Lance-Roberts-111221-Eurozone-Saved.php Dec 21, 2011 Lance Roberts 

Overnight European banks swamped the ECB's first-ever three-year liquidity operation to the tune of, and much larger than expected, �489.2 Billion. That is the LARGEST EVER single refinancing operation in the ECB's history....

So, with a stroke of a pen on the dotted line the Euro-crisis is solved....right?

Not So Fast!
More...]]> b433accbc14fb2e2dfa61c1ed3e7d873 http://advisorperspectives.com/dshort/guest/Chris-Kimble-111221-Dollar-Indicator.php Dec 21, 2011 Chris Kimble 

The U.S. Dollar over the past few weeks looks to be forming a "bullish Cup & Handle" pattern. The Power of the Pattern first suggested that this bullish pattern could be forming a few weeks ago. It is very early in the day, yet the dollar looks to have created a bullish wick at support overnight. If this pattern read is correct, the Dollar could be pushing much higher from here, suggesting that investors and financial professionals should "Be Prepared" for some sizeable market action in the near future.
More...]]> e556a4822e0658b3da742db305e19f1f http://advisorperspectives.com/dshort/guest/Rebalancing-Resurrected-02.php Dec 21, 2011 Adam Butler and Mike Philbrick 

Prologue: This is a 'Japan-amized' version of an article we published on Monday, December 19, 2011, which featured a study of US equity and fixed-income markets. The Japanese experience since 1993 was dramatically different than the U.S. experience. While U.S. stocks climbed 267% over the past 18 years, Japanese stocks dropped 48% over the same period, which annualizes to losses of 3.43% per year.
More...]]> 9ee4e0ff6450a34bf563622cb899f592 http://advisorperspectives.com/dshort/guest/Kay-Conheady-Does-the-Trend-Matter.php Dec 20, 2011 Kay Conheady 

I am fascinated by the growing body of research that revolves around the P/E10 ratio (and its siblings, the P/E5, P/E15 and so on), also known as the cyclically adjusted or normalized P/E ratio. In the past 5 years there have been numerous articles published at Advisor Perspectives as well as independently and in professional journals by numerous researchers: Robert Shiller, Doug Short, Wade Pfau, Michael Kitces, John Hussman, Crestmont Research, Jim Otar, the team of Mike Philbrick and Adam Butler, Rob Bennett and others.
More...]]> 12c0c88b18ae510c3f5863983e075fb3 http://advisorperspectives.com/dshort/guest/Shedlock-111220-Preposterous-Proposals-versus-Reality.php Dec 20, 2011 Mike Shedlock 

Political, Economic, and Mathematical Realities

The investment community is in the midst of an identity crisis, though admittedly many in the industry don't know it yet. At the heart of the matter is the following misconception:

Investors perceive that investment professionals add value via security selection and market timing. What's worse, most investment professionals believe that they add value via security selection and market timing. This perception is dangerously misguided.
More...]]> 86ebb00e1e6e5c3232e72b07fce04a3e http://advisorperspectives.com/dshort/guest/Jeff-Miller-Week-Ahead-111218.php Dec 18, 2011 Jeff Miller 

Market forecasts are made for many different time frames. Peter Lynch focused on the long term, famously saying that he could not tell you the direction of the next 1000 point move in the market, but he could for the next 10,000 points. Our Felix model makes a three-week forecast, although we take a fresh look and adjust positions (if needed) every day.

Each time period is a different battleground. Somehow everything changes at this time of year as you hear the question: Will there be a Santa Claus Rally?
More...]]> e23642e81a770eef7b2b8b5f8f085d34 http://advisorperspectives.com/dshort/commentaries/Dow-1906-and-2007-Peak-Comparison.php Dec 18, 2011 Doug Short 

Note from dshort: During the summer I posted a set of charts illustrating the dramatic market behavior during the Panic of 1907 and the Financial Crisis of 2008. A century separated these two momentous market episodes, and the underlying causes were quite different. However, the overall volatility and general patterns of decline and rally are remarkably similar. In response to a request, I've updated the charts through December 16.
More...]]> 2696e6bca9408421a7d6b0de9fd1c5df http://advisorperspectives.com/dshort/commentaries/WSJ-Economist-Survey-GDP-Dec-2007-versus-2011.php Dec 17, 2011 Doug Short 

Last week I posted the latest GDP forecasts from the Wall Street Journal's December Survey of economists here. I focused on their forecasts for Q4 2011, Q1 2012 and the overall 2012 forecasts.

