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Author: Brad Lamensdorf

The Great Unwind?

By John Del Vecchio and Brad Lamensdorf

Households are loaded to the gills with stocks.

During the start of the COVID pandemic, millions of new brokerage accounts were opened.

New investors flooded the market.

As the chart below shows, household asset allocation to equities hit a 70-year high earlier this year.

Prior peaks have been met with recession and as well as a major ass-kicking in equity holdings.

The Great Unwind

This time, a healthy allocation to equities comes at a time of historically inflated valuations.

We like to look at the level of price-to-sales. While sales can be manipulated, it’s a bit cleaner than earnings due to more line items subject to shenanigans with earnings.

The price-to-sales ratio was popularized in the early 1980’s. Back then, it was nosebleed territory if a technology stock exceeded a price-to-sales of 3x.

Recently, the entire S&P 500 exceeded 3x!

The Great Unwind

These levels simply are not sustainable. There is nothing new under the sun.

Eventually, the excess allocation to equities coupled with absurd valuations measured by price-to-sales will be reconciled.

It’s not gonna be a fun experience.

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad. You may book a call here.

DISCLOSURE: LAMENSDORF MARKET TIMING REPORT

Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.

 

Investor Risk Appetite Wanes

By John Del Vecchio and Brad Lamensdorf

As a sign a big bounce could be coming, investors have little appetite for risk. As the chart below from BofA Global Research shows, the percentage of investors taking higher than normal risks has plunged to nearly 2009 levels and are among the lowest this century.

Investor Risk Appetite Wanes

Meanwhile, the average cash position of fund managers has hit the highest level since the 9/11 terror attacks.

Investor Risk Appetite Wanes

While the market volatility may be far from over and lower prices could be seen in the future, the market sentiment is extremely bearish and indicators are pressed to the floor.

A bear market rally is overdue.

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad. You may book a call here.

DISCLOSURE: LAMENSDORF MARKET TIMING REPORT

Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.

 

Bear Market Odds Model Surges

By John Del Vecchio and Brad Lamensdorf

A bear market prediction tool monitored by Goldman Sachs has surged in recent months to its highest level in decades. Here is a chart courtesy of SentimenTrader.com

Bear Market Odds Model Surges

This is a model outlined by Goldman Sachs using five fundamental inputs – the U.S. Unemployment Rate, ISM Manufacturing Index, Yield Curve, Inflation Rate, and P/E Ratio.

Each month’s reading is ranked versus all other historical readings and assigned a score. The higher the score, the higher the probability of a bear market in the months ahead.

When the model was 20% – 29%, the S&P’s average one-year return was +21%.

But when the model was 80% – 89%, that average return plunged to -2%. So the higher the model, the greater the chance for a bear market, or at least negative forward returns.

Time to up the hedges?

 

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad. You may book a call here.

DISCLOSURE: LAMENSDORF MARKET TIMING REPORT

Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.

The Hindenburg Omen Issues Rare Sell Signal

By John Del Vecchio and Brad Lamensdorf

The Hindenburg Omen has issued a sell signal. In recent months, the Omen has indicated lower stock prices ahead. Just prior to the COVID smash, the signal was bearish multiple times.

 

Here’s how the indicator is designed from SentimenTrader.com:

The Hindenburg Omen is a technical warning sign that was created by James Miekka in the 1990s, based on work from Norman Fosback in the 1970s. It monitors conditions that analysts have looked at throughout history as signifying potential weakness underlying the market. For this particular signal, we use three criteria, which likely differ from other sources: 1) The S&P 500 is above its 50-day moving average, 2) Both new 52-week lows and 52-week highs on the NYSE are greater than 2.8% of all advancing and declining issues, and 3) The NYSE McClellan Oscillator is negative. When the signal triggers, it highlights a “split” market, which is unhealthy. Multiple signals in a cluster is a worrying sign. Traditionally, the signal is canceled after 30 days or if the Oscillator turns positive again, though we’ve seen that it can lead to market trouble several months in advance.

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.

You may book a call here.

DISCLOSURE: LAMENSDORF MARKET TIMING REPORT

Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.

Bear Market Rally?

By John Del Vecchio and Brad Lamensdorf

The riskiest assets have seen a massive rebound.

Many stocks are up 20-30% or more off the recent lows in just a week.

Has the bottom been put in, or is this a bear market rally?

One of our favorite indicators suggests that it is time to add back hedges.

Aggressively.

The Short-Term Composite Indicators, courtesy of Investors Intelligence is now exceptionally overbought. At a level of 75.9, we are in nosebleed territory.

The indicator measures dozens of short-term and intermediate-term technical factors. The market is the most overbought it has been in months.

At a level that preceded pain the last time we got there.

While no indicator is perfect, we find that at extreme levels (both overbought and oversold) there are favorable risk/reward ratios. Now presents such a time to fade the market.

Bear Market Rally?

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.

You may book a call here.

DISCLOSURE: LAMENSDORF MARKET TIMING REPORT

Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.

 

 

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