On Friday the Wall Street Rant blog posted an interesting overlay of the December WSJ GDP survey forecasts for 2012 with the equivalent 2008 forecasts made in December 2007.
More...]]> e03bce066f521c178d4849a6472d6d52 http://advisorperspectives.com/dshort/guest/AI-111215-A-Confederacy-of-Dunces.php Dec 15, 2011 Eric Schaefer 

On January 9th, 1790, Secretary of the Treasury Alexander Hamilton issued his Report on Public Credit in response to a request by the House of Representatives. In it Hamilton argued the newly formed Federal government should assume the war debts incurred by the thirteen colonies during the Revolutionary War. Today European leaders are faced with a similar dilemma. All realize certain member states of the European Monetary Union have borrowed way more than they can ever hope to repay.
More...]]> e8607550ad473ead98bf66de00da8658 http://advisorperspectives.com/dshort/commentaries/Shanghai-Tower.php Dec 15, 2011 Doug Short 

Note from dshort: I've updated the charts to include today's 2.14% decline in the index.

Long-time readers will know that we do not make predictions in the normal sense. That is, we endorse the decisive evidence that markets and economies are complex, dynamic systems which are not reducible to normal cause-effect analysis. However, we are willing to acknowledge the likelihood that the future is likely to rhyme with the past. Thus, we apply simple statistical models to discover mean estimates of what the future may hold over meaningful investment horizons (10+ years), while acknowledging the wide range of possibilities that exist around these averages.
More...]]> e093a4b34ec3a41179b0df275aa00984 http://advisorperspectives.com/dshort/guest/Shedlock-111213-Dollar-Soars.php Dec 13, 2011 Mike Shedlock 

I have read countless articles recently regarding the inevitability of QE3. I have disagreed for four reasons.

1. Price of oil near $100 give Fed little choice
2. Rising price of food gives Fed little choice
3. Stock market has risen on air and hype of European bailout giving Fed little reason
4. Falling unemployment rate (even though it's totally bogus) gives Fed little reason

Commodity expert Dennis Gartman certainly struck a nerve in the financial community as word hit the street of his call on gold in the latest Gartman Letter (subscription required). Here is the gist, as reported by Bloomberg:
More...]]> de9302ef506f800d5a63a4e1cfb4b17d http://advisorperspectives.com/dshort/guest/Lance-Roberts-111212-Million-Dollar-Illusion.php Dec 12, 2011 Lance Roberts 

If you had $1 Million in the bank you would be rich - right? That is what half of the respondents to a recent study by the Gallup Organization said. From the survey: "...Americans [were asked] how much net worth, or savings in cash, stocks, real estate, and other investments, they would need to consider themselves rich. The median figure Americans give is $1 million, the same as in Gallup's 2003 poll asking the same question.
More...]]> 886f388027483e3c50a5c8eee28e10e8 http://advisorperspectives.com/dshort/guest/Chris-Kimble-111212-Twins-in-the-Russell-2000.php Dec 12, 2011 Chris Kimble 

The chart blow was posted on August 8th, reflected an almost perfect identical inverted wedge patterns in the Russell 2000 (see post here).
More...]]> d1228ce940cac79a6e30924253e29205 http://advisorperspectives.com/dshort/commentaries/1968-and-2000-Secular-Bears.php Dec 12, 2011 Doug Short 

Note from dshort: I received a request to post an update of my overlay of the 1968-1982 secular bear with our current market from the peak in 2000.